Munich Personal RePEc Archive

Land Price Fluctuations, Commercial-Residential Segregation, and Gentrification

Xu, Hangtian (2020): Land Price Fluctuations, Commercial-Residential Segregation, and Gentrification.


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By examining the impact of a real estate bubble on residential distribution in Tokyo and Osaka, we show that land price fluctuations influence the residential location choice within a metropolitan area. During a period of rising land prices, land developers favor commercial development over residential use in the central city, thereby increasing the daytime population while decreasing the residential population there. Thus, commercial-residential segregation is intensified. In a downturn period, however, with the shrinking demand for commercial space, homes are favored by land developers. Hence, gentrification occurs as an unintended consequence of this endogenous conversion of the land-use pattern.

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