Distributional effects of Ger area redevelopment in Ulaanbaatar, Mongolia

Ger area in Ulaanbaatar, Mongolia has unique characteristics as nomadic portable dwellings have been clustered in the urban area through massive migration with a transition to a market economy. Since it has given rise to serious urban problems, including low-density urban sprawl, lack of basic services and infrastructure, and city-wide environmental pollution, Ger area has been dealt with as squatter and informal settlement to be eventually redeveloped. This study concentrates more on the fact that Ger area has become a legitimate settlement through the privatization of land, recognizing that the privatized land is a real asset by which Ger residents take advantage of the redevelopment as an opportunity to overcome poverty. In this regard, it examines how the land asset distributed free of charge, has contributed to asset accumulation of Ger residents through redevelopment. Empirical simulation based on financial cost–benefit assessments reveals that all redevelopment profits belong to developers exclusively, while Ger residents do not share any profit. Therefore, it is recommended that the redevelopment profit be shared with Ger residents, including the joint venture model in which the profit is distributed in proportion of land and capital equity investment with land price reflected potentialities of high-density land use. It is also recommended that some of the redevelopment profit be converted into providing affordable housing and, particularly in the scheme of land value capture, providing off-site and connecting infrastructure which otherwise the government supplies with taxpayers’ money.