Structural Determinants of Unregulated Urban Growth and Residential Land Pricing: Case of Bangalore

The primary objective of the study is to examine the interplay between unregulated urban growth and residential land market pricing. This interplay is examined in the context of Bangalore, which is the one of the fasted growing cities in Asia through a few key research questions. (1) What are the factors contributing to the exponential growth and sprawl of Bangalore? (2) What are the structural factors determining residential land market prices? (3) How does the regulated and unregulated land development processes affect land market prices in growing urban systems such as Bangalore? And (4) what are the institutional challenges and opportunities for improving the land market efficiency in the city? Beside the use extensive secondary data, including spatial data generated through satellite imageries and land conversion data collected from the District Land Registration Office, the study has used 720 actual land transaction price data over 2005–2010 periods from 9 fast-growing land market locations in Bangalore. The data set is treated as unbalanced panel data. The structure of residential land price is examined by developing a hedonic price model, using random effects multivariate regression. The model estimated that nearly 61% of the residential land price in Bangalore is determined by structural factors such as distance from the city business district, level of infrastructure, intervention of development agency, etc. One of the important findings from the analyses is that these structural factors could be used to bridge the gap between registered and market land prices and to address distortions in the land market efficiency. The paper concludes that the scarcity effects of regulated planning practices and speculation effects of unregulated land markets have contributed to the significant growth in land prices in Bangalore, although, the supply effects of unregulated land market activities have moderated the price increase and improved the land access. The paper suggests that unless the state and local governments implement efficient land management and urban fringe development policies, the city will soon experience the diseconomies of urban sprawl.