The specificity of the investment in land as in real estate
Abstract
The main purpose of this article is to identify the motives of investing in land and arable land and determine the choices of such investment. The empirical research, based on the method of expert evaluation, fills the gap of the investment in land observed in scientific literature. The expert evaluation has allowed to develop a profile of a land investor, identify the determinants of the value of land and arable land and clarify the motives of investing in land in a small open economy (the trends in one small economy may reflect similar trends in other small open economies, for instance, Latvia or Estonia). The novelty of the article lies in the disclosure of the general and Lithuania-inherent land investment risks and assessment of the impact of the main land value determinants. The practical implications of the article lie in submission of the guidelines to real estate policy and practice makers, investors, real estate developers, buyers and other parties concerned that want to get a better understanding of the expediency or inexpediency of the investment in land.
Keyword : land investment, real estate, land value, general determinants, microeconomic determinants
How to Cite
Remeikienė, R., Gasparėnienė, L., & Ginevičius, R. (2019). The specificity of the investment in land as in real estate. International Journal of Strategic Property Management, 23(4), 244-255. https://doi.org/10.3846/ijspm.2019.8092
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Makridakis, S., Wheelwright, S. C., & Hyndman, R. J. (1998). Forecasting: methods and applications. New York: John Wiley & Sons.
Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York: McGraw–Hill.
Oxley, M., & Haffner, M. (2010). Housing taxation and subsidies: international comparisons and the options for reform. Retrieved from https://www.jrf.org.uk/sites/files/jrf/housing-taxation-systems-full.pdf
Patterson, G. A. (2013). Investment in the global real estate market. In H. Fung & Y. Tse (Eds.). International Financial Markets: (Frontiers of Economics and Globalization) (pp. 69-89). https://doi.org/10.1108/S1574-8715(2013)0000013009
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Scanlon, K., & Elsinga, M. (2014). Policy changes affecting housing and mortgage markets: how governments in the UK and the Netherlands responded to the GFC. Journal of Housing and the Built Environment, 29(2), 335-360. https://doi.org/10.1007/s10901-013-9390-1
Squires, G., Hutchinson, N., Adair, A., Berry, J., McGreal, S., & Organ, S. (2016). Innovative real estate development finance – evidence from Europe. Journal of Financial Management of Property and Construction, 21(1), 54-72. http://dx.doi.org/10.1108/JFMPC-09-2015-0036
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Tiwari, P., & White, M. (2014). Real estate finance in the new economy. New Jersey: Wiley-Blackwell. https://doi.org/10.1002/9781118836651
van der Heijden, H., Dol, K., & Oxley, M. (2011). Western European housing systems and the impact of the international financial crisis. Journal of Housing and the Built Environment, 26(3), 295-313. https://doi.org/10.1007/s10901-011-9230-0
Williams, S. (2013a). The truth about land investing: 15 warning signs to look for when buying vacant land. Retrieved from https://retipster.com/truthaboutlandinvesting/
Williams, S. (2013b). 10 rock-solid reasons why you should be investing in land. Retrieved from https://retipster.com/landinvesting/
Wyman, D., Seldin, M., & Worzala, E. (2011). A new paradigm for real estate valuation? Journal of Property Investment & Finance, 29(4/5), 341-358. https://doi.org/10.1108/14635781111150286
Bergdolt, C., & Mittal, A. (2012). Betting on world agriculture. Oakland: Oakland Institute Publishing. Retrieved from http://www.oaklandinstitute.org/betting-world-agriculture-us-private-equity-managers-eyeagricultural-returns
Buxton, A., Campanale, M., & Cotula, L. (2012). Farms and funds: investment funds in the global land rush. IIED Briefing Papers, The International Institute for Environment and Development (IIED), Jan 2012 – IIED. Retrieved from http://pubs.iied.org/17121IIED/
Ciaian, P., Kancs, d’A., Swinnen, J., Herck, K., & Vranken, L. (2012). Sales market regulations for agricultural land in EU members states and candidate countries (Working paper, No. 14).
Directive 2014/17/EU. (2014). Directive of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers relating to residential immovable property and amending Directives 2008/48/EC and 2013/36/EU and Regulation (EU) No 1093/2010. Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32014L0017
Dong, Z., & Sing, T. F. (2017). Developers’ heterogeneity and real estate development timing options. Journal of Property Investment & Finance, 35(5), 472-488. https://doi.org/10.1108/JPIF-07-2016-0058
Eberlin, E. (2017). Strategies and risks to consider when buying land. Retrieved from https://www.thebalance.com/strategies-and-risks-to-buy-land-4135603
Enemark, S. (2001). Land administration infrastructures for sustainable development. Property Management, 19(5), 366-383. https://doi.org/10.1108/02637470110410194
Faulkner, D. (2016). The Chinese real estate market: development, regulation and investment. Journal of Property Investment & Finance, 34(6), 670-671. https://doi.org/10.1108/JPIF-07-2016-0057
Figari, F., Paulus, A., Sutherland, H., Tsakloglou, P., Verbist, G., & Zantomio, F. (2012). Taxing home ownership: distributional effects of including net imputed rent in taxable income. Retrieved from http://ftp.iza.org/dp6493.pdf
French, N. (2015). Real estate investment: a strategic approach. Journal of Property Investment & Finance, 33(6), 594-595. https://doi.org/10.1108/JPIF-07-2015-0055
Gholipour Fereidouni, H., & Ariffin Masron, T. (2013). Real estate market factors and foreign real estate investment. Journal of Economic Studies, 40(4), 448-468. https://doi.org/10.1108/JES-05-2011-0066
Grant, T. (2016). Is raw land a good investment? Retrieved from http://budgeting.thenest.com/raw-land-good-investment-21604.html
Griggs, J., & Kemp, P. A. (2012). Housing allowances as income support: comparing European welfare regimes. International Journal of Housing Policy, 12(4), 391-412. https://doi.org/10.1080/14616718.2012.711987
Gunnoe, A. (2014). The political economy of institutional landownership: neorentier society and the financialization of land. Rural Sociology, 79(4), 478-504. https://doi.org/10.1111/ruso.12045
Gunnoe, A., & Gellert, P. (2011). Financialization, shareholder value, and the transformation of timberland ownership in the US. Critical Sociology, 37(3), 265-284. https://doi.org/10.1177/0896920510378764
Hegedüs, J., Lux, M., & Sunega, P. (2011). Decline and depression: the impact of the global economic crisis on housing markets in two post-socialist states. Journal of Housing and the Built Environment, 26(3), 315-333. https://doi.org/10.1007/s10901-011-9228-7
Hin, K., Ho, D., & Addae-Dapaah, K. (2014). Real estate market cyclical dynamics: the prime office sectors of Kuala Lumpur, Singapore and Hong Kong. International Journal of Managerial Finance, 10(2), 241-262. https://doi.org/10.1108/IJMF-10-2013-0108
Kemp, P. (2007). Housing allowances in comparative perspective. Bristol: The Policy Press. https://doi.org/10.1332/policy-press/9781861347541.001.0001
Knuth, S. E. (2015). Global finance and the land grab: mapping twenty-first century strategies. Canadian Journal of Development Studies, 36(2), 163-178. https://doi.org/10.1080/02255189.2015.1046373
Makridakis, S., Wheelwright, S. C., & Hyndman, R. J. (1998). Forecasting: methods and applications. New York: John Wiley & Sons.
Nunnally, J. C., & Bernstein, I. H. (1994). Psychometric theory (3rd ed.). New York: McGraw–Hill.
Oxley, M., & Haffner, M. (2010). Housing taxation and subsidies: international comparisons and the options for reform. Retrieved from https://www.jrf.org.uk/sites/files/jrf/housing-taxation-systems-full.pdf
Patterson, G. A. (2013). Investment in the global real estate market. In H. Fung & Y. Tse (Eds.). International Financial Markets: (Frontiers of Economics and Globalization) (pp. 69-89). https://doi.org/10.1108/S1574-8715(2013)0000013009
Rosenberg, M. (2017). Current world population. Retrieved from https://www.thoughtco.com/current-world-population-1435270
Scanlon, K., & Elsinga, M. (2014). Policy changes affecting housing and mortgage markets: how governments in the UK and the Netherlands responded to the GFC. Journal of Housing and the Built Environment, 29(2), 335-360. https://doi.org/10.1007/s10901-013-9390-1
Squires, G., Hutchinson, N., Adair, A., Berry, J., McGreal, S., & Organ, S. (2016). Innovative real estate development finance – evidence from Europe. Journal of Financial Management of Property and Construction, 21(1), 54-72. http://dx.doi.org/10.1108/JFMPC-09-2015-0036
The Bank of Lithuania. (2017). Lietuvos ekonomikos apžvalga: 2017 m. gruodis [Review of Lithuanian economics: December 2017]. Retrieved from https://www.lb.lt/uploads/documents/files/musu-veikla/ekonomikos-analize-prognozes/2017_12_19_LT_ekonomikos_raida_ir_perspektyvos_VIESAS_PRISTATYMAS_LT.pdf
The Parliament of the Republic of Lithuania. (2017). The Republic of Lithuania Law on Real Estate Related Credit. Retrieved from https://www.e-tar.lt/portal/lt/legalAct/ea8fee50ac9311e6b-844f0f29024f5ac
The Word Bank. (2018). Arable land (hectares per person). Retrieved from https://data.worldbank.org/indicator/AG.LND.ARBL.HA.PC
Tiwari, P., & White, M. (2014). Real estate finance in the new economy. New Jersey: Wiley-Blackwell. https://doi.org/10.1002/9781118836651
van der Heijden, H., Dol, K., & Oxley, M. (2011). Western European housing systems and the impact of the international financial crisis. Journal of Housing and the Built Environment, 26(3), 295-313. https://doi.org/10.1007/s10901-011-9230-0
Williams, S. (2013a). The truth about land investing: 15 warning signs to look for when buying vacant land. Retrieved from https://retipster.com/truthaboutlandinvesting/
Williams, S. (2013b). 10 rock-solid reasons why you should be investing in land. Retrieved from https://retipster.com/landinvesting/
Wyman, D., Seldin, M., & Worzala, E. (2011). A new paradigm for real estate valuation? Journal of Property Investment & Finance, 29(4/5), 341-358. https://doi.org/10.1108/14635781111150286