Examining How Mixed Land Use Affect Land Value in Hawassa City

Examining How Mixed Land Use Affect Land Value in Hawassa City

Mesay Kebede,

1Hawassa University Institute of Technology Faculty of Civil Engineering and Built Environment Department of Urban Planning and Design, Hawassa, Ethiopia

Gebrechirstos Nuriye

2Hawassa University Institute of Technology Faculty of Civil Engineering and Built Environment Department of Urban Planning and Design, Hawassa, Ethiopia

Abstract – The major theme of this study is examining how the mixed land use affects the urban land value in Hawassa City. The study conducted through interviews, survey & focus group discussion with key informants of the city like households, land brokers, experts and head office of municipalities, physical observation and documentary reviews by collecting and identifying the land market values from the recent consecutives land lease auctions of the city, land grade & land use plan of the city. As a result, according to correlation analysis and the spatial analysis of GIS, the study has found that besides the distance to the CBD, main roads and the distribution of the public facilities, mixed land-uses influence the general land value pattern which mainly contributes to the macro circumstances of the city. The mixed land use is one of the fundamental factors that drive the value of land in the city. Furthermore, the study intended to investigate the correlation between urban mixed land uses and land values using SPSS to create a predictive decision for urban spatial land valuation. The findings of the study indicate that, the spatial land use pattern of the city has significant contribution in determine land value and urban development of the city. This result can enhance future urban design regarding urban economy improvements and land costs.

Key Words: Urban Land Use, Mixed Land Use, Urban Land Value

1. BACKGROUND

   The price of land is a basic indicator of the attractiveness and the economic value of a specific site and of the amenities available at that location. These amenities include a diverse collection of attributes, quality of an urban neighborhood surrounding a given location. In urban areas, variations in the price of land reflect the location advantages of a particular site, as well as local externalities and governmental policies regulating its use. Mixed land use in urban areas are vital determinants of the form of cities, their spatial patterns of physical development and occupancy, the housing and transport costs of residents, and their economic well-being. Mixed land use can thus affect land prices directly, through the specific uses permitted, but also indirectly by creating neighborhoods and cities of a certain character (Bernard M. Nzau, 2014).

   Mixed land use is beneficial in qualitative respect through increases in land-use valuation by residents (Lagendijk, 2001). Besides standard factors like physical characteristics of a property and location, people also take into account the living environment surrounding the property (Geoghegan, 1997). These considerations show that with transactions in the housing market people actually are buying a piece of living environment in addition to the house itself (Acharya, 2001) and the more the living environment is in accordance with the desired demand the higher the associated quality of the area and the more people are willing to pay for it. So, the benefits of mixed land-use are counted via positive impacts on land prices.

   Since the land is expensive resource of the city and base for the development, so land value (land grading) determination plan of the land is one part of the development plan and core element for the valuation of the land.

   This study aims to explore the impacts of mixed land uses on urban land value in Hawassa city and this have different implications for designing and adapting the urban landscape than when people just value a heterogeneous (living) environment. Thus, an overview of residents preferences regarding different types of land-uses shall be presented first.

2. METHODS AND MATERIALS

   1. Description of the Study Area

      Hawassa is a five-decade-old emerging city that characterizes the ongoing rapid urbanization and urban growth of Ethiopian secondary cities. It is situated on the shores of Lake Hawassa within the Greater Rift Valley, 273 km south of the capital, Addis Ababa. The city lies on the geographical coordinates of 7°3'0"N, 38°28'0"E, UTM Zone: 37N, with an elevation of 1,708 meters (5,604 ft.) above sea level in the area of 50 km2 (20 sq. mile). In 2018, Hawassa had 15,720 hectares of land within its administrative boundary, while only 6,465 hectares (24.4 per cent) was demarcated within the municipal boundary and planned as urban land (Scott, Ross, & Hawkins, 2016). The rest is rural land. In 2017, Hawassa projected a total population of 457,231, with annual growth rates of 4.8 and 2.8 per cent in urban and rural areas, respectively. The citys residents are heterogeneous both in ethnic and religion (Hawassa City Administration (HCA), 2016). Hawassa is a Regio polis city as per the regional urban grade. It is thus administratively organized with three tiers of administration: city administration, eight sub-cities and 32 kebeles (HCA, 2016). The city is also serving as a growth pole for the regional economic development corridor, hosting an industrial park, established in 2016.

      Fig.1 Location Map (Source: Hawassa City Plan Preparation Office, 2020)

   2. Research Design

      Research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to research purpose as well as it can be used as conceptual structure to conduct the whole research process (Kothari, 2004). Hence, the research design of this research uses as strategy to integrate the different components of the study in a coherent and logical way so as to address the research problem effectively. In this study descriptive method is used to describe the impact of mixed land use on land value of the city. It focuses on current issues through a process of data collection, analyzing and finally describing the issue.

   3. Research Approaches

      According to (Creswell, 2003) and Kothari (2004) mixed designs is the best approach if the study requires both quantitative and qualitative designs. Accordingly, this research employed mixed approach because the nature of the study involves both a quantitative design and qualitative design. The quantitative design focuses on the analysis and measurements like rate and extent of the land value with respect to urban land composition of the city. Whereas the qualitative design helps to investigate the attitude and perception of the respondents employed through focus group discussion and interview to deal with the impact of urban mixed land use on land value.

   4. Research Strategies

      This study used dominantly field survey study research strategy because, it focuses on in-depth investigation through intensive field survey on the case which is the impact of mixed land use on land value In addition the study generally information is required from different sources and through the use of different types of data such as observations, survey, interviews and analysis of documents. Data can be qualitative, quantitative or a mix of both.

      Time dimension of the study: The study is Cross-sectional study in nature because the researcher able to detect developments or changes n the characteristics of land value patterns with time as urban land use composition changes. Land values and land use composition of 2020- 2024 data are utilized for the study. Since the study investigates spatial and temporal patterns of land value based on data available, the study is reviewing in reference period.

      1. Types and Sources of Data

         This research study depends on primary and secondary data types. Primary sources of data are key informants from municipality head officers, experts, land brokers and lease bidders. Whereas Secondary data sources are published and unpublished documents like land use map, land grade map and land transaction documents of the city are collected from Hawassa city municipal office, city administration office, and urban plan preparation office.

   5. Sample Size Determination

      Since it is difficult to undertake the study all over the population found in the city due to time and resources limitation, it is better to take representative sample by personal judgment from Municipal office and quota from each sub categories of the land grade areas of land in order to be effective and efficient in achieving the stated objectives of the research. Among different sample size determination methods, using published tables of Glenn (1992), sample sizes necessary for given combination of precision =0.5, confidence level=95% and variability (e=±5 and ±10) used in this study. For this study sample sizes 2 land brokers, 4 land lease bidders from each grade and sub grade totally 72 persons were selected from the 8 sub-cities by simple random sampling from each sub categories of land grade by quota sampling method. In order to get in depth information from the experts that are expected to have knowledge on the subject, Interviewee samples 20 from municipal and plan preparation bureau head offices and experts. Household survey questionnaire to gather opinion of 8 residents how mixed use affected the land value considering land use categories, to evaluate possible paradox for land values in pure residential areas and mixed commercial areas, and also location of land whether or not affect land values whether it is mixed or not.

      1. Sampling Techniques

         In this study both probability and non-probability sampling techniques applied. From non-probability sampling (purposive sampling and quota sampling) was used. Purposive sampling techniques is used based on the researchers specific plan in mind (Babbie,2012 p.128) so from the municipal office and experts, it is suitable to get information from selected professional and technical Municipal staffs to reach a targeted sample quickly since sampling for proportionality is not the primary concern. Quota sampling technique focus on interest of comparison between and among the strata so it was used for each 4 groups of land grades because there are no lists of population in each grades of land. From probability sampling techniques a random sampling was selected from each stratum based upon quota that each subgroup represents in population so, interviews with the land brokers, and land lease bidders from each category of the land grades carried out and also household survey questionnaire conducted.

   6. Methods of Data Analysis and Interpretation

      Based on the type of the data to be collected from different sources, the researcher analyzed using quantitative and qualitative method of data analysis. Moreover, those quantitative data were presented by charts and tables and analyzed using percentage and other statistical data analysis tools and then interpreted, while the qualitative data analyzed and interpreted in descriptive text and report form.

      In addition to this some useful type of computer programs like SPSS and GIS software was used to analyze and present the data.

3. RESULTS AND DISCUSSIONS

   Many factors contribute in determination of the value of land. These include quality of location, land use type, topography, access to basic social services and infrastructures, environmental features such as absence of bad smells, noise, etc. The regulation that governs land management and administration such as the type and amount of taxation, zoning, and building laws, planning and restrictions are also key determinant of land value. The social factors include population growth or decline, changes in family sizes, typical ages, and attitudes toward law and order, prestige and education levels. The economic forces include value and income levels, growth and new construction, vacancy and availability of land. So, one of the key determinants of urban land value is land use type whether it is mixed use or not.

   Mixing land uses has become one of the key planning principles of the Smart Growth movement and other land use planning strategies by using practice of combining different types of land use, such as residential, commercial, and industrial, in close proximity to each other in compatible manner. This approach has several potential impacts on land values by increasing land values through diverse range of activities and services that can be supported by the area. The presence of different land uses can attract a

   wider range of people, including businesses, residents, and tourists, which can drive up demand for land and, consequently, land values. This article analyzes the impact on the prices of urban land when mixed land uses are included in neighborhoods. First, I have developed qualitative description of mixed land uses and then quantitative data through the use of secondary data and then computed these measures for various neighborhoods and incorporate those measures in correlation analysis.

   According to the survey, the land use mix can significantly influence its value. The distance of the land from the commercial activities is the primary factor determining its price. For instance, a large plot of land will likely have limited value and low prices due to its distance from business centers and lack of access to facilities. On the other hand, the weight and price of the property can increase if it is close to popular destinations in cities offering essential services at nearby residential quarters. Pure residential land uses are located in the background of the main accessible streets, which makes them less integrated with the main services. As a result, the residential area has lower land prices than the commercial space with mixed land use.

   Following the Proclamation 721/2011 criteria for defining the land lease benchmark in Hawassa currently, the reference price defined by the City Administration is from 200 to 300 ETB per m², depending on the location. These values are applicable for transfer from old possessions to lease systems. The amount must be paid in a 15 years period of time. The annual payment will be readjusted applying the interest rate established by the National Bank, and the annual official inflation rate. These values are also used for the new land to be leased.

   Since 2000, the City Administration has implemented land lease particularly for cooperatives. The City Administration has auctioned land for lease five times since 2012. The last auction took place in 2016 for parcels of land for residential and mixed/commercial functions, with an average maximum price of 26,001 Birr/m2 for residential, and 26,210 Birr/m2 for mixed uses. The table below presents the evolution of the land prices for residence and commerce/mixed use in Hawassa, from 2012 to 2016 E.C.

   Table 1: Average Auction Prices in Hawassa per round and per category 15th 19th round

   No.	Auctions round	Average Maximum price per m2		Average Minimum price per m2
   		Residence	Mixed use	Residence	Mixed use
   1	15th	27,055.00	36,100.00	4,100.00	13,750.00
   2	16th	35,500.00	51,600.00	10,001.00	11,100.00
   3	17th	79,214.00	201,000.00	25,200.00	23,500.00
   4	18th	99,000.00	102,000.00	31,250.00	35,000.00
   5	19th	26,001.00	26,210.00	5,389.15	12,100.00

   The table-1 shows the amount of the land leased that the prices increasing significantly. This is even more expressive considering the reference prices defined by the City Administration, which has been applied for the transfer from the old possession to the land lease system.

   Auction price per round and per category

   250,000.00

   200,000.00

   150,000.00

   100,000.00

   50,000.00

   0.00

   15th

   16th

   17th

   18th

   19th

   1

   2

   3

   4

   5

   Average Maximum price per m2 Residence Average Maximum price per m2 Mixed use

   Average Minimum price per m2 Residence Average Minimum price per m2 Mixed use

   Fig.2: Auction price per rounds per land use category (Source: HCA, 2016 E.C)

   The figure-2 also shows the maximum prices more than doubling for residential purposes, and tripling for non-residential/mixed use. The increase is even more expressive considering the average prices, which tends to be the case of land leased for individuals and small cooperatives, in the case of residences, and the small and medium commercial enterprises for mixed use.

   According to the interview and FGD held with the key informants (the brokers, land transaction and lease auction experts; the expensiveness of a plot of land is because of the location of a business area in the urban center has profound impact on the valuation system. The factors are commonly related to the functional attributes of the commercial center (main center, sub center) and commercial corridors in the given neighborhood. Hence the influence of the mixed land use takes the highest share in urban land value. Generally, in Hawassa context, the values and the lease price of those sites in the central business district (CBD), namely sites along major highways that are well provisioned in terms of basic infrastructure and utility. Services were set on the higher side compared to those with peripheral locations that lie along less important roads and in areas deficient in basic infrastructure.

   Perhaps, locations for new settlement areas and relatively less developed and less infrastructure compared to other places. The lowest price observed in Tula sub city where the least price of land (average minimum price for a plot of land is 5,389.15 birr). One of the main reasons for low price is the perception that it is located far away from the center of the city relative to the other sub cities and it is mainly used for residential purpose.

   The above description suggests that the auction land markup price offered by bidders varies across the different characteristics of the auction land. In particular, it varies across the types of use of the plot, and plot location. The description also suggests that there is a marked difference between the minimum and maximum markup price that bidders are offering for a plot. Empirical result revealed that, land use type and location have significant effect on determining land value in the city. Plots located in southern part of the city (Tabor and Menaharya sub cities) compared to northern and other part of the city and land use type, (commercial and mixed land use compositions) compared to residential types of land use compositions have higher land value.

   This reduction of land lease auctions and land offer, together with the non-implementation of the instruments to enforce the development of the land leased, should be a motivation for the land price increase. As result of that, due to the high cost of the land, the housing production becomes less feasible for individuals and cooperatives, and less attractive for real estate investors.

   1. Correlation of Plot Land Use Type with Land Value

      To identify the inter relation between the variables of plot land use type with its land value; correlation analysis is done by taking a sample of bid round 18 & 19 from different location of the city (from the 8 sub cities of the city) and from different plot use type (mixed use & residential) with having P value for 1meter square of the plot.

      Table 3: Plot land use types with its land value: (Dependent variable: plot Mark-up price/meter square. Source (Hawassa land administration and management lease auction 2024 annual report).

      No.	Land uses	Auction no.18			Auction no.19
      		Max	Min	Mean	Max	Min	Mean
      1	Mixed	94,541.00	61,340.00	77,940.50	15,248.50	8,631.00	11,939.75
      2	Residential	34,333.00	31,250.00	32,791.50	6,450.00	5,389.15	5,919.57
      3	Residential	42,590.00	38,780.00	40,685.00	8,137.00	7,160.00	7,648.50
      4	Mixed	102,000.00	69,000.00	85,500.00	26,210.00	12,987.00	19,598.50
      5	Mixed	67,570.00	58,178.00	62,874.00	20,000.00	17,000.00	18,500.00
      6	Mixed	64,105.00	45,720.00	54,912.50	18,211.00	16,312.00	17,261.50
      7	Mixed	98,219.15	68,321.00	83,270.07	26,110.00	24,210.00	25,160.00
      8	Residential	62,500.50	49,000.00	55,750.25	25,243.00	19,321.00	22,282.00

      Regression analysis carried out by cross tabulating land use category and land prices by using mean prices of maximum and minimum winning prices of auction 18 and 19 from different location of the city.

      Model Summary

      Model	R	R Squared	Adjusted R Square
      1	0.795	0.632	0.486

      According to the above regression analysis model, it looks that Plot land use type has significant effect with 79.5% of correlation coefficient. There is a positive correlation between the land use type and land value, and this has proven effectively linking economic and spatial variables. The existence of mixed land uses in cities influences development of part of the city where access to basic social services and infrastructure are well developed. The other locations such as Tula and Addis ketema sub cities have not significant effect on the markup price of plot of land. Most of the expansion areas of the city physical area are made in these sub cities, and, thu, plots of land are made available from these expansion parts of the sub cities.

4. Conclusions and Recommendations

In the case of land value of the Hawassa city, the empirical study identifies that most factors that are incorporated in designing urban land value (grading) have their roots in the family of land use types. Moreover, Land valuation is originated from the need for a comprehensive assessment of land performance when used for different specified purpose. According to the study mixed land use value is greater than residential land value. This indicates that compared with residential land use types, the mixed land use values are the most centralized with higher values in the area and decreasing with residential use. Hence, it can be concluded that mixed type of urban land use category has its own impact on land value of the city.

According to the study, factor like land use types are the main indicators for land value and price estimations; there is a positive correlation between mixed land use and land values in the city. Generally, land values are higher in mixed land use due to accessibility to basic activities and services at nearby. Therefore, improved integration and accessibility with basic services in H a w a s s a City can lead to higher land values and increased business activity. Consequently, the s t u d y is crucial in optimizing the use of u r b a n land value. Therefore, urban planning, development, and design require a systematic ap p r o ach to determine the lands value for future improvements. On the other side, urban planners and designers should consider mixed land use for urban future economic enhancements in terms of land value.

According to the analysis of the mixed land use and land value of the city, I recommend that:

The city administration, Plan Preparation & Implementation Office, should adopt compact city development and allow to develop on this line until the center of the city is fully developed and properly utilized.

The priorities of municipal authorities should be geared to facilitate the expansion areas, so that these areas function properly and contribute to the economy of the city by mixed land use.

City Plan Preparation & Implementation Office should have an optimal arrangement of land uses, such as residential, service centers, commercial and others which functionally mixed, in order to simplify the mobility, minimize the trip length and transportation cost.

The City Land Lease auction office and the Plan Preparation & Implementation Office should re-examine and prepare new land lease bench mark price and land grade for the city based on the pattern of current land use. This is because the city is experiencing one of the fastest urbanization rates during the last decade. In this regard, appropriate institutional mechanisms to provide appropriate incentive for domestic investment, governance system for accountability not only, in the determination of land use type and in land sales but also revenue utilization need to be in place through adopting compact city development model by land use mix.

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3. HCA, H. C. (2016). Socio-economic profile of Hawassa. Zak Print.

4. HCPPO. (2017). Report on spatial development framework, Hawassa. Hawassa City Plan Preparation Office.

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