The way you think markets work don't always apply to land. Land (distinct from buildings) is one of the few resources for which ownership without utilization or improvement is not only profitable but sometimes optimal.
The unimproved value of land is still a function of its proximity to other desirable things. Barring remodeling, it's not generally the value of the building on a piece of land that goes up over time.
Not really because investors are committing resources to the business which, it is hoped, will deliver value greater than the amount put in. Merely owning land doesn't help the land improve and deliver any value.
But isn’t land ownership and renting free markets? If there is profit to be made by renting out land, investors should look to buy land to rent out, since both the land market and pool of renters are limited this should naturally drive up prices of land while driving down rents. And as such you should move towards buying land to rent out becoming a very low margin business and renters end up paying only marginally more than they would if they bought the land themselves.
That’s in theory though, so what’s keeping this from happening in practice?
Land/location is not a capital good and isn't affected by the same market rules as capital goods, because it is unique and possesses monopoly properties. It's essentially impossible for land and other natural resources to have a free market, by nature.
Land isn't valuable because there is a finite supply. Only certain land is valuable because there are buildings and people nearby, which is why land out in the wilderness is nearly free. The prediction is based on the fact that individual cities grow, not that the total fraction of land occupied by humans becomes nonnegligible.
In densely populated areas, the value of real estate has very little to do with what's built on the property, and everything to do with the land it is build on.
GPs point is that owning land is not creating value. It is, however, very profitable.
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