Rent gap formation due to public infrastructure and planning policies: An analysis of Greater Santiago, Chile, 2008–2011

Ernesto López-Morales, Claudia Sanhueza, Sebastián Espinoza, Felipe Ordenes and Hernán Orozco
Additional contact information
Ernesto López-Morales: Universidad de Chile, Chile; Centre for Conflict and Social Cohesion Studies (COES), Chile

Environment and Planning A, 2019, vol. 51, issue 7, 1536-1557

Abstract: Land upzoning and state investment in public infrastructure are two of the principal factors that increase the rent gap in the city; however, the scale of their impact remains unknown. This paper presents a novel method of rent gap analysis based on multiple linear regressions with controlled fixed factors, tested for Greater Santiago, Chile. Drawing on an administrative dataset of 36,911 transactions for new apartments sold between 2008 and 2011, along with data regarding the size of each apartment and its commercial sale price—but discounting imputed land and construction costs—it can be seen that state investment in the Metro rapid transit network enlarged the potential ground rent (portion of the rent gap capitalized by developers) by 25.6% over the period. Similarly, each additional floor area ratio point (dictated by district zoning guidelines) increased capitalized ground rent by an average of 6.1%. Meanwhile, the portion capitalized by small-scale private landowners through sale of un-redeveloped land increased by only 5.5% over the same period. These results show the high elasticity of the rent gap, the strong influence of land regulations and state-financed Metro infrastructure on rent gap formation, and the need for discussion of taxation of the capitalized ground rent for redistributive purposes.

Keywords: Rent gap; private developers; metro; upzoning (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0308518X19852639 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:envira:v:51:y:2019:i:7:p:1536-1557

DOI: 10.1177/0308518X19852639

Access Statistics for this article

More articles in Environment and Planning A
Bibliographic data for series maintained by SAGE Publications ().