Explanations for the private investment decision in the industrial land market

Erwin Van der Kr Pasmans and Rob Van der Heijden

ERES from European Real Estate Society (ERES)

Abstract: Though industrial land is not a public good in the strict sense of the words a small part of the industrial estates has been developed by the private sector municipalities have nevertheless often treated the provision of industrial land more or less similar to the provision of other public utilities like energy and water provision or infrastructure development. Notwithstanding, that the industrial property market is suffering from a number of imperfections it is our conviction that in order to be able to effectively liberalize the market for industrial land development, more knowledge is needed about the present private involvement in the market for industrial land. This paper aims to analyse the differences between public and private investments in the industrial land and property market in the Netherlands. Based on previous work, a number of hypotheses about assumed intervention variables, are formulated and tested. These variables, including location attributes as well as market characteristics, are assumed to be decisive for the private investment decision. The statistical method to test this model is logistical regression analysis. The explanatory analysis is executed by making two subsets based on our own database; one of public developed sites and one of private developed sites. Our findings will indicate the strength between the dichotomous variables, the categories of public and private investment, and the aforementioned independent variables. So, this paper tries to explain the current private sector involvement in industrial land development in the Netherlands, aiming to derive potential implications for policies aimed at the liberalization of the industrial land market. In a broader perspective, our study can be considered a case study of the liberalization of land and property markets and the conditions that must be met to match the rationales of private sector investment decisions in industrial land development.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2012-01-01
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