What Drives the Spatial Development of Urban Villages in China?

China’s dramatic urban expansion has encompassed many peri-urban villages and turned them into so-called urban villages that provide a niche housing market for rural migrants for whom the formal housing market is unaffordable. Yet urban villages are very distinct from informal settlements elsewhere, because they are being developed by the original village community on collectively owned land. As these communities cannot sell their land and only build housing units for low-paid workers, the only way to make a higher return from their land is to increase its built intensity. This paper tests the hypothesis that the driving factors of this built intensity are analogous to factors that drive land prices in the formal city. Results of multivariate regression models of the built intensity of urban villages across the city of Shenzhen show a remarkable resemblance to hedonic models of land prices elsewhere. Location matters and access to employment, along with development constraints, are the most important determinants for the development of Shenzhen’s urban villages.