Course Title: Urban Economics

Part A: Course Overview

Course Title: Urban Economics

Credit Points: 12

Course Code	Campus	Career	School	Learning Mode	Teaching Period(s)
OMGT1124	City Campus	Undergraduate	325H Property, Constr & Proj Mgt	Face-to-Face	Sem 1 2006, Sem 1 2007, Sem 1 2008, Sem 1 2009, Sem 1 2010

Course Coordinator: Kathryn Robson

Course Coordinator Phone: +61 3 99253424

Course Coordinator Email:kathryn.robson@rmit.edu.au

Pre-requisite Courses and Assumed Knowledge and Capabilities

OMGT1113 Property Concepts
BUIL1149 Property Economics

Course Description

Conventional microeconomics has a limited ability to analyse the effects of time and space. Indeed it is normal to assume that all economic activity occurs at a single point and that consumption occurs at the time of the transaction. The rights to use real estate assets, because of their long life, immobility and heterogeneous character, are traded in markets that differ significantly from those in which other commodities are traded. The potentially valuable rights to use real property must therefore be evaluated in relation to the economic and political environment in which they exist. Wherever possible, examples and insights will be drawn from Australia as well as abroad

The aim of this course is to lead students to an understanding of the economic and social forces that have influenced the way in which modern urban settlements have grown and developed. Macro economic growth, technological change in production and transport, demographic change and political responses to perceived market failure will be considered. The result is intended to be a framework within which students of property markets can analyse existing urban land usage and see it as part of a diverse and ongoing evolutionary process.

Objectives/Learning Outcomes/Capability Development

Capabilities

The experience gained in the course should facilitate the development of various student capabilities. Namely that students are:

• capable of seeking further knowledge and understanding as part of life-long learning.
• capable of adapting to changing methods, technology, practice and contexts.
• capable of monitoring and interpreting the impact of changes in the socio-political and economic environments of the property, construction and relevant project sectors.
• resolve problems using sound problem-solving methodologies
• progress from simple data and information collection towards more detailed analysis, synthesis and evaluation.
• work as part of a multi-disciplinary team and to positively contribute to appropriate outcomes.

Specifically, this course will add to the theoretical knowledge of the student and develop attitudes conducive to the development of a creative professional with an international outlook. The assignment work is intended to induce cooperative work attitudes The need to apply standard theories of urban behaviour to particular circumstances in the assignments, will assist in the development of a critical and inquiring mind set.

By the end of the course, students who pass will:

• Be conversant with the various theories purporting to explain the urbanisation phenomenon (viz. the stages theory of economic growth and the interdependency theory of global urban development).
• Be able to highlight the causes of urban growth as enunciated in various theories that relate to the urban growth phenomenon (viz. central place theory and its empirical counterpart the rank size rule, urban base theory, Keynesian theory, modernisation theory and dependency theory)
• Be able to comment critically on the optimal size of a city from the following perspectives: minimum efficient size, least-cost size, maximum social welfare, maximum net benefits per capita.
• Be acquainted with the major models of urban spatial structure (viz. the concentric zone theory, the sector theory, the multiple nuclei theory) and be able to identify where and when such models appear to apply.
• • Understand how cost benefit analysis may be employed to evaluate the social viability of urban-based public projects (eg the construction of freeways and airports, sewerage plants, public housing, government schools and hospitals etc).
• • Be conversant with various theories purporting to describe the location and globalisation of urban economic activity at the retail, office and industrial level.
•• Understand the rationale for government intervention in the real estate market as reflected in urban planning and land policy.
• Be knowledgeable of the attributes as well as pros and cons of different local property tax regimes (viz. capital value rating, site value rating, net annual value rating) including other sources of local revenue (viz. local income tax, user charges and local sales tax).
• Be able to discriminate between the investment attributes of property assets (be they directly or indirectly held) with those of other financial assets (viz equities and fixed interest securities).
• Be able to identify theories that purport to describe how the internal structure of cities change through time.
• Be able to employ an economic framework for determining whether redevelopment or rehabilitation is preferable and whether historic buildings should be preserved or razed.
• Appreciate the steps and various parties involved in the property development process.
• Be able to use an economic framework to determine the development potential of a site using the residual valuation approach and appreciate why this approach is preferred over a direct comparables approach.
• Monitor how key dimensions of Melbourne’s urban landscape have changed through time and how they might change in the future.
• Be able to work as part of a collaborative team working on a common research task.
• Be able to work independently on a given research task with minimal guidance and support from colleagues.
• Reconcile the conflicting forces which led to urban blight and gentrification.
• Define as well as recognise an economic region or market area
• Identify the economic base of a region or city
• Generate and explain a bid rent curve
• Discriminate between cyclical fluctuations and longer term trends in residential, commercial and industrial construction activity; and
• Logically project the consequences for real estate markets of changes in transport technology, population growth rates and the age structure of the population.

Overview of Learning Activities

This course comprises a structured lecture accompanied by a tutorial. The lecture is designed as a preliminary introduction to the important concepts and methodologies of Urban Economics. The exercises that are tackled in demonstration lectures are designed to enrich student understanding of the principles outlined in lectures. Assignment work is intended primarily as an opportunity to apply the concepts discussed in lectures and demonstration lectures. However, students will be expected to engage in some independent self-directed research activities as part of these assignments. At all times, students are encouraged to raise any questions they may have during class sessions. Separate material regarding the weekly program, suggested readings and questions covered in demonstration lectures will be provided by global email. It is therefore essential that students take all steps to regularly check their RMIT email accounts or to ensure email is re-directed from these accounts to personal email-accounts of their choice.

Overview of Learning Resources

A range of suitable reading is detailed on the Learning Hub, along with the weekly outline and all assignment details.

Overview of Assessment

The assessment for this course will comprise 55% individual assessment and 45% group assessment.  The assessment will make use of class tests,individual and group assignments and presentations.

The method of assessment (including submission dates) in the course guide may be altered by the lecturer with the approval of the Program Coordinator and the agreement of 70% of the students enrolled in the course. Any alterations will be notified to all students concerned in writing.