Property right fragmentation and value-distribution in redeveloping China's old urban neighbourhood : an analysis of nail-houses

Abstract

Chinese urbanization is an increasing focus of attention in the worldwide. The rapid urbanization had reached 54.77%in 2014, which means that the mode of urban development in China is facing the transition from expanding the scale of urban development areas (增量擴張, zengliang kuozhang)to optimizing land uses of existing urban areas (存量優化,cunliang youhua).Redevelopment of old urban areas is a major approach to land use transfer, and urban demolition is the first stage that is central to the entire process. The increased land value created by the redevelopment should be distributed amongst the relocation groups and the municipal state according to their rights to the transferred lands. However, during the distribution process, the Nail Houses (NHs) (釘子戶,dingzihu) might occur when the amounts of the compensation cannot be accepted by the displaced households, and they have rejected to move till the last moment. The full story behind them, which includes the much value locked up under the surface of a redevelopment project, has never been told. Based on the new institutional economics perspective, through a case study of the biggest demolition project of an old urban neighbourhood (OUN) in the city of Chongqing, this research shows how the value-flows and the barriers that inhibited and shaped the NHs, which had been influenced by the property right fragmentation (PRF) that had occurred over the history of this part of the city. The specific distribution process of land incremental values (LIVs) amongst all the stakeholders were divided into three certain stages according to the social goals pursued by the local state via the land transfer. A comparative analysis is also conducted to show the impacts of different categories of PRFs on demolition efficiency and the formation of NHs, illustrating the so-called tragedy of anti-commons. The research result exhibits that in these ONUs, compared with the PRFs of physical properties, land and buildings, the PRF of the social welfare, especially for poverty alleviation, generated more effects to the nail-house formation and demolition efficiency reduction.