The effect of urban redevelopment on retail shopping property values: a case study in Hong Kong

Jayantha Wadu Mesthrige, Chu Chun Ming

Research output: Journal article publicationJournal articleAcademic researchpeer-review

7 Citations (Scopus)

Abstract

Purpose – Redevelopment, an essential aspect of the urban regeneration process, brings positive externalities to neighbourhoods. This study evaluates the effect of the improvements of neighbourhoods, brought about by redevelopment, on nearby ground-floor retail shopping property values. This study uses a hedonic price model to determine whether there is a relationship between redevelopment work and nearby shopping property values and the influence of neighbourhood improvements on the price of shopping properties if there is such relationship. The analysis is based on three large-scale redevelopment projects, each having a commercial space ranging from 30,000 to 50,000 sq.ft. The results show that an improved neighbourhood environment brings significant value enhancement to nearby shopping properties. Potential tenants are willing to pay a sale rental price premium ranging from 13% to 34% on shops located near redeveloped areas. The results also reveal that potential shop tenants are willing to pay a premium of 0.1% more on a shop with a cockloft. These findings imply that a neighbourhood environment that has been improved through well-planned redevelopment projects adds value to nearby properties. This study contributes an indication of the amount a tenant or buyer would be willing to pay on shops near redeveloped areas and can be used as a reference for users, developers and investors.
Original languageEnglish
Pages (from-to)379-399
Number of pages21
JournalInternational Journal of Urban Sciences
Volume19
Issue number3
DOIs
Publication statusPublished - 1 Jan 2015

Keywords

  • neighbourhood environment
  • redevelopment
  • rental property price
  • shopping property

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Urban Studies

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