What is the Difference Between a Master Planned Community and Master Planned City?

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Master planned cities are big… very big. The capital of Brazil, Brasilia, has a population of nearly 5 million. The Charter Cities Institute defines a master planned city (also called New City) as a city that is centrally planned on a Greenfield site, having a master plan, and a planned population of over 100,000.

By contrast, master planned communities tend to be small. Most American master planned cities have a population of 10,000 or less.

However, scale is not the only difference between the two.

Master planned cities are usually planned by the government. Recent data published by the Charter Cities Institute has found that more than 8 out of 10 master planned cities are state-built and state-run. They are generally built for economic and strategic reasons by central planners.

By contrast, most master planned communities are built by private for-profit real estate companies. The motive for building them is usually profit.

Master planned cities always have mixed use land planning standards for cities. If they have US-style zoning laws, then they always feature both commercial, residential, and industrial areas. 

By contrast, master planned communities are primarily residential. One study found that as much as 40% of the space of US planned communities is taken up by recreational areas or outdoor spaces. Commercial spaces tend to be small, and industrial areas are almost non-existent.

It is important to note that there are exceptions. There are large, private, residential master planned cities - mostly in emerging markets. Some master planned communities, such as company towns, prominently feature industrial areas.

There are also regional differences. For example, in most countries master planned communities are fully private. However in Asian countries such as Vietnam or China, they are usually public-private joint ventures.

Despite the fact that they account for tens of billions of dollars of investment in the global real estate market, the impact of master planned communities is often ignored by economists and is critically understudied.

By contrast, most master planned cities behave just like ordinary cities once they have been completed. Although individual master planned cities are always much larger than master planned communities, in the aggregate they tend to garner less aggregate real estate investment.

Both master planned communities and master planned cities play a critical role in the global economy. As more countries enjoy the fruits of economic development, and as emerging markets urbanize, their importance will only increase.