Governance in a co-ownership environment: The management of multiple-ownership property in Hong Kong

Abstract

Purpose - To examine how the allocation of property rights in multiple-ownership buildings in Hong Kong creates an environment in which the optimization of asset value may be difficult to achieve and in this situation how owners chose to overcome the associated problems of collective action decision making to resolve issues of building management. Design/methodology/approach - An institutional approach, drawn from the literature on common property and collective action, is used to examine the management of multiple-ownership property. The paper uses a hedonic pricing model to empirically test whether, in such circumstances, management is reflected in property price and which mode of governance owners prefer as a mechanism for resolving problems of collective action. Findings - The institutional arrangements for co-ownership and use of multiple-ownership property assets in Hong Kong have resulted in an "anticommons" environment, in which individual owners are in a position to veto action in relation to the property. In the absence of mandatory management the study indicates property prices are increased in those cases where owners have chosen to resolve the difficulties of collective decision making by forming incorporate owners' groups and employing professional management services. Research limitations/implications - The outcome of the empirical work is the result of an initial study carried out in one district in Hong Kong and may not be generalised. In the future, the approach will be extended to other areas. Practical implications - In the absence of a regulatory environment which ensures the management of multiple-ownership property assets, owners may be better advised to formalise arrangements through the formation of incorporate owners' groups and appointment of professional property management agents. Originality/value - The paper assesses the implications of an anticommons environment for the management of multiple-ownership property in Hong Kong. Examines arrangements for collective decision making and demonstrates influence of management on property price. © Emerald Group Publishing Limited.