Land Speculation and Local Development Process

Most of the literature on property markets is written as though it were the very paradigm of a neoclassical perfect market. In practice, the market is imperfect, properties are heterogeneous, information and transaction costs are high. Land speculation is an intrinsic characteristic of land markets, but it is often omitted in economic approaches and is rarely placed in its geographical context. In this paper, we explore the spatial, economic and financial dimensions of land speculation by considering the existing planning regulations, land tenure system, and land transactions during a 30-year period, within the geographical context of a tourist agglomeration development process on the island of Rhodes, Greece. The main source of reliable quantitative data on land transactions is the local cadastre and the Property Tax Office. Land transactions in sub-periods of spatial development of the study area are presented on maps. Within the context of increasing demand for accommodation means, bank financing practices and State subsidies system favoured the creation of new enterprises, the accommodation supply and consequently the increase of land demand. Land property structures, urban planning regulations and land policy determined land supply. All the above factors have produced synergies that encouraged land speculation with ambivalent effects on local real estate markets, tourist activities and space.