Measuring unobservable factors in residential developments: a structural equation approach
Abstract
Purpose
The purpose of this paper is to investigate how to measure the effect of unobservable factors on residential choice behaviour in an attempt to advance the understanding of how to perform advanced market analysis. This research is important to residential developers, as the diversity of preferences is increasingly driven by lifestyle-based households and affluent households.
Design/methodology/approach
Information about the pros and cons of renting an apartment in an ongoing residential development project in Stockholm came from interviews using the laddering technique. Qualitative data were subsequently analysed using exploratory and confirmatory factor analysis to confirm which factors had the highest effect on an overall assessment of living in the development and a value-for-money conclusion.
Findings
Among the potentially important factors identified, respondents who became residents perceived the development to be more noise-free than those who did not when stating the overall value of living in the development and making a value-for-money conclusion. The perception of noise differed between the two groups, meaning that those who did not become residents believed the development to be more exposed to noise. The standard of the apartment was the second most influential factor when stating the overall value of living in the development and making a value-for-money conclusion. The belief of being able to relax in the home environment had no significant effect on overall value for either group.
Originality/value
The results show that confirmatory factor analysis can be used in measuring the effect of unobservable factors in residential choice behaviour. The methodology presented may advise developers, architects or planners in evaluating those attributes that create value-for-money to improve, for example, overall design solutions in urban development projects.
Keywords
Acknowledgements
The authors hereby acknowledge the financial support given by the Swedish Research Council Formas, by the companies BESQAB, JM, NCC, Prognoscentret, Stockholms Stads Bostadsförmedling, Swedbank and Veidekke and the municipalities of Sollentuna and Upplands-Väsby, who formed an advisory board. Without their financial support and fruitful discussions, these findings would not have been made. The authors also would like to acknowledge the valuable comments from three anonymous reviewers for their comments on this paper.
Citation
Lundgren, B.A. and Wallentin, F.Y. (2016), "Measuring unobservable factors in residential developments: a structural equation approach", Journal of European Real Estate Research, Vol. 9 No. 3, pp. 250-272. https://doi.org/10.1108/JERER-12-2015-0046
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited