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Determinants of industrial land prices in The Netherlands: a behavioural approach

Huub Ploegmakers (Institute for Management Research, Radboud University, Nijmegen, he Netherlands)
Friso de Vor (Research group Area Development, Windesheim University of Applied Sciences, Zwolle, The Netherlands)

Journal of European Real Estate Research

ISSN: 1753-9269

Article publication date: 2 November 2015

380

Abstract

Purpose

The purpose of this paper is to demonstrate how the specification of hedonic pricing models can be improved by using insights generated from qualitative research. In doing so, it seeks to address one of the main problems in the specification of hedonic models, namely that theory yields little guidance in the selection of the characteristics that should be included on the right-hand side.

Design/methodology/approach

Building on the behavioural tradition in real estate research, this paper introduces a research approach that integrates insights from qualitative analysis in an econometric model of land values. The empirical segment explores the way in which asking prices of building plots for industrial purposes are determined in The Netherlands. It draws from interviews with municipal land developers, who dominate supply in this market. The information secured during these interviews relates to the characteristics considered important and the kind of information used in the valuation process. Based on these qualitative data, an econometric model is developed and estimated.

Findings

The estimation results confirm qualitative evidence that the typical developer considers only a limited number of features of the land in the valuation process and that the primary source of information in setting asking prices relates to the prices charged in neighbouring municipalities.

Originality/value

This paper represents a novel attempt to examine the determination of land and property values by merging qualitative and quantitative, econometric analyses.

Keywords

Acknowledgements

This paper draws on data generated within a research collaboration between the Radboud University and the PBL Netherlands Environmental Assessment Agency (PBL). The authors would like to gratefully acknowledge the assistance of the colleagues at the PBL in constructing major parts of the data set.

Citation

Ploegmakers, H. and de Vor, F. (2015), "Determinants of industrial land prices in The Netherlands: a behavioural approach", Journal of European Real Estate Research, Vol. 8 No. 3, pp. 305-326. https://doi.org/10.1108/JERER-04-2015-0016

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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