Developer obligations and negotiation-based benefit distribution in urban redevelopment: Evidence from Shenzhen, China

The distribution of potential benefits between local governments and developers in urban redevelopment shows a global popularity of negotiating developer obligations for more value capture in exchange for the adjustments to land-use regulations. Existing literature has focused on the institutional factors at national or city level that determine the effectiveness of developer obligations for public value capturing, neglecting the potential gains obtained by developers and overlooking the influencing factors at project level. This study examines the impact of project-based factors on distributional outcomes by applying a quantitative analysis of citywide urban renewal projects in Shenzhen, China. In the Chinese context, benefit distribution is affected by the involvement of stateowned enterprise (SOE) developers, which have established special relationships with local governments and such relationships vary between local and central SOEs. The results indicate that compared with non-SOEs, local SOEs contribute more negotiable developer obligations, while central SOEs are more likely to receive administrative support for project promotion. Though, neither of them is granted extra development density compared with non-SOEs. This study sheds light on the strategies adopted by Chinese local governments to achieve comprehensive objectives via differentiated treatment to SOEs and non-SOEs in the negotiation-based benefit distribution of marketized urban redevelopment.

Automated summary

The distribution of potential benefits between local governments and developers in urban redevelopment is a global trend. Negotiating developer obligations for more value capture has been popular, but the literature has mainly focused on institutional factors and overlooked project-based factors. This study examines the impact of project-based factors on benefit distribution in urban renewal projects in Shenzhen, China. The involvement of state-owned enterprise (SOE) developers and their relationships with local governments play a significant role in benefit distribution. The study reveals the strategies adopted by Chinese local governments to achieve comprehensive objectives through differentiated treatment of SOEs and non-SOEs.