THE CO-EVOLUTION OF GATED COMMUNITIES AND PUBLIC GOODS IN CHINA

Jingjing Ruan

Iowa State University

April. 20, 2015

1. The era of deregulation In may 2014, the Chinese government started institutional reform and decided to cancel

133 approval authority of the central government and other ministries.

2. Gated communities are already very common in China About all new housing built in China over the last 10 years is gated.

Approaching 100% of houses built in China’s sprawling new metropolises are governed by local Neighborhood organizations

3. The big issue is how government can better manage them or provide better service for them.

How to balance the private government with the municipal government, Private seems to reduce the public realm, but it secures more efficient collective realms

Why is this topic?

Definition of key words There are two kinds of communities in China, one is residential & commercial building (RC)，the other is residential apartment (R), most of residential apartments are gated communities. Gated community: with neighborhood walls, guards, owner-governance structures, fees and neighborhood management.

RC R

Definition of key words Their differences between R and RC are shown below.

Brief description Residential apartment

Regulated by the Standards for Residential District Planning, has the required public goods in the community

Right of use lasts 70 years Attract all citizens

Residential & commercial building

Not regulated by the Standards for Residential District Planning Right of use lasts 40 years Mixed use, usually located in commercial or quasi-residential zoning areas,

typically no precincts Utility fee is much higher than that of R Attract single person, mostly used for investment or for renting

Definition of key words

Local public goods are public goods that are provided by local government and can be enjoyed only by residents in the local community: for example, local public school, public transport stations, beaches, parks, etc. are typical examples of public goods. Club goods are privately provided public goods. They are usually provided by developers, and managed by private management companies or home-owner associations in China . These goods include convenience shops, connecting roads within the precinct, landscaped open space, small-scale sports facilities, kindergartens, primary and secondary schools, senior residents’ community centers, clinics, welfare services, playgrounds, swimming pools, parking and so on.

Local public goods

Club goods

State public goods and national public goods

Public Goods

Research Question Will the housing price of gated community be more sensitive to club

goods or local public goods?

What is suggestion for the city governors? As club goods and local public goods are in an urban ecosystem (Woo and Webster, 2014),

we can use the biological concept to describe their relationship.

Biological concept: Mutualism (+ +), benefits both species

Antagonistic interactions (+ -), one species benefits and the other is harmed

Competition (- -; + +), using the same resource

Commensalism (+ 0) , one benefits but the other is unaffected

Amensalism (- 0), one is unaffected while the other is harmed

Research Question The hypotheses can be addressed as below.

Public goods Definition Hypotheses Suggestion for management The relationship

between club goods and local public goods

Which is CCs more sensitive to？

Transportation aspect

Metro station, bus station, Residential street, parking space

mutualism (++) Local public goods

Mainly supplied by Government, working with developers

environmental aspect

Park, river, swimming pool, playground, mountain, square

Commensalism(+0) Club goods Mainly supplied by developers

cultural and healthy aspect

Education, library, hospital, gym, community center

Competition(- - ;+ +) Local public goods

Mainly supplied by Government, working with developers

commercial aspect

Department stores, super stores, center CBD

Competition(- - ;+ +) Club goods Mainly supplied by developers

social aspect Police station, rescue station, urban village association

amensalism (- 0) Club goods Mainly supplied by developers

negative aspect

Garbage station, toilet, sewage treatment facilities, distribution substation, freight road, high tension corridor, and other dusty, noisy functions

amensalism (- 0) Local public goods

Mainly supplied by Government,

Haizhu District in Guangzhou Number of gated communities: 800-1000

Population of Haizhu District in Guangzhou: 840 thousand

Area: 102 km²

Research Design

Data Select all the residential & commercial building (RC) in Haizhu district of Guangzhou, the number is 83. Then choose one

nearest residential apartment (R) with every RC. The total RCs and Rs are 166.

Digitize the all communities, collect the average house price of every community from Soufang website.

Geoda Relationship to space, to visually display public goods and club communities in space.

Depend variable Average housing price of communities.

Independent variables Number of shops , hospitals, banks, subway stations, bus lines in 800 meters;

Shortest distance to the nearest school;

Shortest distance to the nearest park.

Dummy Variables Building age, plot ratio, Brand of builder, Housing management fee

Research Design

Research Design Categories Variables Definition Related to the research Policy Housing policy

housing and land tax; Limited purchasing right for R,

ownership 40y/70y, utility fee

Housing Planning Double-limited housing in R, limited area and limited

price. Affordable housing, Public rental housing

Excluding affordable housing, when calculating the average price of R

Standards for Residential District Planning（GB50180—93） (2002）

Require basic public goods for R; No requirement for RC

Rs have all required club goods.

Structural

Area Standards for Residential District Planning defines housing regulations based on number of units.

A surrogate for quantity and range of privately provided public goods

Sales Price tends to include investment-demand as well as use-demand,

Building age A surrogate for quality dummy variable for less than 10 years

plot ratio A surrogate for quality dummy variable for less than 3

Brand of builder A surrogate for quality and homogeneity dummy variables for 20 biggest builders

Housing management fee Be managed by qualified housing managers and to accumulate funds for long-term maintenance.

dummy variable for more than 2 ￥

Research Design

Categories Variables Definition Related to the research

locational Public goods in transportation aspect Number of subway stations and bus lines in 800 meters

Public goods in environmental aspect

Shortest distance to the nearest park, river, swimming pool, playground, mountain, square

Public goods in healthy aspect Number of hospitals in 800 meters

Public goods in commercial aspect Number of shops and banks in 800 meters

Public goods in educational aspect Distance to the nearest school

Methodology 1. 1. Collect data 2. Collect all the data for these residential & commercial buildings and residential apartments, which includes

sales price, building age, plot ratio, brand of builder, housing management fee, public goods, club goods.

Methodology 1. 2. Digitize and join table 2. Digitize the area of all the residential communities. Then join attributions from the previous table,

such as plot ratio, green ratio, building structure and the bland of the housing estate.

Distribution of communities (include residential & commercial buildings and residential apartments)

Methodology 1. 3. Create Buffer 2. Create 800 meters buffer for each communities. Select all the public goods in the buffers, and

calculate the number of hospitals, banks and so on for each buffer.

800 meters buffer for each communities

Methodology

1. 4. Classification

2. Digitize all the schools in

Haizhu district, and

classify them into club

goods and local public

goods.

Distribution of local schools

Distribution of schools in gated communities

Methodology

1. 4. Classification

2. Digitize all the parks in

Haizhu district, and

classify them into club

goods and local public

goods.

Distribution of local parks

Distribution of parks in gated communities

Methodology 1. 5. Edit attribute table and export data 2. According to the research design, import the number of public facilities calculated in the buffer to

the attribute table. Then export the layer and all the data into a shape file.

1. 6. Use Geoda to do spatial regression

GeoDa consists of an interactive environment that combines maps with

statistical graphics, considering spatial data in the regression. It is widely used

in economic analysis.

First of all, create new project from the shape file which contains the spatial

information, and then add an attribute table in a .dbf format which contains the

statistical information. The attribute table can be edited inside GeoDa. At last,

create distance-based spatial weight to do spatial regression. GeoDa can

produce histograms, box plots, and scatterplots to conduct simple exploratory

analyses of the data.

Methodology

Methodology 1. 7. Use the regression method to analyze the coefficients 2. The empirical Model is:

3. ln(P) = α0 + α1ln(N_SHOP) + α2ln(N_BANK) + α3ln(N_HOSPITAL) + α4ln(N_STATION) + β1T +

β2T*DIST_SCHOOL+ β3T*DIST_PARK + λk + ε

4. Where: 1. P = real property price in RMB (obtained by deflating nominal transaction prices);

2. N_SHOP = the number of shops in 800 meters;

3. N_BANK = the number of banks in 800 meters;

4. N_HOSPITAL = the number of hospitals in 800 meters;

5. N_STATION = the number of bus stations and subway stations in 800 meters;

6. T = an event dummy variable that equals 1 if the public goods are club goods and 0 otherwise;

7. N_SCHOOL = the number of schools in 800 meters;

8. N_PARK = the number of parks in 800 meters;

9. DIST = distance from the community in meter;

10. λk = a set of structure dummies indicating the characteristics of the community;

11. αi and βj = coefficients to be estimated; and

12. ε = error term

Results 1. Coefficients for sales price

1. Note: The dependent variable is sales price; Coefficients of the structure dummies are not shown here; The coefficients represent the mean

change in the response variable for one unit of change in the predictor variable while holding other predictors in the model constant; and

the t‐statistic is the estimated coefficient divided by its own standard error, it means the significant level of the variable.

Discussion Based on the data and analysis above, the housing price will be higher if the

distance to schools is less. Moreover, if the distance to parks is less, the housing price will be higher too.

Most of the club goods are consisted with private schools and parks. Club goods are located within the gated communities. Therefore, the club goods provided by the developer can better server the residents.

But the price of housing in good education district are also very high, which may due to the price of the education service supplied by government is lower than that supplied by private companies. So this kind of public goods is better to take charge by local government, and work with private companies.

The limitation of this research is lack of the time series analysis. Housing price is affected by many factors, such as the distance from employ center, the distance from downtown. I will include these factors in the further.

1. 1. Will the housing price of gated community be more sensitive to club goods or local public goods?

It depends on which categories of public goods.

By comparing the coefficient of housing price with different public goods, the result will show that

the housing market of gated communities are more sensitive to certain categories of club goods

than local public goods, and the club goods can be a substitute for centrality in certain aspects.

Answers for the research questions

1. 2. What is suggestion for the city governors?

All communities are tend to locate near to public goods if they are regulated less. But gated

communities in China are required to provide club goods. Will this requirement lead to an efficient use

of resources? I doubt it.

The suggestions for the city governors are: the guidance for public good management should be set

up based on identifying the best manager for each category of public goods, such as private company

or local government.

Answers for the research questions

Yoonseuk Woo and Chris Webster (2014) Co-evolution of gated communities and local public goods. Urban Stud 2014 51: 2539

Chris Webster (2011) Briefing: Cities of clubs. Urban Design and Planning Volume 165 Issue DP1

Fulong Wu (2009) Gated and packaged suburbia: Packaging and branding Chinese suburban residential development. Cities 27 (2010) 385–396

Fulong Wu, Klaire Webber (2004) The rise of ‘‘foreign gated communities’’ in Beijing: between economic globalization and local institutions. Cities, Vol. 21, No. 3, p. 203–213, 2004

Luigi Tomba (2005). Residential Space and Collective Interest Formation in Beijing's Housing

Disputes. The China Quarterly, 184, pp 934-951 doi:10.1017/S0305741005000573

Werner Breitung (2012) Enclave Urbanism in China: Attitudes Towards Gated Communities in Guangzhou. Urban Geography, 33:2, 278-294, DOI: 10.2747/0272-3638.33.2.278

Chun Zhang, Yanwei Chai (2014) Un-gated and integrated Work Unit communities in post-socialist urban China: A case study from Beijing. Habitat International 43 (2014) 79e89

Basak Tanulku (2010) Gated communities: From ‘‘Self-Sufficient Towns’’ to ‘‘Active Urban Agents”. Geoforum 43 (2012) 518–528

Marie Sander (2013) Shanghai Suburbia: Expatriate teenagers’ age-specific experiences of gated community living. City, Culture and Society xxx (2014) xxx–xxx

Choon-Piew Pow (2009) Gated Communities in China: Class, Privilege and the Moral Politics of the Good Life. London : Routledge

Kevin Lo, Mark Wang (2011) The development and localisation of a foreign gated community in Beijing. Cities 30 (2013) 186–192

Seong-Hoon Cho, Neelam C. Poudyal, Roland K. Roberts (2008) Spatial analysis of the amenity value of green open space. Ecological economics 6 6 (2 0 0 8) 4 0 3 – 4 1 6

References

Thank you!