Why Land is Expensive

Why is land expensive?

Firstly, we have to ask what land that is expensive? Well, land like any commodity is expensive because of high demand.

Where is there high demand for land? Where there are many people.

Where are there many people? Urban areas, cities, towns and so on

The more people there are in a city, the more expensive the land. But why do these people go to cities? Well, many reasons. Firstly, they go to cities looking for work that pays more than where they came from. If you live in the village, there are few jobs that can pay as much as a job in the city.

Why do jobs in cities pay more? Because it is a bigger market with more opportunities to trade with more people. If you have a product in the village, you can only sell it to 5 people or so. In the city, you can sell it to 100 people or more. This means more dollars in your bank account, meaning more income for you and your family. It makes sense to move to a city, especially if you are an ambitious person who wants to make more money. Why you want to make this money is any one's guess because it is dependent on what you want to buy with it? In fact, since you have more money you can satisfy more of your wants and needs based on what people are offering in your market.

Alright, so it makes sense why people move to cities. Because of this high influx of people, the land prices go up as space around the city is limited, especially if it is around a central area where all the business happens. Or as people would call it, the Central Business District, a piece of land where many people set up their businesses and trade with each other in close proximity.

The reason for high prices is because of proximity. Everyone wants to be close to the trading action, which increases demand and therefore prices. In our world today, people have solve this problem of high land prices in the following ways:

Building Buildings

One way is to increase the amount of people you can trade per square metre. This means that instead of just one person per 100 square feet, you have 100 people per 100 square metres. This is done by building buildings that are vertical in nature. Instead of having the ground, which is 100 square metres, you can have 100 floors on top of each other of 100 square metres. This accomodates 100 businesses. This has worked for a while but it is not enough as these spaces have also increased in prices. Building tall buildings is also expensive and very difficult to do, especially if you have existing buildings that need to be torn down and replaced. Buildings are quite permanent so if you build it, you are stuck with it for a long time. This is because of the cost of building one, maintaining it as well as tearing it down to replace it. It is not worth the effort for the majority and even the owner.

Remote Work

Another way is through digital technology, specifically video conferencing. This has allowed certain individuals to work from home and not have to migrate to the Central Business District to trade their skills or products. It has the potential to eliminate the need for the Central Business District and move it online to the virtual realm, which has unlimited space and no need for physical proximity. This works for certain people but not everyone. For knowledge workers who creates spreadsheets, call customers and write code, this is fine and very ideal. However, it doesn't work for factory workers who carry boxes, fix cars, transport goods and other physical things. It has also been found that working from home is also not good for knowledge work, as less information is passed from one person to the next. It is common knowledge that 70% of communication is non-verbal. This is not easily picked up from a screen and therefore productivity can be slower than it would be in person. This means that many knowledge-based businesses like tech companies still need physical offices in the Central Business District or at least somewhere close to it.

Efficient transportation

Another way is to make transportation more efficient, allowing people to leave further away from cities, where land is cheaper, so they can commute to work in the Central Business District. This has also been an option tried. By building large highways, railways systems, trams, designated bus lanes and so on. This has worked in certain countries like in Scandinavia and some Asian countries. However, it has stalled or been actively fought in others like the Americas and Africa. It is clear that this is a policy issue that routed in politics and economics. Unfortunately, the beneficiaries of high rents in urban areas find it atrocious to have their land prices go down because less people are demand to leave on it. The rents would have to go down and land prices would follow suit. No good for land owners. It also goes against the profit gains for petroleum dealers, car dealers and spare part dealers who profit from the idea of having a car to commute. There is no good reason why we shouldn't have a train system. It is cheaper for the population in the long-run and it is more efficient in energy use. However, without force to push for such an idea, capitalism and self-interest prevails and trumps the common good.

Those are the methods that we have tried to reduce land prices in urban areas. They work for a while but the benefits depreciated. Now, we need better methods. However, I would say that the answers are in the above methods and I will explain why. We have mentioned 3 methods:

  1. Increase the amount of people who can be in proximity through better buildings
  2. Eliminate the need to live and work in proximity to cities using technologies
  3. Make transportation more efficient to reduce the need for people to live in cities, eventhough they work there

They can broken down into: The need to live and work in proximity to many people.

Option 1 is favors both living and work. Option 2 favors neither living nor work. Option 3 favors work but not living.

We need a combination of these 3 things to reduce the demand for land in cities. We just need to find more effective ways to make these option better than they are now. By solving their disadvantages with better technologies. The truth is that the solutions are there, we just need to find them. For example:

  1. Option 1: We can build better buildings are cheaper, modular, less permanent but also strong. We gives the builder more flexibility to build more levels by taking advantage of the vertical and horizontal planes in a cost effective manner. This means houses like Legos, which can be added onto each other at any time, or dismantled whenever you want. You can build upwards into the sky or even float in the sky if you like. You can also build downwards and get the mantle. There is also sideways if you are high enough in the stratosphere.
  2. Option 2: We can make the work-from-home experience more like reality through virtual reality, augmented reality to make it feel like you are talking to real colleagues and collaborating like you would in a physical office. Any trade can be done by a strong logistic network that transports goods, while services are handles by people moving to where their service providers is using efficient personal or collective transport. Just travel to your barber's house to get a haircut.
  3. Option 3: We can build better, cheaper and faster transportation for the common person to move from one place to the next. This means that moving 100km in 10 minutes can cost 200shs and not 10,000shs. This means trains that travel as fast as the speed of sound, flying cars that take advantage of the open air or teleportation is as fast as the speed of light. No need for roads or cars with such inventions.

I would also add another option. Option 4 is to create more cities. Instead of many people moving into specific big cities, new cities should be built to around their own form of business. Cities usually form for an economic reason. It could be a Johannesburg, which started because of the gold mines. New York because of the 1st settlement who we call Americans today. Nairobi because of the need to settle for the Lunatic Express builders as they continued on to Uganda. These cities have also mushroomed to become what they are today. They have become established and moved away from the intended purposes and have become a place for people to gather in large numbers to trade and live. If these cities were started for such natural reasons, it would be good negation to say that cities can be started for artificial reasons like decongestion of a city. Instead of an economic reason, it becomes a political one or even an emotional one. If a group of people want to live somewhere different that's not a city, they should be allowed to start their own. If they have the right amount of numbers, a city would be form automatically. Amenities would show up as people want to buy goods and services and there are those who want to sell those goods and services. The only problems with such an option as getting the social cohesion to start one and the cost of building the network effects. The truth is that a new city will not have the amenities that an established city has like power, water, entertainment, security and so on. It takes a lot of foundational work to get the social cohesion for people to move. It is a chicken and egg situation where you need social cohesion to build these amenities but you need the amenities to build social cohesion. Tough.

However, the answer to solve Option 4 is still in building better technologies. For power, you can use renewable energy like solar and wind, which are dropping in price and getting more efficient every year. For water, boreholes can be dug to aquifers in the area, water capture of rain is possible, desalination of sea water and even water recycling is possible. For entertainment, there is loads of online content as well as social amenities like restaurants that can be set up as businesses. For security, you can live closer together as start, have an armed group of people, install good security systems and even get the government to support you. There are ways and means to make this possible and grow steadily in population.

There is so much land in the world that it doesn't make sense to buy an acre of land at 500 million shillings in Muthaiga. You can buy a land that's outside the city and work from home or commute to work effectively. This is the most realistic way of doing it with current technology. In the future, it can be said that you don't even need to live anywhere near an urban centre. You can live in a rural area and work comfortable from there, get all the goods and services you need, and all the entertainment you want.

The goal of this is essay was to discuss how to reduce the price of land and make it affordable for everyone to use, or at least give everyone a fair chance. This means that we have to make it less valuable in the eyes of people. This means reducing the need for land and keeping for only the essentials. What does that mean? Well, it means that instead of using land to build cities, we should use it for only what is necessary like farming, animal conservation and relaxation. If we remove the need for land to do business or live, then we can reduce the price to almost zero. This sounds like a crazy idea, how the hell will we not need land? We have always needed land to build buildings, houses, farms, monuments, roads and so on. Allow yourself to think outside the box. Remember, it is a question of technology. What would allow us to not need land at all for business and living?

Crazy Idea 1 would be to leave the planet and live in space or on other bodies like Mars, Europa, Venus and so on. With dropping prices of rocket launches and many companies looking to solve habitability of space and Mars, we can see the increase in land area and more areas of business and living are opened up. More people can live elsewhere. Unfortunately, this option will still suffer from the barriers to grow of Option 4 on building more cities.

Crazy Idea 2 would be to build either floating or underground cities. Instead of fighting for land on the earth's crust for business and living, we can build these places on floating pads that are kilometres wide and can move up and down in the sky. They may not even need to be kilometres, but buildings-size structures that float in the sky like airships. The underground and undersea cities can be much bigger, especially the latter since 70% of the earth is covered in water. It is free real estate that no one owns. Still suffers from the problem of Option 4.

Crazy Idea 3 would be live and work in the digital realm. We can wear Oculus headsets all day at the comfort of our home and sleep in our bed during the night. We can engage in all sorts of work and play just as we do in video games. Even better, we can completely upload ourselves into the digital realm and live their perpetually. It is a scary one because it brings into question what it means to be human, which we often associate with our physical bodies and mind. Can we exist without our bodies?

Crazy Idea 4 would be to access other forms of reality that exist in the same space. This one is really crazy one. Just like radio frequencies, my theory is that we can have the same plot of land being inhabited by many people all at once but in different planes of realities. Just like a frequency at 50Hz doesn't disrupt one at 100Hz, it is the same concept. I don't know this is possible and don't ask if I am taking drugs. It sounds cool so just take it as it is.

Crazy Idea 5 is something that I haven't even thought of yet. Someone can come up with something like becoming miniature versions and living at the tip of a pin and so on. Crazy Ideas are welcome.

With that said, I would like land to be cheaper and the only way to do so is to reduce our reliance on it. In the beginning, it would be necessary to restrict ownership of land to encourage people to move towards these newer forms of land ownership to create space for living and work. This means that land will have to be restricted to farmers, conservationists and so on. It sounds very Marxist but hear me out. We will allow the technologies to develop and build proofs of concept that work outstandingly well. Next, we increase the tax on land ownership for anything that can be solved by their proofs of concept like working and living. Making land harder to own would reduce the need to horde it. If you want to buy land, it would have to be for a very specific reason like building your retirement home or a base of operations for your business. Not just land for ownership and renting sake. The taxes will be low for people who want to build public spaces like parks, restaurants, hotels, national reserves, and most importantly, farms. This means that great transportation is required for people to move from these shared spaces to the other places of living. The Central Business District is a shared place, not a place to own private property. That's the idea.

This means that when a city becomes large enough and the CBD rises beyond a certain value, the government should buy the land and the assets built on behalf of the citizenry and declare it a shared space that no one owns but utilises it on a limited basis to provide a specific service to the public. From there, modular buildings are set up to take advantage of vertical and horizontal planes. This would potentially make the CBD less attractive and forces other to move to other areas and use the above alternatives.

However, thinking about this idea from a market-based economy perspective doesn't make any sense. It is best to let innovation do the job of making these alternative ideas more affordable than owning land, moving into cities or commuting there. This means that the above idea is bad and you should not implement it. This is my disclaimer.