Benefits of Real Estate Policies

Abstract

If Africa wishes to prosper, it must draw insights from how the West has managed to attain and retain prosperity. There is evidence of a connection between property market efficiency and rising prosperity in the West. Earlier economists like Adam Smith (1776) and George (1912) have long detected a positive correlation between development and the performance of the property market. In comparatively recent times also, Alonso (1960), Muth (1985), Mills (1972), Ball et al. (1998), Deininger (2003) and Dam (2006) have all contributed profoundly to our understanding of the importance of landed properties to the economic development processes in both rich and poor countries. It is no wonder that all rich countries are host to active and efficient property markets. It is estimated, for example, that land and buildings ‘account for between half and three-quarters of the wealth in most economies’ (World Bank, 2007). Further, a developed economy like the UK derives as much as 6 per cent of its Gross Domestic Product (GDP) from its commercial property sector alone (BPF, 2006). A possible inference from this is that developed economies are rich to a degree because their property markets are well functioning. There is thus little doubt that improving the performance of property markets in the developing world is an effective and strategic means of achieving economic prosperity.