Real Estate and Urban Development Policy


KANEMOTO, Yoshitsugu

Credit / Semester / Schedule / Language

2 Credits / Winter / Thursday Period: 6 / English

Papers in AY2011


The course introduces to prospective policy professionals some of the important aspects of urban development and real estate development. Topics covered are (1) urban transportation and land use development, (2) real estate development and finance, (3) public-private relationship in urban development. These topics are combined with discussions of real-world cases from Japanese urban development.


Urban development, Real estate, Infrastructure, Finance, Public policy,


Tentative, Subject to change

10/06: Introduction

10/13: Real Estate Development and Finance I: Residential Development Project Cases (A exercise on a simple residential development case)

10/20: Real Estate Development and Finance II: Commercial Development Project Cases (A case exercise on a composite project)

10/27: Real Estate Development and Finance III: Financial Analysis and Project Evaluation

11/10: Real Estate Development and Finance IV: Case Exercise Presentation with a Memo

11/17: Transportation Investment and Land Development I: Urban Development by Private Railway Companies in Japan, Discussions on team projects

11/24: Transportation Investment and Land Development II: Tsukuba Express

12/01: Transportation Investment and Land Development III: Kashiwanoha and other Mitsui projects

12/08: Transportation Investment and Land Development IV: Economic theory backgrounds

12/15: Transportation Investment and Land Development V: PPP and Private Financing

12/22: Transportation Investment and Land Development VI: Team Project Discussion

01/12: Sustainable City Development I: Cases

01/19: Sustainable City Development I: Discussion with a Short Memo

01/26: Team Project Presentation (Final team report due February 10th)

Teaching Methods

Lectures, class discussions, case study reports and presentations


Based on: Exercises, Case study reports and presentation, Class participation

Reference Books

1. Real Estate Development and Finance

This part introduces the financial analysis of real property investments carried out in the real world and explores its applications.


William J. Poorvu, The Real Estate Challenge: Capitalizing on Change, South-Western Pub, (1995), Section V Technical Notes.

1.1. Retail and residential developments

(1) Small scale commercial development (shopping centers or supermarkets)

(2) Residential development

1.2. Financial analysis of real property investments

2. Transportation investment and land use development

This part introduces the students to four basic elements of transportation and urban land use developments.

1. Historical and international perspectives on the relationship between transportation and land use

2. Japanese cases of private provision of urban transportation

3. Theoretical foundation of private provision of urban infrastructure

4. The relationship between the financial analysis and the cost-benefit analysis

2.1. Urban development by private railway companies: Japanese cases


T. Saito, Private Railway Industry, Koyo Shobo, 1993, (in Japanese).

2.2. The relationship between transportation and land use


Gregory K. Ingram, “Patterns of Metropolitan Development: What Have We Learned?” Urban Studies, vol. 35, no. 7, pp. 1019-1035, )1998).

Supplementary readings:

Glaeser, E. L. and M. E. Kahn, “Sprawl and Urban Growth, ” Handbook of Urban and Regional Economics III, (2004). Sections 2, 3, 4.

Essays in Transportation, (1999), Ch. 12 (Transportation and Land Use)

Paul Krugman, “Space: The Final Frontier”, Journal of Economic Perspectives, vol. 12, no. 2 (Spring 1998), pp. 161-174.

2.3. Capitalization hypothesis and the land developer theorem: Theoretical foundation of privatization in urban development

Supplementary readings:

Kanemoto, Y., "Pricing and Investment Policies in the System of Competitive Commuter Railways, " Review of Economic Studies 51, 665-681, (1984).

Kanemoto, Y., Theories of Urban Externalities, North-Holland, (1980). Chapter 2 on City Formation and City Sizes, Chapter 3 on Local Public Goods.

Henderson, V., Economic Theory and the Cities, Second Edition, Academic Press, (1985). Chapter 10 on Local Public Services, Chapter 11 on The System of Cities.

2.4. Cost-Benefit Analysis and Financial Analysis


World Bank, (2005) "A Framework for the Economic Evaluation of Transport Projects, ” Transport Note No. TRN-5.

World Bank, (2005) " Relationship between Financial and Economic Evaluations for Different Types of Project, ” Transport Note No. TRN-10.

Kanemoto, Y., (2006), “Urban Transport Economic Theory, ” A Companion to Urban Economics, Edited by Richard J. Arnott and Daniel P. McMillen, Blackwell Publishing, Oxford, UK, 245-260.

Supplementary readings:

Kanemoto, Y., (2010), “Surplus Theory, ” Handbook in Transport Economics.

2.5. Spatial monopoly and regulation


Need a reading on elementary reviews of (1) monopoly power, (2) regulation (ROR and price cap), (3) regulation of monopoly with side businesses.

Supplementary readings:

Kanemoto, Y. and K. Kiyono, "Investment, Pricing, and Regulation in Urban Transportation and Spatial Development, " in H. Kohno and P. Nijkamp (eds.) Potentials and Bottlenecks of Spatial Economics Development, 30-44, Springer-Verlag, (1993).

Kanemoto, Y. and K. Kiyono, "Regulation of Commuter Railways and Spatial Development, " Regional Science and Urban Economics 25, 377-394, (1995).

Microeconomics textbook on monopoly (e.g. Mankiw, Microeconomics, ch. 15)

Jose A. Gomez-Ibanez, Regulating Private Infrastructure: Monopoly, Contracts, and Discretion (Harvard University Press, 2003), chapters 1-3.

2.6. Private Public Partnership in urban development and infrastructure provision


Sammis B. White, Richard D. Bingham, Edward W. Hill (Eds), Financing Economic Development in the 21st Century, M E Sharpe Inc; New edition, (2003).

2.7. Private financing of infrastructure

3. Sustainable city development

This part will look at practical challenges and implementation plans of sustainable city deveopment.

Notes on Taking the Course

This course requires good understanding of basic economics and statistics but does not pursue sophisticated economic analysis. Prerequisites are

(1) Microeconomics for public policy

(2) Statistical Method

or their equivalents.

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