Cities and the Urban Land Premium

Cities and the Urban Land Premium

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

After a long period of suburbanisation, cities have been in vogue again since the 1980s. But why are people prepared to spend far more money on a small house in the city than on a large house in the countryside – and why doesn't this apply to all cities? This book shows that the appeal of the city in the 21st century is not only determined by the production side of the economy, but also by the consumption side: its array of shops, cultural activities and, for example, an historic city centre. All these factors not only translate into land prices that are worlds apart but, in terms of production, into different wages for urban and rural citizens. This book maps out these differences.

Chapter 6: Land prices and governmental policy

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

Subjects: economics and finance, urban economics, urban and regional studies, cities, urban economics


The reorganisation of public administration is advanced occupational therapy. Friso De Zeeuw, 2010 One of the figures in the film The Godfather is Moe Green. Moe Green is presented to the audience as the imaginary founder of Las Vegas. It was, in the words of one of the Mafia bosses, a visionary idea: it did not involve any spatial planning whatsoever. Moe Green put Las Vegas on the map as a private initiative. He cashed all the profits and used them to further adorn his creation: making the Strip even longer, the Bellagio fountains even more beautiful. All these facilities could be paid for from the land proceeds; no taxes whatsoever were levied. This concept of a city as the project of a single private person seems unreal to the Dutch. Still, it is a useful frame of reference in considering governmental policy where spatial planning is concerned. What goes wrong if a city is taken to be a project of the city’s council that develops the city with a view to maximum revenue, but also in competition with other cities that all strive after the favour of potential inhabitants? Land prices are closely linked to the level of the facilities in the direct surroundings. The total surplus value of land for residential purposes in Dutch cities amounts to approximately EUR 340 billion.

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