Information Transparency and Its Effect on Brownfields Price in China
DescriptionContaminated urban land in China is the result of the relocation of state-owned enterprises, engaging in manufacturing activities from urban areas, to less-developed urban peripheries beginning in the 1990s. Primarily driven by a booming real estate market in the 2000s, such a de-industrialization process became more widespread, evidenced by a significant amount of former industrial land being redeveloped for more productive uses. However, the redevelopment of industrial sites, commonly known as brownfields in the Western context, does not appear to be treated differently from noncontaminated sites until very recently. Over the past ten plus years, two major changes related to China’s industrial sites have occurred. The first is the result of the launching of a market-based land transaction system, which replaced the past free-allocation or negotiation-based land-use right transfer. The second change, related to the increasing awareness of land contamination, has resulted in policy initiatives and media exposure of contamination-induced health problems in newly built communities, which has caught local and national attention. A debate prevailing in the Western literature is whether it is necessary to spend public money cleaning up private properties. Using empirical data of cities in the United States, scholars find statistically significant positive linkage between remediated brownfields and the surrounding properties. Also, they find that for industrial properties in prime locations, sales price displays a discounted rate that appears to take into consideration remediation cost. Such an empirical analysis with Chinese land data is clearly missing. This study fills a gap in the literature by investigating all land sales in three top tier cities in China over a thirteen-year period. With over ten years of land sales under the market mechanism, this study examines whether land remediation cost in industrial site redevelopment has been capitalized in land prices. I expect to find out that, due to the increasing societal awareness of environmental problems related to land contamination and the adoption of the market mechanism in land transaction, real estate developers have learned over time to take into consideration remediation cost when they bid on former industrial sites. In addition, cities with different policy initiatives show different price response to potential contamination.
|Effective start/end date||1/01/19 → …|