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A duration analysis of housing construction times Evidence on the role of option values, public involvement and stalled sites

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Listed:
  • Jan Rouwendal
  • Lars Brugman

Abstract

This paper investigates the duration of housing construction projects in the Netherlands. We utilize comprehensive data from the Dutch Land Registry for the period 2013-2022 to investigate the importance of municipal land ownership, building plot price changes, construction costs, development inside areas that are already built-up and competition. The construction process covers the time between issuance of building permits and completion of the project, which can be split in a preparation and construction phase. We find that municipal involvement in projects speeds them up significantly, while increasing building plot prices and especially construction costs have a delaying effect. Construction inside already built-up areas fastens the preparation and slows down actual construction, with an significant net delaying effect on the total duration. Competition decreases the time needed for construction. Our results lend support to real option theory and indicate differences in the objections of private firms and local authorities.

Suggested Citation

  • Jan Rouwendal & Lars Brugman, 2024. "A duration analysis of housing construction times Evidence on the role of option values, public involvement and stalled sites," ERES eres2024-128, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-128
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    References listed on IDEAS

    as
    1. Capozza, Dennis & Li, Yuming, 1994. "The Intensity and Timing of Investment: The Case of Land," American Economic Review, American Economic Association, vol. 84(4), pages 889-904, September.
    2. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    3. Korthals Altes, Willem K., 2019. "Planning initiative: Promoting development by the use of options in Amsterdam," Land Use Policy, Elsevier, vol. 83(C), pages 13-21.
    4. Chris Elbers & Geert Ridder, 1982. "True and Spurious Duration Dependence: The Identifiability of the Proportional Hazard Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(3), pages 403-409.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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