Does Comprehensive Redevelopment Change the Housing Price Gradient? A Case Study in Mongkok, Hong...
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Transcript of Does Comprehensive Redevelopment Change the Housing Price Gradient? A Case Study in Mongkok, Hong...
Does Comprehensive Redevelopment Change the Housing Price Gradient? A Case Study in Mongkok, Hong Kong
Simon Y. YAUDepartment of Public and Social Administration
City University of Hong Kong
ERES Conference 2009
24-27 June 2009
ERES Conference 2009
24-27 June 2009
Externalities of Redevelopment
Costs and benefits of a redevelopment project net monetary gains to measure a government’s efficiency in
an urban redevelopment project (Broadway, 1974)
When assessing the project benefits rise in property value of the redevelopment site direct and indirect jobs created by the project possible spillover effects of the project
Large-scale improvement or redevelopment projects increase the values of properties in their vicinity
(e.g. Rosenthal and Helsley, 1994; Baleiras et al., 2004)
ERES Conference 2009
24-27 June 2009 6
Research Gap and Aim of this Study
Few empirical studies
exploring the externalities of redevelopment on neighbouring properties
To empirically study
effects of comprehensive redevelopment on the market prices of neighbouring properties
by hedonic price analysis of a set of panel data in Hong Kong
ERES Conference 2009
24-27 June 2009 8
Argyle Street/Shanghai Street Redevelopment Project- Langham Place (office tower,
hotel and shopping mall)
- completed in end of 2004
ERES Conference 2009
24-27 June 2009 14
Analytical Model
Founded on Rosen’s (1974) seminal work,
price of a property treated as aggregate of the implicit prices of its property attributes:
property age
floor area
floor level (i.e. vertical location in a building)
external environment
… etc.
ERES Conference 2009
24-27 June 2009 15
Hedonic Price Model
ssss
sss
sststst
REDAFTERDISTDIST
AREAAREAFLOOR
FLOORAGEAGERPRICE
_
ln
21
265
24
32
210
Variable Description
RPRICEst real transaction price of property s at time t (in HK$ million)
AGEst age of property s at time t, equating the difference between the date of the issue of the occupation permit and the transaction date (in years)
FLOORs floor level of property s
AREAs saleable floor area of property s (in square feet)
DISTs distance between property s and the centre of Langham Place complex (in metres)
AFTER_REDs is a dummy variable which equals 1 if the transaction was engaged after the opening of Langham Place and zero if otherwise
ERES Conference 2009
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Source and Descriptive Statistics of the Data
Continuous Variable Maximum Mean MinimumStandard Deviation
RPRICE (in HK$ million) 12.11 2.18 0.02 2.04
AGE (in years) 589.00 238.67 0.00 168.53
FLOOR 51.00 13.79 1.00 11.04
AREA (in square feet) 1,006.81 358.57 0.00 115.74
DIST 500.00 237.12 35.00 98.41
Transaction data for residential properties within 500 metres from the centre of Langham Place from January 2003 to September 2006 obtained from the Economic Property Research Centre 6,475 property transactions
2,962 (~ 45.75%) engaged after the opening of Langham Place
ERES Conference 2009
24-27 June 2009
Dependent Variable: lnRPRICE
Independent Var. Coefficient Std. error t-statistic p-value
CONSTANT -0.411107 0.028999 -14.17652 0.0000 **
AGE -0.003759 0.000101 -37.39666 0.0000 **
AGE2 2.87 x10-6 1.93 x10-7 14.86835 0.0000 **
FLOOR 0.010424 0.001112 9.373329 0.0000 **
FLOOR2 -4.40 x10-5 2.47 x10-5 -1.783935 0.0745 #
AREA 0.003870 8.21 x10-5 47.14263 0.0000 **
AREA2 -1.51 x10-6 6.59 x10-8 -22.90464 0.0000 **
DIST -8.36 x10-5 4.23 x10-5 -1.975285 0.0483 *
DIST*AFTER_RED 2.29 x10-5 2.86 x10-5 0.799986 0.4237
Adjusted R-squared 0.857634 Durbin-Watson statistic 1.002656
F-statistic 4876.035 Akaike Info Criterion 0.366094
Prob (F-statistic) 0.000000 Number of observations 6,475
ERES Conference 2009
24-27 June 2009
Why No Positive Externalities?
Confirming previous studies (by Chau et al., 2004; Lai et al., 2007)
comprehensive redevelopment projects in Hong Kong not exerting a net positive price effect on the residential properties in the neighbourhoods
Non-existence of a net positive externality
counter effects of the negative environmental impacts created by the gigantic Langham Place complex (e.g. reduction in openness and blockage of natural lighting and ventilation)
a so-called ‘screen-wall effect’
lowering the rate of air flow in the area
20
ERES Conference 2009
24-27 June 2009
Gentrification?
Smith’s (1979) explanation of gentrification rent gap ‘the disparity between the potential ground rent level and the actual ground rent capitalized under the present land use’
Results of this study suggesting rent gap may not exist
Spatial-price gradient the properties in the neighbourhood of Langham Place not changing after the project completion
seemingly not supporting the rent gap theory
dummy variable AFTER_RED is added to the equation
insignificant at the 10 percent level
22
ERES Conference 2009
24-27 June 2009 23
Concluding Remarks
Redevelopment thought to have positive externalities on nearby properties
Hedonic price analysis spatial-price gradient of neighbouring properties not changing
confirming findings of Chau et al. (2004) and Lai et al. (2007)
doubtful usefulness of rent gap theory
Further studies suggested to investigate if gentrification is observed in the environs of Langham Place
impacts of different types of urban regeneration projects
public administrators knowing how urban regeneration should proceed with a view to better economic sustainability
ERES Conference 2009
24-27 June 2009 24
Thank You !
For comments and questions,
please e-mail me at [email protected]
ACKNOWLEDGEMENT
The work described in this paper was supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. CityU 1508/08).