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Planning regulations and their impact on European commercial property dynamics

Planning regulations and their impact on European commercial property dynamics. Ed Nozeman & Arno van der Vlist Edinburgh , 15 June 2012. Impact planning regulations. Central issue .

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Planning regulations and their impact on European commercial property dynamics

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  1. Planning regulations and their impact on European commercial property dynamics Ed Nozeman & Arno van der Vlist Edinburgh, 15 June2012

  2. Impact planning regulations Central issue Whether and to what degree differences in local commercial markets relate to differences in planning regulations?

  3. Impact planning regulations ` • Research design • Step 1 Review of the literature on how planning regulations and commercial market behaviour are intertwined. • Step 2 Measuring the degree of differences in commercial market returns between countries/cities • Step 3 Considering the interrelations between commercial market dynamics and planning regulations

  4. Impact planning regulations • Step 1 Review of literature • Direct causal effect is lackingbecause of variation in regulations and methodologicalimprecision • Lack of empirical research relating land useregulations and development of prices in commercial r.e.

  5. Impact planning regulations • Step 1 Defining planning regulations as part of institutions • Man-made rules that are meant to constrain possibly opportunistic human behaviour • Comprising 1 (In)formal rules 2 property rights 3 institutions of local governance

  6. Impact planning regulations • Step 2 Establishing the impact on performance of commercial realestate Hypothesis Land useregulations comprising actors, factors and reviews have impact on performance of commercial real estate

  7. Impact planning regulations • Step 2 Data and methodology • Finding data on stock, yieldand rent 2. Findingproxiesfor land useregulations • Selecting the empirical model

  8. Impact planning regulations • 2 Findingproxiesfor land useregulations Adaptation of Quigley’s questionnaire to Europeanpoliticalstructure and to commercial realestate • Type of actorsinvolved • Type of factors involved • Requiredreviews • Relevancedevelopment caps, densityrestrictions, open spacerequirements, infrastructureimprovents and inclusionaryrequirements

  9. Impact planning regulations 3 Selecting the empirical model

  10. Impact planning regulations Mean RENT M2 for Offices and Retail over 2000-2010, by MSA

  11. Impact planning regulations Mean YIELD for Offices and Retail over 2000-2010, by MSA

  12. Impact planning regulations Development in Stock of offices and retail (average percentage change per year)

  13. Impact planning regulations %stock increase BLURI politicalinfluence index 2011 per MSA

  14. Impact planning regulations Estimation results for the dynamic panel model, corrected LSDV estimates , *, **, ***significant at 10, 5 and 1 percent , respectively

  15. Impact planning regulations Estimation results for the fixed effect of the land use regulatory index for RETAIL and OFFICES, least squares estimates , *, **, ***significant at 10, 5 and 1 percent , respectively

  16. Impact planning regulations • Conclusions • Difference in marketsrelated todifferences in market fundamentals 2 Markets withstronger politicalinfluence on land useanddevelopment have higherrents • Retail is more affectedby land useregulationsthan office markets

  17. Impact planning regulations • Questions ?

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