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Article

Genanew Bekele Worku

This paper aims to examine house price drivers in Dubai, addressing nonlinearity and heterogeneity.

Abstract

Purpose

This paper aims to examine house price drivers in Dubai, addressing nonlinearity and heterogeneity.

Design/methodology/approach

The study applies a combination of linear and nonlinear, as well as quantile regression, specifications to address these concerns and better explain the real-world phenomenon.

Findings

The study shows the double-log quantile regression approach is an overarching description of house price drivers, confirming that not only the price of housing and its determinants are non-linearly related but also that their relationship is heterogeneous across house price quantiles. The findings reveal the prevalence of sub-market differentials in house price sensitivity to house attributes such as size (in square meters), location and type of house, as well as government laws. The study also identifies the peaks and deflation, as well as the rebounding nature of the house price bubble in Dubai.

Research limitations/implications

The data used are limited, in that information on only a few house attributes was available. Future research should include data on other house attributes such as house quality, zip codes and composition.

Practical implications

The findings of this study are expected to suggest results with significant ramifications for researchers, practitioners and policy makers. From a policy perspective, there is an obvious interest in understanding whether the price of housing is affected by different attributes differently along its distribution.

Social implications

This study allows policy makers, developers and buyers of higher-priced houses to behave differently from buyers of lower-priced or medium-priced houses.

Originality/value

Methodologically, it demonstrates alternative linear and nonlinear, as well as quantile regression, specifications to address two increasing concerns in the house price literature: nonlinearity and heterogeneity. Unlike most other studies, this study used a rich data (140,039 day-to-day transactions of 10 years’ pooled data). The Dubai housing market presents an interesting case. UAE (Dubai, in particular) is named as the second-hottest marketplace for global residential property investors, ahead of Singapore, the UK and Hong Kong (Savills plc, 2015).

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 3
Type: Research Article
ISSN: 1753-8270

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Article

Debarpita Roy

This paper aims to understand housing demand of urban Indian households in terms of housing and household-level characteristics. Because a house is a bundle of certain…

Abstract

Purpose

This paper aims to understand housing demand of urban Indian households in terms of housing and household-level characteristics. Because a house is a bundle of certain characteristics which vary across houses, each characteristic has an implicit price. Finding this implicit price for certain important characteristics is the first objective of this study. The second objective of the paper is to compute the income elasticity and price elasticity of housing demand for these cities.

Design/methodology/approach

To achieve comparable estimates, household-level data from India’s National Sample Survey Organisation housing surveys for the years 2002 and 2008-2009 have been used. A hedonic price function is estimated using ordinary least squares (OLS) and Box-Cox functional forms to estimate the implicit prices of housing characteristics. This exercise is attempted for owned and rented houses separately. Demand function required for computing the elasticities, uses the hedonic price index derived from the implicit prices and household characteristics.

Findings

The study finds housing demand to be income elastic and price inelastic for the six cities across both the time periods.

Originality/value

Firstly, this study includes housing characteristics such as individual access to drinking water, modern sanitation facility, separate kitchen, condition of the structure, existence of a road with street light and whether the house is in a slum or non-slum area in the hedonic price function. These variables were not used in any of the earlier studies pertaining to India. Secondly, it uses the Box-Cox non-linear form to derive the hedonic price function, a specification not used earlier. Thirdly, this is the first study analysing housing demand across the six largest Indian cities.

Details

International Journal of Housing Markets and Analysis, vol. 13 no. 1
Type: Research Article
ISSN: 1753-8270

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Article

David P. Lorenz, Stefan Trück and Thomas Lützkendorf

The basic purpose of this paper is to explore the relationship between the sustainability of construction on the one hand and market value, worth and property investment…

Abstract

Purpose

The basic purpose of this paper is to explore the relationship between the sustainability of construction on the one hand and market value, worth and property investment performance on the other hand. This paper aims to analyse price movements and price differences caused by different property characteristics.

Design/methodology/approach

Based on the estimated log‐linear hedonic regression model, a hedonic price index is calculated. Price movements subject to different property characteristics are examined by constructing various conditional hedonic price indexes.

Findings

The results reveal that, high‐quality flats or flats within preferred locations clearly outperform their competitors in terms of price stability during an overall market downturn. However, it is also shown that contemporary building descriptions or specifications of transactions within property databases are not yet sufficient and need to be widened to meet forthcoming challenges. Therefore, an “integrated building performance approach” is introduced and a proposal for the step‐wise improvement of building descriptions is made.

Practical implications

The paper shows that efforts need to be undertaken by the property profession in combining and transferring financial performance data along with information that is indicative of a building's contribution to sustainable development.

Originality/value

The paper offers insights into the relationship between the sustainability of construction and market value.

Details

Property Management, vol. 25 no. 2
Type: Research Article
ISSN: 0263-7472

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Article

Onur Özsoy and Hasan Şahin

The purpose of this paper is to investigate empirically the main factors that affect the house prices in Izmir, Turkey using the quantile regression and ordinary least…

Abstract

Purpose

The purpose of this paper is to investigate empirically the main factors that affect the house prices in Izmir, Turkey using the quantile regression and ordinary least square approaches.

Design/methodology/approach

Sample data about the housing market for Izmir collected from the web pages of various real estate agencies during June 2018. Following this, the quantile regression method is used to estimate all possible effects of variables on each interested quantile to determine the factors that affect house prices to guide the potential consumers, house developers, city planners and the policymakers in Izmir, Turkey.

Findings

Results show that the age of the house, central heating and parking have no significant effect on prices. The size of the house, the existence of an elevator, fire and security have a positive and significant effect on prices. The number of rooms has lower values for high-priced houses, while the floor, the number of balconies, air conditioning, proximity to schools have a higher value for high-priced houses. The number of toilets, the number of bathrooms and the distance to the hospital have a lower value on the high-priced housing. The value of the distance from the city center and the shopping center is almost uniform in all quantiles and lowers the value of the higher-priced houses. With the exception of the value of the houses in the 10th percentile in Balcova district, the value of the houses in Konak, Balcova and Narlidere is lower prices in Karsiyaka.

Originality/value

This is the first comprehensive research to determine the major factors that affect house prices in Izmir. The second contribution of this paper is that it includes all possible variables and accordingly derives adequate policy implications, which could be used both by the public housing authority and private housing constructing companies in designing and implementing effective housing policies.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

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Article

Funlola Famuyiwa and Gabriel Kayode Babawale

– The purpose of this study is to examine the relationship and pricing effects of physical infrastructure on house rents using the hedonic technique.

Abstract

Purpose

The purpose of this study is to examine the relationship and pricing effects of physical infrastructure on house rents using the hedonic technique.

Design/methodology/approach

Primary data are derived through a questionnaire survey and secondary data from existing literature. Sampling data on 211 detached residential buildings with a range of physical infrastructure attributes within Lekki Phase 1 area of Lagos are analysed with the hedonic regression technique.

Findings

Results reveal significant impacts and a range of price premium estimates of physical infrastructure on house rents in the study area.

Originality/value

The study suggests a nouvelle and contextualized approach for sustainable infrastructure delivery, improvement and maintenance. Appropriate pricing will help to guide and support physical infrastructure development and sustainability. When tailored in line with market support, achievable pricing can be attained in setting land-based user charges and tariffs for cost recovery on projected developments and reform. Results from empirical market evidence also provide demand and viability indicators that offer invaluable blueprints, by which governments, policy/decision makers, investors, town-planning authorities and other stakeholders can take sustainable decisions based on priority, in the face of budgetary constraints – a significant characteristic of the Nigerian economy.

Details

Journal of Facilities Management, vol. 12 no. 3
Type: Research Article
ISSN: 1472-5967

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Article

Devindi Geekiyanage and Thanuja Ramachandra

Traditionally, early-stage investment decisions on buildings purely based initial capital costs and simply ignored running costs and total lifecycle cost. This was…

Abstract

Purpose

Traditionally, early-stage investment decisions on buildings purely based initial capital costs and simply ignored running costs and total lifecycle cost. This was basically due to the absence of estimating models that yield running costs at the early design stage. Often, when the design of a building, which is responsible for 10–15% of its total cost, is completed, 80% of the total cost is committed. This study aims to develop a building characteristic-based model, which is an early-stage determinant of running costs of buildings, to predict the running costs of commercial buildings.

Design/methodology/approach

A desk study was carried out to collect running costs data and building characteristics of 35 commercial buildings in Sri Lanka. A Pareto analysis, bivariate correlation analysis and hedonic regression modelling were performed on collected data.

Findings

According to Pareto analysis, utilities, services, admin work and cleaning are four main cost constituents, responsible for 80% of running costs, which can be represented by highly correlated building characteristics of building height, number of floors and size. Approximately 94% of the variance in annual running costs/sq. m is expressed by variables of number of floors, net floor area and working hours/day together with a mean prediction accuracy of 2.89%.

Research limitations/implications

The study has utilised a sample of 35 commercial buildings due to non-availability and difficulty in accessing running cost data.

Originality/value

Early-stage supportive running costs estimation model proposed by the study would enable construction professionals to benchmark the running costs and thereby optimise the building design. The developed hedonic model illustrated the variance of running costs concerning the changes in characteristics of a building.

Details

Built Environment Project and Asset Management, vol. 10 no. 3
Type: Research Article
ISSN: 2044-124X

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Article

Shanaka Herath and Gunther Maier

This study aims to examine the impact of relative importance of local characteristics, distance from the city centre and unobservable spatial relation in explaining values…

Abstract

Purpose

This study aims to examine the impact of relative importance of local characteristics, distance from the city centre and unobservable spatial relation in explaining values of constant‐quality apartment units in Vienna.

Design/methodology/approach

Drawing on recent developments in spatial econometrics and spatial hedonic house price modelling, the rent gradient hypothesis is examined by means of hedonic regression and spatial hedonic regression. Spatial autocorrelation tests are applied in order to assess possible presence of spatial dependence. The authors borrow Florax et al.'s specification search strategy in order to choose the most appropriate spatial model specification.

Findings

This research shows that local characteristics – or particularities – proxied by district and distance from the city centre are important location variables with regard to the Viennese apartment market. The spatial analysis suggests that the apartment prices are spatially autocorrelated and the Viennese apartment market has a distance‐based neighbourhood structure. The main finding is, however, that residents are willing to bid more for constant‐quality apartment units that are close to the centre of the city.

Originality/value

Rent gradient hypothesis is usually tested within non‐spatial hedonic frameworks: this study estimates a spatial hedonic model additionally in order to allow for comparison of results. This is also the first article to apply recent developments in spatial econometrics to examine explicitly rent gradient theory in the context of the Viennese apartment market.

Details

Journal of European Real Estate Research, vol. 6 no. 2
Type: Research Article
ISSN: 1753-9269

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Article

Urbi Garay, Gwendoline Vielma and Edward Villalobos

The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069…

Abstract

Purpose

The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works sold in auctions by 71 Argentinian artists during the years 1980-2014.

Design/methodology/approach

The authors estimated a regression of hedonic prices using the ordinary least squares method. When the regression was run and the results were analysed, the authors then estimated the annual price index of Argentinian artists’ work to then compare them with different financial and economic variables.

Findings

The average annual nominal arithmetic rate of return in dollars for Argentinian art during this period was 6.81 per cent, with a 29.11 per cent standard deviation. Argentinian art shows a low correlation with Argentinian and US companies’ shares and a slightly negative correlation with US bonds. This is the reason for artworks to be included in investors’ portfolios despite the relatively high volatility.

Research limitations/implications

Valuating works of art in Argentina can be explained by a series of their attributes. The benefits of art as an investment should be contrasted with factors including illiquidity and high transaction costs that are inherent when investing in works of art.

Practical implications

Argentinian artists’ works have higher prices when, ceteris paribus, they are dated; they are auctioned in either Christie’s, Sotheby’s, Galería Arroyo, Roldan & Cia, Meeting Art, or Naon & Cia; they are oil or acrylic paintings; they are larger in size – although the price increase is decreasing when the size of the painting increases; and when the artist dies before their work is auctioned.

Originality/value

This work presents the first rigorous price index of Argentinian artists’ works. Additionally, and as far as the authors have been able to observe, the time-period in this article is the longest that has been used in studies on art as an investment in emerging markets.

Propósito

Este trabajo presenta la elaboración del primer índice exhaustivo de precios de artistas plásticos de Argentina (y de cualquier otro país de Latino América) a partir de 5.069 ventas de obras de 71 artistas argentinos realizadas en subastas durante el período 1980-2014.

Diseño/metodología/enfoque

Se estimó una regresión de precios hedónica por el Método de Mínimos Cuadrados Ordinarios. Una vez corrida la regresión y analizados sus resultados, se procedió a estimar el índice anual de precios de obras de artistas argentinos, para posteriormente relacionarlos con diversas variables financieras y económicas.

Hallazgos

El rendimiento promedio aritmético nominal anual en dólares del arte argentino durante ese período fue de 6,81% con una desviación estándar de 29,11%. El arte argentino exhibe una baja correlación con las acciones de empresas argentinas y de EEUU y ligeramente negativa con bonos de EEUU, lo cual le confiere atributos para ser incluido en las carteras de los inversionistas, a pesar de la elevada volatilidad.

Limitaciones e implicaciones de la investigación

Se consigue que la valoración de arte en Argentina puede ser explicada por una serie de atributos de las obras de arte. Los beneficios del arte como inversión deben ser evaluados con la iliquidez y los elevados costos de transacción, entre otros costos, inherentes a la inversión en obras de arte.

Implicaciones prácticas

Las obras de artistas argentinos tienen precios más altos cuando, ceteris paribus: están fechadas, se subastan en Christie's, en Sotheby's o en Galería Arroyo, son ejecutadas en óleo o en acrílico, tienen un mayor área, aunque el aumento de precio es decreciente al aumentar el área, y cuando el artista ya había fallecido al momento de celebrase la subasta.

Originalidad/valor

Este trabajo propone el primer índice riguroso de precios de obras de artistas de Argentina. Además, y hasta donde hemos podido comprobar, el período utilizado en este trabajo es el más largo que se haya empleado en estudios del arte como inversión en mercados emergentes.

Details

Academia Revista Latinoamericana de Administración, vol. 30 no. 3
Type: Research Article
ISSN: 1012-8255

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Article

Harish Kumar Singla and Priyanka Bendigiri

The purpose of this paper is to find out the factors affecting rentals of residential apartments in Pune, India.

Abstract

Purpose

The purpose of this paper is to find out the factors affecting rentals of residential apartments in Pune, India.

Design/methodology/approach

Four regression models are developed, i.e. basic ordinary least square (OLS) regression model, OLS regression model with robust estimates, OLS regression model with clustered robust estimates and generalized least square (GLS) regression model with maximum likelihood (ML) robust estimates. Based on the Akaike information criterion and Bayesian information criterion criteria, OLS regression model with clustered robust estimates and GLS regression model with robust estimates are best fit. The data are tested for multicollinearity and the models are tested for heteroscedasticity. The study uses the expected rent value data collected from Web portals and the data on factors affecting the rental value of residential property are collected through the study of land use maps, Google earth software and field visits.

Findings

Total floor area and number of rooms are structure related factors that positively affect the rental value, i.e. more the area and number of rooms, higher the rental value. The distances from the nearest police station and fire station are security and safety factors. The results suggest that higher distance from these factors leads to lower rental values, as safety and security is the top priority of residents seeking residential property on rental basis. The distance from employment zones, distance from nearest school/college and the distance from the nearest public transport terminal are convenience related factors that negatively affect the rental value, as greater the distance, lesser the rental value and vice versa. The distance from Central Business District and hospitals has a positive effect on the rental values of a residential property implying that higher distances from these places command higher rental value.

Research limitations/implications

The study relies on rental data that owner is expecting for a particular property, it is not certain that the property would be actually rented for the same value. Second, researchers had to drop certain important drivers of rental value because of the issue of multicollinearity.

Practical implications

This is one of the rare studies conducted in Indian context, and the findings of the study are useful from the owner, tenants, urban bodies and developers’ point of view. Knowing that India is one of the fastest growing markets and need for housing is increasing day by day (including housing facility on rental basis), the stakeholders need to take care of the factors that affect the rental values of a residential property.

Social implications

The authors suggest the governments and the municipal bodies in India to come up with a public rental housing policy that separately caters to the needs of the lower income group, middle and upper income group in at least metros, tier I and tier II cities that are witnessing unprecedented growth in job seeking immigrants, who are seeking properties on rental basis. While developing a public rental policy, they must keep in mind the factors that are driving the rental values, such as proximity to employment zones, proximity to proper school and college, efficient public transport system as well as all safety and security measures. Creation of such a public rental policy is a win–win situation for immigrants, property owners and government/urban development bodies.

Originality/value

This paper is the first empirical study about the factors affecting rental values in Pune, India. The study will help property owners, immigrant and local tenants, government and urban development bodies to develop an understanding about the important factors affecting rental value and come up with their respective plans. Advanced econometric regression models are used based on the data that is collected through actual field visits, study of maps and secondary information rather than use of survey method or creation of dummy variables.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 6
Type: Research Article
ISSN: 1753-8270

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Article

M. McCord, P.T. Davis, M. Haran, D. McIlhatton and J. McCord

Accounting for locational effects in determining price is of fundamental importance. The demise of the mainstream property market has culminated in increasing appetite and…

Abstract

Purpose

Accounting for locational effects in determining price is of fundamental importance. The demise of the mainstream property market has culminated in increasing appetite and investment activity within the private rental sector. The primary purpose of this paper aims to analyse the local variation and spatial heterogeneity in residential rental prices in a large urban market in the UK using various geo-statistical approaches.

Design/methodology/approach

Applying achieved price data derived from a leading internet-based rental agency for Belfast Northern Ireland is analysed in a number of spatially based modelling frameworks encompassing more traditional approaches such as hedonic regressive models to more complex spatial filtering methods to estimate rental values as a function of the properties implicit characteristics and spatial measures.

Findings

The principal findings show the efficacy of the geographically weighted regression (GWR) technique as it provides increased accuracy in predicting marginal price estimates relative to other spatial techniques. The results reveal complex spatial non-stationarity across the Belfast metropole emphasizing the premise of location in determining and understanding rental market performance. A key finding emanating from the research is that the high level of segmentation across localised pockets of the Belfast market, as a consequence of socio-political conflict and ethno-religious territoriality segregation, requires further analytical insight and model specification in order to understand the exogenous spatial and societal effects/implications for rental value.

Originality/value

This study is one of only a few investigations of spatial residential rent price variation applying the GWR methodology, spatial filtering and other spatial techniques within the confines of a UK housing market. In the context of residential rent prices, the research highlights that a soft segmentation modelling approaches are essential for understanding rental gradients in a polarised ethnocratic city.

Details

International Journal of Housing Markets and Analysis, vol. 7 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

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