Risk allocation in implementation of urban development projects - comparison of Finland, the Netherlands, and the UK

Eero Valtonen, Heidi Falkenbach, Kauko Viitanen and Erwin van der Krabben

ERES from European Real Estate Society (ERES)

Abstract: Developing new neighbourhoods, both through greenfield and brownfield projects, is risky business. These kinds of large scale urban development projects can take several decades and contain high amount of both private and public investments. Uncertainty concerning the time table as well as the overall profitability of the projects is obvious. Development industry is usually also highly regulated, at least in the developed economies. Albeit the property rights allowing using, transacting and benefiting from a private property are usually secured by law, the change of a property's use is somehow regulated at the same time. The main argument supporting this regulation is handling the externalities caused by a particular use of a real estate, such as a polluting factory in the middle of a residential neighbourhood. The regulation concerning planning and development differs among countries, although the underlying argument is the same.Our study aims to investigate the planning and development practices with the perspective of risk allocation in urban development projects in Finland, in the Netherlands and in the UK. These countries form an interesting group for comparison because of their differences concerning planning and development, i.e. the countries represent different planning systems according to urban planning literature.The main emphasis in the study is put on the risk positions of the municipalities and private developers in the studied countries. To study the risk position the legislation governing planning and development together with illustrative case examples in each country are analysed. Special attention is paid to the roles of the municipalities and private developers in planning the to-be-developed areas and to the responsibilities of the municipality in the implementation of the plans concerning the infrastructure provision. Together with the infrastructure provision responsibilities it is discussed how the delivery of the infrastructure can be financed.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2015-07-01
New Economics Papers: this item is included in nep-ure
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