Geographical Determinants of Residential Land Values in Luxembourg

The sustained periurbanisation observed throughout Luxembourg has considerably challenged spatial planning policies. The limited success of recent policies that aimed at modifying consumers’ residential preferences, underlies the main research objective of this thesis to further understand consumers’ preferences for the local geographical context, that can be considered as additional drivers of the ongoing urban spatial expansion. Besides the standard trade-off discussed in the monocentric city model (Alonso, 1964), several extensions to this model and specifically the periurban model (Cavailhès et al., 2004) have shown the utility bearing attributes of local urban and rural amenities for land consumers. By the means of the hedonic pricing method (Rosen, 1974), I aimed thus at identifying the marginal value of periurban amenities developable land consumers revealed when purchasing land.
The main question addressed in this thesis is how urban and green amenities are valued by land consumers in Luxembourg, relying on advanced spatial econometric techniques. Further the focus was turned to the heterogeneity of consumers’ preferences with regard to their socio-economic background, relying on the spatial quantile regression approach. Moreover, spatial market segmentation and spatial heterogeneity in the valuation of the geographical determinants was further investigated by relying on the multilevel modelling approach, rather an uncommon practice in hedonic modelling context.
The results of the thesis confirm that distance to Luxembourg by car and parcel size are the main determinants of land prices in Luxembourg, confirming thus urban economic theory. It was shown that not all land consumers are in competition on the same market and spatial market segments have been identified. Further, we show that land-use diversity is valued differently at different distances and that its marginal impact varies throughout Luxembourg, depending on the specific geographical context, and with regard to the price distribution.
Results underline the importance of periurban amenities in consumers’ location decision, that however vary between (spatial) market segments. Accounting for the specificities of the local geographical context and individuals needs should help finding ways to design more acceptable and liveable neighbourhood plans that at the same time account better for the negative effects of urban spatial expansion.