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Tuesday 12 November 2019
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Commentary

Town and Country and housing prices

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Consider two listings for land in areas assumed to be zoned primarily or exclusively for residential use by the Town and Country Planning Division (T&CPD): lot one, roughly 7,165 square feet in area, is just off the Eastern Main Road in Sangre Chiquito and listed for $340,000; and lot two, roughly 5,000 square feet, is on Gallus Street in Woodbrook and listed for $3,400,000.

The selling price of land per square foot in these two locations is roughly $47 and $680 respectively. A professional assessment of the lots may produce lower or higher values, but given the two locations, the huge observed differences are not unrealistic.

In his book Order Without Design, urban planner Alain Bertaud says, “The spatial expansion of cities requires land, but the final product of urbanization is floor space, not land. Because land is an indispensable input for the building of floor space, a high demand for floor space in a specific location increases the price of land at this location.”

However, when land costs increase, the housing market –in the absence of restrictive land use regulatory distortions – will respond by developers using land more efficiently. This first involves buildings having a larger footprint – and covering a larger percentage of the lot (building coverage) – and being built closer to, or at, the lot boundary lines (setbacks), and eventually being built taller.

Unfortunately, local land use regulations do not adequately consider the difference in land values.

Let us look at the extreme example in this case, lot three. It is in a neighbourhood that is within walking distance of the central business district of the capital city, employment and numerous amenities, and has well-developed infrastructure by national standards. In an urban planning sense, it is a no-brainer that we should be encouraging more people to live in places like this, and use the existing infrastructure – the roads, sidewalks, WASA pipes, TTEC lines – more efficiently.

The regulations at the T&CPD, based largely on a plan from 1987, dictate that one can build three, maybe four residential units on that lot of land.

If four units are built, the land alone would add a cost of $850,000 to each unit. Assuming a modest construction price of $600 per square foot, and a profit of 25 per cent for the developer – reasonable assumptions for no-frills construction, according to local quantity surveyor, Omar Thomas of OTA Consulting – a 1,000-square-foot apartment on this lot could be sold for $1,800,000. Of course, this is a simplification that doesn’t take into account financing and other costs to the developer.

Reformed land use regulations that considered the value of land, the cost of car ownership and long commutes, the relatively low average household income in this country, and the high upfront cost – and long-term maintenance liabilities – of extending infrastructure to undeveloped peripheral land, could drastically increase the supply, and reduce the cost, and therefore price of housing in desirable urban areas.

If ten units were built on that lot of land – assuming the same construction costs and profit – the developer could now sell a 1,000-square-foot unit for $1,175,000.

Shrinking the size of the unit to roughly 800 square feet, and building 20 units could drop that sale price to $812,500.

There is currently a local private-sector developer selling similar-sized units, using a multi-storey building model that is now being repeated all over the country due to its success.

Twenty apartment units on a 5,000-square-foot lot can be accomplished with a building footprint that takes up roughly 70-75 per cent of the lot, smaller or zero lot setbacks, and a height of a mere five storeys. The neighbourhood of Little Havana in Miami, a low- to mid-rise district adjacent to the high-rise downtown, allows for 200 dwelling units per acre, or roughly 23 units on a 5,000-square-foot lot.

Of course, with so many apartments on one lot of land, one must wonder where the cars will fit. They certainly cannot be accommodated onsite. In this instance, inter-agency collaboration could play a key role.

Coincidentally, Udecott is currently planning a series of projects meant to catalyse development activity in Port of Spain. It is being overseen by the Ministry of Planning and Development, under which the T&CPD falls.

Here’s a bit of free advice: advise Udecott to build multi-storey parking structures – possibly through PPP arrangements – in strategic locations around the city.

If one were to be built in Woodbrook for instance, T&CPD could plan, in tandem with Udecott, to have all of the lots within a given walking distance of the parking structure rezoned to allow for a higher intensity of residential units per lot, and a removal of all onsite parking requirements. It's a strategy that has proven to be a winner in many jurisdictions.

Ryan Darmanie is a professional urban planning and design consultant, and an avid observer of people, their habitat, and the resulting socio-economic and political dynamics. You can connect with him at darmanieplanningdesign.com or e-mail him at ryan@darmanieplanningdesign.com

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