I used to work in the real estate development industry. The best returns are almost always made on increases in land value. Who exactly captures that profit can

I used to work in the real estate development industry. The best returns are almost always made on increases in land value. Who exactly captures that profit can vary a lot. Sometimes it's land speculators who buy land cheaply on the outskirts of growing cities. Other times it's developers who buy a large parcel cheaply and then develop it slowly until by the end it's a much more desirable place for a lot of people and they can sell sell product at premium prices but with a very low land basis cost. More often than not it's property owners - typically REITs for multifamily and office buildings - who benefit from price increases. And they can profit enormously from speculating and trading properties. In a lot of ways the US real estate market is similar to luxury consumer goods markets. People are willing to pay a big percent of their income to live in SF or NYC because those cities have a strong brand. There's a perception of value that goes above and beyond quantifiable quality of life measures. It's not radically different from how people will pay a premium for an iPhone over an arguably equal or better Android phone. Landowners and homeowners can benefit from owning property in a location that commands a brand premium not unlike shareholders in a company.