This instrument typically consists of a city government pooling or assembling multiple privately owned land parcels in a given area and preparing and developing a land-use plan for the combined area, including designating spaces for public infrastructure and services such as roads and open spaces. At the end of the process, the government returns each landowner a parcel size equivalent to about 50 to 60 percent of the original land parcel size with the rationale that the new land parcel has a higher value as it is now serviced urban land. The government often retains selected strategic land parcels that it can auction or sell at market rates for cost recovery of its investment in infrastructure and service delivery.

Instrument category

Land value capture (LVC)

Implementation status

Moderate - tried and tested

Enabling conditions and success factors
  • Land readjustment needs strong local institutions and a transparent and sound legislative framework to be implemented effectively.
  • Strong engagement and communication are required between the government and all stakeholders.
Instrument benefits
  • Beneficial for the government because it does not require significant up-front investment to buy the land from the owners.
Challenges and risks to implementation
  • Obtaining the consent of all existing landowners for the regeneration project. Furthermore, the land readjustment process involves the valuation of the land. It is generally difficult for the government and the landowners to reach agreements on the true value of the land.

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