Monitoring Urban Land and Building Markets

Pablo Trivelli, September 1, 1997

A group of Latin American scholars, practitioners and government officials who monitor urban market information systems and publish statistical reports on market behavior met in Chile in April to share their experiences and explore plans for future cooperation. Representatives came from Mexico City; San Salvador, El Salvador; Sao Paulo and Porto Alegre, Brazil; Montevideo, Uruguay; Santiago, Chile; Quito, Ecuador; and Bogota, Colombia. Specialists from the World Bank, the Inter-American Development Bank and the United Nations Development Program (UNDP) also participated.

Most of the cities’ initiatives originated from small ventures to obtain information for project evaluation, research requirements or market analysis, and later expanded into larger-scale systems to monitor different types of markets and broader geographic regions.

Newly constructed housing and office and commercial buildings are the most frequently studied markets; price, location and product type are the basic variables being computed. Other variables are used in specific cases to obtain more precise information about each product being supplied to the market or each transaction. In all cases, statistics are gathered from the formal market, even though an estimate from Bogota indicates that this market represents only about one third of all transactions.

Newspapers, magazines or specialized publications are the major sources of market data, but building permits or visits to construction sites also provide useful information. In San Salvador, the main source is data from the banking system on credit loans for the acquisition of real estate property.

The geographical area and the time period for which statistics are computed vary from case to case. Yet, all systems face the same dilemma of losing statistical validity when reducing the size of the unit of analysis or shortening the time period. On the other hand, broadening the geographic area means a loss of homogeneity of well-defined neighborhoods, and broadening the time frame limits fine tuning of the phenomena.

General statistics and market trends are disseminated through newspapers and specialized publications, while more detailed statistics are sold through periodical bulletins and reports. Published listings of new construction provide an open and useful mechanism for correcting information, because when a case is not listed the supplier is the first one to make it known.

At present, only Brazil and Mexico are operating their information systems on a profit basis. In other countries, income from the sale of market data covers only operating expenses, but dissemination of the data provides opportunities for professional consultants to use it for related profitable activities. Thus, this information aids the private sector by making markets more transparent and helping entrepreneurs evaluate urban projects and define geographic and economic trends. For the public sector, the market data assists in the public valuation of properties and in planning purposes.

Many challenges remain to improve the coverage of urban market transactions, the quality of the information, the analysis of the data, and the debate this information can stimulate regarding urban land policy. From an academic perspective, the challenge is to improve the understanding of the phenomena being observed. From a professional perspective, it is to use the available information for better project analysis and to adjust valuation maps to establish more accurate records for property tax purposes.

Since many Latin American cities lack any type of urban market monitoring systems, the special challenge facing the participants in this ongoing project is to find ways to share their experiences to improve the efficiency of market operations and urban planning throughout the region.

Pablo Trivelli is regional coordinator of the Urban Management Program, United Nations Development Program, Santiago, Chile. The seminar was cosponsored by the Lincoln Institute with the GTZ-MINVU project, the Urban Studies Institute of the Catholic University of Chile, and Chile’s Ministry of Housing and Urban Development.