This paper applies the institutional-based view of strategy to investigate how speculative housebuilders in Sao Paulo have responded to transitionary scenarios in zoning regulations, considering an analytical framework centred on the local-scale contingencies of the development process. By looking at a unique dataset of disaggregated housing output, we draw three main conclusions: first, land markets become more competitive inside TOZ districts, resulting in increased oligopolistic power of those firms able to secure development sites; second, compliance with land use regulations promoted structural changes in building features of new schemes; and third, the supply of compact housing helped to leverage financial performance during a period of economic recovery. The findings corroborate the view that upzoning decisions – seen as part of the institutional structure of the development process – offer both constraints and enablers for residential development activity. Furthermore, by analysing the time variance in the behaviour of the housing supply indicators, the study demonstrates a price strategy and a volume strategy in the way housebuilders employ local strategies to respond to wider structural contingencies.
