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1 – 10 of over 23000An increasing trend in residential property markets is the concept of planned residential community developments, offering a range of services not available to the existing…
Abstract
Purpose
An increasing trend in residential property markets is the concept of planned residential community developments, offering a range of services not available to the existing residential property markets in that given location. The purpose of this paper is to analyse a number of planned residential community developments in a major city to determine the demand for these developments and the impact they have in relation to price premiums and the overall residential property market.
Design/methodology/approach
This study has identified four planned residential developments in the Sydney property market and all sale transactions in these developed estates or unit complexes have been analysed and compared to the sales transactions in the residential areas immediately adjoining the planned residential developments. These sales represent all sales transactions in the study areas and this database has enabled a comparison based on price trends, average annual capital return and price volatility.
Findings
Results from this study have shown that residential property buyers are prepared to pay a premium for property in a planned residential community, despite the availability of cheaper housing within immediately adjoining locations, with this premium being maintained over time. The study also shows that buyers are prepared to purchase a property in a planned residential estate even though the adjoining areas are not considered to be as desirable, and in time the planned residential estate can increase the price of residential property in the adjoining areas.
Research limitations/implications
Although the sales data for two of the planned residential developments only covers the period 1999‐2004, this limitation is offset by the greater time period of sales transactions for the other two planned residential estates in the study. The limited sale period is due to the relatively new nature of these developments in Sydney, Australia.
Originality/value
The research has indicated that, in developed residential property markets, consumers will pay a premium for property that meets their lifestyle or security requirements, irrespective of the actual location of the development.
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David Kim Hin Ho, Eddie C.M. Hui, Tai Wing Ho and Satyanarain Rengarajan
This paper aims to examine the behavior of “rational” residential developers, under game theory, for their pricing strategy in a competitive environment.
Abstract
Purpose
This paper aims to examine the behavior of “rational” residential developers, under game theory, for their pricing strategy in a competitive environment.
Design/methodology/approach
Results show that residential developers cooperate implicitly for long-term benefit, leading to a slow-down in sales. Developers are motivated to deviate from cooperating at the beginning and at the end of successive periods in a sub-market. Relatively high profits, earnable in the first few periods, provide an allowance to undercut prices and improve sales. For the last few periods, the punishment for any deviation from cooperating is insignificant or zero. Note that the first-mover advantage in a new market is evident. On the effect of uncertainty on the developer’s residential prices, results show that as uncertainty increases, prices decrease while price variability increases.
Research limitations/implications
This study highlights the merits of a uniquely simplified experimental research design for the strategic behavioral pricing of the private residential development market using a game theoretic approach.
Practical implications
This study enhances the understanding of the residential development strategy of developers in the residential development market.
Originality/value
There is limited research on pricing strategy for the private residential development market in Asia.
Details
Keywords
- Behavioural pricing
- Development and redevelopment
- Price uncertainty
- Experimental research design
- First-mover advantage
- Game theoretic approach
- Private residential development market
- Investor-developer
- Behavioral pricing
- Pricing strategies
- Game theoretic approach
- Experimental research design
- Equilibrium price
- First-mover advantage and price uncertainty
Antti Tapio Kurvinen and Jaakko Vihola
Even as multi-story apartment building development proposals in existing neighbourhoods represent a substantial component of policy debate at local planning boards, there is…
Abstract
Purpose
Even as multi-story apartment building development proposals in existing neighbourhoods represent a substantial component of policy debate at local planning boards, there is limited evidence for the impact of such residential developments on surrounding apartment values. This paper aims to address the void in knowledge, and the impact of multi-story apartment building developments on apartment values in residential high-rise areas located outside city and district centres is investigated in Helsinki Metropolitan Area, Finland.
Design/methodology/approach
Whether a multi-story apartment building development is followed by an increase in housing values depends on both positive and negative externalities. To specify valuation effects of proximate development projects, advanced research design combining matched sample methodology and hedonic-based difference-in-difference approach is used.
Findings
It appears from the analysis that completion of a single multi-story apartment building has an immediate positive impact on apartment values within 300 metre radius, while there is no statistically significant impact on price trend.
Research limitations/implications
This paper studies apartment values only in Helsinki Metropolitan Area, Finland, and it is important to notice that local regulations and market conditions may have a notable impact on the outcomes.
Originality/value
This study is the first of its kind to provide with statistically significant evidence for positive impacts from multi-story apartment building development in Finnish residential high-rise areas and may have a crucial role in helping to dispel prejudices related to such developments.
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Antti Tapio Kurvinen and Tanja Tyvimaa
Even as many countries are facing changes in demographic profile and new types of senior housing developments are becoming more important, there is limited evidence for the…
Abstract
Purpose
Even as many countries are facing changes in demographic profile and new types of senior housing developments are becoming more important, there is limited evidence for the development impact of a senior house on surrounding residential property values. The purpose of this paper is to address the void in knowledge, investigating the impact of senior house developments on apartment values in Tampere, Finland.
Design/methodology/approach
To specify valuation effects of proximate senior house development projects, advanced research design combining propensity score matching procedure and hedonic pricing models is used.
Findings
The results show that a senior house development has a significant positive impact on proximate residential property values within a 500 metre radius. The impact is found to be the highest in underdeveloped neighbourhoods. Nevertheless, in neighbourhoods where property values and demand for housing units are higher and senior house developments fall into the criteria of infill development, a premium is lower, but still statistically significant and notable in magnitude.
Research limitations/implications
This paper studies apartment values only in Tampere, Finland, and it is important to notice that local regulations and market conditions may have a notable impact on the outcomes from senior house developments.
Originality/value
This study is the first of its kind to address a number of empirical issues and provide with statistically significant evidence for positive impacts from senior house developments – encouraging investors and developers to build senior houses.
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Kwabena Mintah, David Higgins, Judith Callanan and Ron Wakefield
Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support…
Abstract
Purpose
Real option valuation is capable of accounting for uncertainties in residential development projects but still lacks practical adoption due to limited evidence to support application of the theory in practice. The purpose of this paper is to use option valuation to value staging option embedded in residential projects and compare with results from DCF to determine which of the two methods delivers superior results.
Design/methodology/approach
The fuzzy payoff method (FPOM), a real options model that uses scenario planning approach to generate a range of figures, from which a single-numerical value is computed for decision-making.
Findings
The results showed that the use of a range of figures was able to represent uncertainties to a higher degree of accuracy than the static DCF. As a result, the FPOM was able to capture about 3 per cent of the value of the project that was missed by the DCF. The staging option offers an opportunity to abandon unprofitable phases of a project, thereby limiting downside losses. Thus, real option models are practically applicable to cases in property sector.
Practical implications
Residential property developers must consider flexibility in financial feasibility evaluation of development because of the embedded value in uncertain property projects. It is important to account for optionality in financial evaluation of property projects for value maximisation.
Originality/value
The FPOM has been used for the first time to evaluate a horizontal phasing of a residential development project.
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Satakhun Kosavinta, Donyaprueth Krairit and Do Ba Khang
The purpose of this paper is to investigate the rationality of the decision making of residential developers in Thailand. Exploring its implications in the residential development…
Abstract
Purpose
The purpose of this paper is to investigate the rationality of the decision making of residential developers in Thailand. Exploring its implications in the residential development field, the researchers propose the famous prospect theory as the primary cause of developers’ incompetent decisions during the pre-development stage of residential development.
Design/methodology/approach
The methodologies used in this research include literature review, expert interview, and experimental questionnaire.
Findings
The results show that Thai developers exhibit all five aspects of prospect theory: loss aversion, fourfold pattern, bias from rare events, mental accounting, and preference reversals (PR); however, in contrast to previous literature, the researchers found that Thai developers always choose to receive gains, and usually make risky choices to avoid losses, even if the risk of loss is low. Moreover, status quo bias has a low influence on Thai developers: they tend to become attached to the areas they develop, but remain flexible in selecting a project type that fits the land. In addition, PR and the framing effect affect only some groups of developers.
Practical implications
This research provides awareness to professionals in the residential development field to make sound judgements, using Thailand as a case study.
Originality/value
This paper reveals the existence of the unproven prospect theory in the residential development field using an empirical study in Thailand as a case study.
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Jayantha Wadu Mesthrige and Tayyab Maqsood
Hong Kong, like many other developed cities and countries, invests heavily in transport development. This study investigates whether the speculative benefits of future…
Abstract
Purpose
Hong Kong, like many other developed cities and countries, invests heavily in transport development. This study investigates whether the speculative benefits of future improvements in accessibility, brought about by impending transport development, will be capitalized into nearby residential property values even prior to the opening of the development.
Design/methodology/approach
Deviating from the standard hedonic price approach, the present study employed a fixed-effects model with a large data set of residential property transactions in the vicinity of three-stations situated along a newly proposed mass-transit-railway line in Hong Kong.
Findings
The results suggest that the values of residential properties close to stations do reflect the accessibility enhancements to be brought about by transport improvements even before the opening of the line. Results revealed a 6.5% of property value premium after the announcement of construction; and higher up to 6.7% after the operation of the line. This indicates that forthcoming new transport-infrastructure development produces changes in spatial price-gradients for neighbouring residential properties. Findings indicate that potential buyers/investors recognized the positive benefits of the planned transportation development, even before completion of the project, and are ready to pay a premium for those properties close to railway stations, representing clear evidence that residential property prices/values, near stations, reflect anticipated accessibility enhancements brought about by transport improvements.
Originality/value
This study, using a novel approach – a fixed-effects model to capture the speculative benefits of future improvements in transport infrastructure – provides a positive hypothesis that expected benefits of future improvements in accessibility are capitalized into property values.
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John M. Polimeni and Jon D. Erickson
This chapter presents projections of residential development in Wappinger Creek watershed of Dutchess County, New York in the Hudson River Valley. A spatial econometric model is…
Abstract
This chapter presents projections of residential development in Wappinger Creek watershed of Dutchess County, New York in the Hudson River Valley. A spatial econometric model is developed based on data from a geographical information system (GIS) of county-level socio-economic trends, tax parcel attributes, town-level zoning restrictions, location variables, and bio-geophysical constraints including slope, soil type, riparian and agricultural zones. Monte Carlo simulation is employed to distribute spatially explicit projections of land-use change under various residential development scenarios. Scenario analysis indicates the likelihood of continued residential, decentralized development patterns in formerly agricultural and forested parcels. Policy scenarios demonstrate possible courses of action to direct development and protect watershed health.
Most of the native citizens in the UAE live in public or private single-family houses. Given the tremendous cost of developing this type of housing and the inability of providing…
Abstract
Most of the native citizens in the UAE live in public or private single-family houses. Given the tremendous cost of developing this type of housing and the inability of providing single-family houses to cover all the current and future needs for public housing, high-rise residential buildings seem to offer an alternative. But the question is; does this type of housing suit the local communities in the UAE, especially in light of the failure of the previous western experiences?. Through addressing this question, the research proposes an approach towards a community-oriented design for high-rise residential buildings in the UAE.
The research first investigated the reasons behind the community-relevant shortcomings of the traditional high-rise residential developments in the West. Afterwards, it briefly reviewed the status quo of the community-relevant considerations in the design of the recently built high-rise residential buildings in the UAE, where it has been found that little concern has been devoted to the community needs. In an effort to find an answer to this problem, the research examined four recent design experiences as examples for the current universal efforts to design community-responsive high-rise residential developments. Some conceptual approaches were derived from these experiences that are envisaged to help reach an approach for the case of the UAE. Nonetheless, because of the unique social and cultural traits of the UAE native society one cannot rely on these global conceptual approaches alone. Instead, the research proposes an approach that, while benefiting from the relevant global experiences, is chiefly pivoted on the vertical reconfiguration of the idea of the ‘fareej’ as the smallest unit in the residential urban context both traditionally and in the future official urban plans in the UAE.
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Wisa Majamaa, Matti Kuronen, Chris Heywood and Juha Kostiainen
The purpose of this paper is to examine the identification and engagement of future inhabitants in planning processes for residential developments using a new “4Ps” participation…
Abstract
Purpose
The purpose of this paper is to examine the identification and engagement of future inhabitants in planning processes for residential developments using a new “4Ps” participation method, where the 4Ps denote public, private and people are in partnership. This form of participation gives new information, related to consumers' residential choice, unlike those environments produced by using other participation methods.
Design/methodology/approach
The empirical study is based on innovation theory where end‐users are primary stakeholders in the innovation process, and even innovators themselves. A case study of a new participation method based on a two‐phase internet questionnaire is used to research practical solutions in integrating end‐users into urban planning process.
Findings
This paper demonstrates that the widely used theory of communicative action in planning and its aim of increasing citizens' activity in planning and development processes can be developed to the stage that it also includes future inhabitants as stakeholders. Thus urban planning processes become innovative and customer‐oriented through their openness, end‐user orientation and interpretative nature.
Originality/value
The case study findings indicate that the new participation method described here gives flexibility and benefits to all stakeholders and is a method to create consumer‐desirable neighbourhoods. Engaging future inhabitants in planning processes opens previously unseen potential for including consumerist possibilities for cities and developers. This paper illustrates that this new 4Ps participation method makes comprehensive participatory planning and development possible through giving an opportunity to include consumers' opinions and needs into an alternative to traditional communicative planning.
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