The impact of a pedestrianisation scheme on retail rent: an empirical test in Hong Kong

Abstract

Purpose - The purpose of this paper is to study empirically the effect of a pedestrianisation scheme on retail rent, in a case study in Hong Kong. Design/methodology/approach - Most of the previous studies on the impacts of pedestrianised areas on the environment were qualitative ones, and without controls. This study, in contrast, uses panel market data in Hong Kong to estimate the effect in a two-street-two-period controlled model. Findings - The results show a net 17 per cent increase in rental value of retail shops in the pedestrianised area is achieved, ceteris paribus. Research limitations/implications - Sample size and number of case study are not large enough to make robust conclusions; some other uncontrollable variables may well be attributed to the increase in rents. Practical implications - Retail rent is found empirically to be dependent of the external environment. Social implications - Shoppers' preference for pedestrianisation schemes can be indirectly quantified by the change of retail rent. Originality/value - This paper presents the first two-street-two-period panel empirical test on the effect of pedestrianisation scheme on retail rent.