16.9.2001
Tenkanen,
Abstract
This
study deals with the valuation of emerged land, i.e. land accretions resulting
mainly from a reduction in the level of a body of water or from land uplift,
which is still in progress along the western coast of
The
airn of the study was to answer the following
questions:
- What are the determinants of the value and price for waterside areas
consisting of emerged land, with special relevance to land accretions to
holiday-home plots?
- What hypotheses or principles have been used, or can be used, in the
valuation of emerged land in cases of expropriation under the Land Division Act
or the Waters Reallotment Act?
- What need exists for the improvement of appraisal procedures used in the
expropriation of emerged land?
The
empirical part of the study was mainly based on data from the documents of
compulsory purchases or from other public sources. The data were complemented
by a questionnaire sent to plot owners who had already used their right to redeern land accretions between the new shore line and
their own land parcels. The data, which covered about 170 individual land
accretions in various parts of the country, were subjected to statistical
analysis, including the use of non-parametric tests.
In the case of compulsory purchase of land accretions to holiday-home plots, particular
emphasis was placed on the unit price ratio computed as the quotient of the
unit price for the land accretion and the current unit price for a hypothetical
waterside plot including that same land strip. The unit price ratio varied
greatly both in voluntary price agreements and in the appraisals by the
surveyors performing compulsory purchases. The median unit price ratio obtained
from classified data on mineral land accretions was about 0.4. Very poor
quality land was found to correspond to lower unit price ratios.
The price formation of land accretions to holiday-home plots was found to
resemble the price formation process described by the theory of isolated
exchange or bilateral monopoly. lf there is no
established convention governing local price agreements, the current market
price of accretion strips cannot be precisely determined merely on the basis of
known waterside plot prices, equity has also to be taken into consideration.
Several other hypotheses were also examined in order to explain the actual
pricing of land accretions to be joined to the adjacent holiday-home plot or
part of it. With a view to potential standardisation of the present appraisal
practice in situations where the current market price of land accretions is
indefinite, one hypothesis was found to roughly match the valuation practice in
certain key instances. According to this hypothesis, the value of a land
accretion to be redeemed can be ascertained in the following manner:
The economic value corresponding to the conveyor´s
potential for exploiting the land accretion in his own
possession is first ascertained. Then an equitable proportion of the total
profit accruing from the conveyance of that land accretion is added to the
value thus obtained. The said proportion should depend on the size and, in
particular cases, also on the quality of the land accretion. lf
an accretion is of sufficient quality and size, it may have an efficient use in
and of itself, even without additional land; its economic value then tends to
equal the current market price of ordinary waterside land.
On
the basis of the results, some proposals for the amendment of current
regulations on emerged land were suggested.