Impact of Land Use Zoning Changes on Land Values

This study examines the impact of municipal land use planning on land values in Hamburg, Germany during the time period 2010-2018. While the study of zoning has been well documented in the United States (McDonald & McMillen, 1993 & 1998; Asbere & Huffmann, 1991; Glaeser & Ward, 2009; Kok et al., 2014), this is the first study that directly examines zoning in Germany. Since the principles of municipal zoning vary considerably between traditional American and German applications (Hirt, 2007), this study aims to bridge the prevailing literature gap and extend the research to Europe. Unlike most previous studies, this research also examines the impact of rezoning as opposed to initial zoning (Munneke, 2005). The German land use plan (Flächennutzungsplan) discloses the long-term land use and forms the basis of the legally binding development plans (Bebauungspläne) of the city. Over the 2010-2018 time frame, the city of Hamburg has issued 53 changes to its land use plan that have resulted in adaptations to the development plans of the city. These changes can be broken down to 115 individual changes by type, which are grouped to determine the overall impact of different types of land use changes. They range from new green spaces to residential, commercial and mixed zones. Since the zoning classification is provided by one source, a comparable definition of zoning is applied throughout. Fixed-effects panel estimation is used to identify the impact of 4 different types of land-use changes on adjacent land values. The impact analysis is done for land values of different property types, including single and multiple family homes, stores and office buildings, and for different distance buffers. Using time lags the responses at different periods in time after the announcement are explored.