The effects of building management practices on residential property prices in Hong Kong

Abstract

Building management and maintenance has gained its importance after a series of disastrous building-related incidents in Hong Kong. To facilitate the management of an apartment building, homeowners usually form an owners association among themselves and/or appoint an external property management agent (PMA) to manage the building on their behalf. Empirical studies found that the involvement of these bodies was conducive to a better-performing built environment, and that premium was added to better-performing properties. Yet, these studies often took the formation of owners association and engagement of external PMA in a building as dichotomous variables in exploratory models, and thus ignored the variations in the adopted building management practices in different buildings even with the same building management setting. Making use of the data collected from two previous research projects, a hedonic price analysis was carried out to study whether specific building management practices added value to the properties concerned. The analysis results indicated that properties in buildings with good documentations (eg keeping of as-built architectural drawings and incident records), thoughtful emergency planning (eg presence of emergency plan and regular fire drills) and property-all-risk insurance coverage were sold at a premium, ceteris paribus. Policy and practical implications then follow. © 2009 Palgrave MacMillan.