Urban development and negative differential rent [Lo sviluppo urbano e la rendita differenziale negativa]

Abstract

The growth of building land does not always produce a positive differential rent on the existing building stock. The essay aims to discuss the case where urban expansion has negative effects on the rent of existing building plots and constructions. In other words, the differential rent assumes negative values that increase over time, lowering the value of existing properties. This occurs when the expansion of the city does not correspond to a real need for new housing. Generally, it happens in the presence of urban centres already in an advanced phase of demographic contraction, when the existing building stock would be sufficient to satisfy the real estate demand. This expansion (sometimes achieved through urban plans or building programs, others in the total absence of plans) is a phenomenon that, since the 1960s, has affected (and still affects) many smaller towns in Italy. While in the cities that attract population, urban expansion led to the creation of a positive and growing rent (absolute and differential), in the centres suffering from depopulation the same type of expansion had adverse effects on the existing building stock.