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Article: Externalities of Urban Renewal: A Real Option Perspective

TitleExternalities of Urban Renewal: A Real Option Perspective
Authors
Issue Date2014
PublisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638
Citation
Journal of Real Estate Finance and Economics, 2014, v. 48 n. 3, p. 546-560 How to Cite?
AbstractIf carefully planned, urban renewal may play an important role in regenerating a decaying neighborhood and mitigating the negative externality generated by dilapidated buildings in densely populated areas. Despite its potential benefits, in urban areas dominated by high-rise developments, urban renewal has an unintended negative impact on nearby properties since it reduces their redevelopment option values. In this study, we develop a number of hypotheses on how an urban renewal project, once made known to the public, affects neighborhood housing prices and test them with data in Hong Kong. Our empirical findings suggest that the degree of positive externalities brought by urban renewal depends on the scale of an urban renewal project, as well as the amount of commercial areas included in the project. Most importantly, through examining changes in the age coefficient, we found that an urban renewal project reduces the value of nearby buildings beyond the boundaries of the project. The negative effect was stronger for older buildings and for those buildings located closer to the project’s boundaries. These unintended consequences of urban renewal have not been analyzed or tested in previous studies.
Persistent Identifierhttp://hdl.handle.net/10722/200844
ISSN
2015 Impact Factor: 0.698
2015 SCImago Journal Rankings: 1.144
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChau, KW-
dc.contributor.authorWong, SK-
dc.date.accessioned2014-08-21T07:03:54Z-
dc.date.available2014-08-21T07:03:54Z-
dc.date.issued2014-
dc.identifier.citationJournal of Real Estate Finance and Economics, 2014, v. 48 n. 3, p. 546-560-
dc.identifier.issn0895-5638-
dc.identifier.urihttp://hdl.handle.net/10722/200844-
dc.description.abstractIf carefully planned, urban renewal may play an important role in regenerating a decaying neighborhood and mitigating the negative externality generated by dilapidated buildings in densely populated areas. Despite its potential benefits, in urban areas dominated by high-rise developments, urban renewal has an unintended negative impact on nearby properties since it reduces their redevelopment option values. In this study, we develop a number of hypotheses on how an urban renewal project, once made known to the public, affects neighborhood housing prices and test them with data in Hong Kong. Our empirical findings suggest that the degree of positive externalities brought by urban renewal depends on the scale of an urban renewal project, as well as the amount of commercial areas included in the project. Most importantly, through examining changes in the age coefficient, we found that an urban renewal project reduces the value of nearby buildings beyond the boundaries of the project. The negative effect was stronger for older buildings and for those buildings located closer to the project’s boundaries. These unintended consequences of urban renewal have not been analyzed or tested in previous studies.-
dc.languageeng-
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638-
dc.relation.ispartofJournal of Real Estate Finance and Economics-
dc.rightsThe final publication is available at Springer via http://dx.doi.org/10.1007/s11146-013-9418-z-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleExternalities of Urban Renewal: A Real Option Perspective-
dc.typeArticle-
dc.identifier.emailChau, KW: hrrbckw@hku.hk-
dc.identifier.emailWong, SK: kelvin.wong@hku.hk-
dc.identifier.authorityChau, KW=rp00993-
dc.identifier.authorityWong, SK=rp01028-
dc.description.naturepostprint-
dc.identifier.doi10.1007/s11146-013-9418-z-
dc.identifier.scopuseid_2-s2.0-84897057140-
dc.identifier.hkuros234024-
dc.identifier.volume48-
dc.identifier.issue3-
dc.identifier.spage546-
dc.identifier.epage560-
dc.identifier.isiWOS:000334419800008-
dc.publisher.placeUnited States-

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