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Land Use
4
Types of land use

Commercial

Residential

Public

Waiting
Supply of Land in Shot run

Fixed.

Demand determine land price.

Price determine how land is allocated
among users
Land is an asset

Earns return over many years.

Capitalized or present value of land yeild
fixed return. PV= A/I
Urban Land Use Models

Concentric zones
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Radial – sector

Multiple-nuclei
Concentric zones

A city expands from the center in
the form of Concentric.

Five successive zones around the
CBD.

1st zone: wholesaling area.

2nd zone: mixed of slum housing
and scattered business.

3rd zone: low and middle-income
residence.

4th zone: upper-income single
family.

5th zone: high –income suburban
commuters.
CBD
1
2
3
4
5
Bid Price Curve and Concentric Zones

As CBD grows outwards
there is a pressure on
each successive zone to
expand.
R1

Thus a successive of land
use overtime.
Rent
R2
R3
R4

Housing will “filter down”
from higher- to lower
income families.
R5
Distance
How can families in Zone 2 outbid high
income families?

Speculators hold the land in Zone 2 in its present
use waiting for huge capital gain when the land
transformed to higher use.

During this waiting period , there is little if any
incentive for speculators to keep up the structure
on the land ; thus rents or the price paid for land
services for a given year will be low enough for
low income families.

Higher – income persons have stronger
preference for the size of the parcel of land they
buy than for distance
Redial Sector

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Explain residential landuse development.
According to the model a
circular city is composed
of sectors of similar types
of land use radiating from
the center.
Four types of land uses
around the CBD:
A &B devoted for
business and light
manufacturing
C&D refer to low-middle
and higher income
residential area
C
D
A
C
CBD
B
C
D
Determinant of Land use in Redial
sector model





Rent bid:
Agglomeration forces will attract firms; thus allowing them
to bid higher rent for land in sector A&B.
Similarly, good transportation routs to the city center will
attract residence who can offer higher rents, since their
commuting cost will decline the closer they locate near the
highway.
Topographical condition:
Houses can be built on hillside more easily than shopping
centers.
Multiple Nuclei

Shortcoming of the previous two models is their assumption
of single CBD.

Even cities having single centers have numerous subcenters.

Why subcenters originate Subcenters based on:
Central-place activities (shopping center).
Transport nodes or terminal.
Major agglomerations (sport stadium, or university).
Former small town.
Natural advantage of the site.
Once a given subcenter exist, concentric zone and/or radial
sector may emanate from its center in various pattern.
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The Determinants of Specific Land Use

How a specific parcel of land will be used?

The market is a point of contact between real-estate
owner and person who desire to buy, rent, or lease
property for their residences or businesses.

If the prospective user is business, its demand price
will be determined by:
1. characteristics of business.
2. characteristics of site.
3. The location of the site with respect to
competitors, or complementary establishment.




1. preference.

2. Income.

3. The neighborhood
characteristics of the
perspective site.
Rent
The deterarminant demand price for
residents
PL
U1 U2
Distance
U3
Commercial land Use

Profit – maximizing firm will buy land up
to the point where: MR = MC
Marginal revenue Product = MP. P
Revenue

SL= PL
MRPL
Unit of Land
Rent – bid Curve

Bid curve is steeper when:

Advertisement cost is high.

Greater productivity of land.

Land and non land are poor substitute.
Land Use Policy

Efficient allocation of resources is
reached when Mr(P) = MC

If P grater than MC society is saying it
desire more.
Tools of Land Use Policy

Zoning.

Fire and safety ordinance.

Urban Renewal.
Zoning

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Zoning: certain geographical areas
constrained in the type and number of
structures that can be placed on the land.
It freezes the use of land in the short term.
There is an economic rational for zoning.
It consider social cost (negative
externalities), so MC > P.
Urban Renewal.
High Income
Low Income
Rent/acre

To eliminate blight and slums.
This involve changes in land use.
Rent/acre

Middle Income
Low Income
Middle Income
High Income
Distance
Rent bid by income
Distance
Impact of urban renewal on land use