The dynamics of the Shanghai land market – An intra city analysis

In an open market, the land price of a particular site represents a set of attributes that a user is willing to pay for the use of that site. It has long been established that one of the most important attributes is the distance of this site from the city center. Based on a mono-centric assumption of urban development, land economists since Alonso have almost all agreed that there is a diminishing effect on land price the greater the distance from the city center. Although there have been various modifications of this locational perspective, it remains the core concept of land market dynamics. The question arises, therefore, as to whether a semi-open but extremely active land market with a heavy government presence will also follow this urban structure principle. In this paper, we apply a double-log regression model to examine land price changes in Shanghai from 1992 to 2006. Our results, based on an examination of more than seven thousand transactions, show that land price changes in Shanghai follow these dynamics and that a major transportation node plays an important role.

► Measuring land price changes is important to the understanding of the land market dynamics.
► Land price changes in Shanghai from 1992 to 2006 were examined.
► The relative importance of distance from the center is skewed towards the south-western direction of the city.
► Our results show that despite the dominant role of government, land price movements assemble market-led behavior in Shanghai.