Construction Land Development – Land Readjustment

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Land readjustment is an important and worldwide recognized technique for urban land development used for both the development of new areas and the reorganisation of already build-up areas.

Land readjustment has a long tradition in central Europe, starting from Germany more than 100 years ago and then spreading over all continents. In the English speaking world it was long time quite unknown, but recently there are efforts to implement it into the planning system also in the USA. In 2013 the World Bank has pointed out in a policy paper the advantages and importance of land readjustment. This paper recommends land readjustment as a powerful tool for efficient and well organised urban development.

What is Land Readjustment?

“Land readjustment is an alternative land assembly tool for urban expansion. Land readjustment is most commonly used to expand urban boundaries on the periphery of cities. However, it may also be used in urban areas for redevelopment purposes. Land readjustment is gaining acceptance as an alternative to land acquisition as it has many advantages for land assembly. Being in essence a participatory tool, land readjustment avoids to a great extent the public discontent and protests that land acquisition may generate. Land readjustment is thus more politically feasible than eminent domain in some situations, and is arguably more efficient and equitable than the use of eminent domain given the role of landowners in the process (Hong 2007). However, land readjustmentinvolves efforts from public authorities such as the redrawing of boundaries and the associated adjustment of property rights. In some cases, land readjustment also requires local officials to initiate the project and negotiate with affected landowners for a set of general agreements for the undertaking.”(Lozano-Gracia et al. 2013)

In most cases, an increase in the value of the land is achieved due to the procedure of land readjustment and the increase in value is the most important motive of the plot owners to participate in the process. Experiences from countries that apply land readjustment for many years show that the average increase in value of the land goes up by 4 to 8 times (from initial agricultural land, converted into the building, fully equipped and connected to the infrastructure land). In areas where there is great demand for construction land, the increase in value can be dozens of times.

Implementation of land readjustment measures in Serbia

Phase 1: Pilot projects on local level

In the first phase (2010-2012.) the project launched three pilot projects: new residential zones “Resava” in Despotovac and “Mišeluk III” in Novi Sad, and the design of the new industrial zone in Sevojno, “Sevojno D”.

The essence of the “Resava” project in Despotovac is to create a new zone of residence in an attractive location in Despotovac, along the southern banks of river Resava. The location consists of a bigger complex of land parcels used for agricultural purposes and is very near to the centre of Despotovac. For the mentioned location different tasks were carried out, such as a comparative study evaluating locations for the planning and implementation of new residential areas, an urban concept, active participation of the public in the proposal for the development of the zone, Detailed Regulation Plan and a complete project for land consolidation.

Parcel structure1 Despotovac Parcel structure2 Despotovac

The “Sevojno D” is the concept of the city of Užice to offer a developed and attractive location for small and medium businesses, in order to stop their settlement along the main road Pozega-Užice. The site is now used for agricultural production. For this area, an urban concept (by the planning company ASTOC, Germany) was developed, which envisages the creation of five blocks and then a detailed plan of land readjustment.

For the project “Mišeluk III” in Novi Sad, the Detailed Regulation Plan has been already created and adopted and only needed to carry out its implementation on the ground. This means the plan of land readjustment should have been worked out as a basis for redistribution of land parcels and realization of infrastructure. A partial problem is the fact that at the perimeter of the zone “Mišeluk III”, some buildings have been erected without construction permits (illegal construction), which would certainly hamper implementation of the Detailed Regulation Plan.

The implementation of all three projects is temporarily stopped because in Serbia there is no legal basis to regulate this matter in detail. To carry out the implementation of these pilot projects, in the absence of detailed legislation, the unanimous approval of all parcel owners would be required. Local partners expressed their uncertainties in this respect and the most logical decision was to wait for the adoption of laws and by-laws that would accurately define this new, so far unknown procedure in Serbia.

Phase 2: Adaptation of the legal framework

Certainly the most sensitive part of the land readjustment it the reallocation of the land parcels. This requires very precise legislation so that landowners will not feel cheated and will not obstruct the process, because they are uncertain of the future of their real estate.

The GIZ/AMBERO-ICON project, in cooperation with the Ministry of Construction, Transport and Infrastructure, has participated in the development of articles of the Law on Planning and Construction, in the part about on land readjustment. With the adoption of the Amendments to the Law in 2014 new provisions for land readjustment have been adopted. However, in order to apply the instrument, a by-law regulating further details is necessary. In February 2015, the project provided a proposal for this by-law, and it is expected that the by-law will be adopted very soon.

The process of legal adaptation was accompanied by several workshops, organized by the project, in which German experts provided consulting services in this field, relying on years of positive German practical experience in the field and on a globally recognized model for conversion of land.

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One of the potential challenges for the successful implementation of the processes of land readjustment could be that Serbia has no fully developed, fully transparent, standardized system of real estate appraisal, based in the state institutions. In the case of agricultural land, one should not expect special problems because agricultural land has been in private hands for many years and is subject to the laws of supply and demand in the market. The records of property transactions should be a good basis for a reliable estimate of its value. However, when it comes to building land, which has been state owned for over 50 years and until recently was not subject to free trade on the real estate market, one can expect large fluctuations in the assessment of its value. This might jeopardize the trust of the owners of land who should participate in the procedures of land readjustment. A standardized, transparent and state organized real estate valuation system would certainly increase the trust of citizens in determined values of land (especially construction land), boost land market and make processes of land readjustment more attractive.

Please take a look at the activities in our local pilot projects: