An empirical study on the effect of dark toilets and pandemics on residential property prices in Hong Kong

Abstract

Dark toilet refers to toilets without windows. They have been prohibited for hygienic purposes in the past, but the Buildings Department relaxed the relevant regulations in 1996 and dark toilets have then been allowed in residential units. After the relaxation, dark toilets have been gaining popularity among developers and more developments involving dark toilets are introduced. However, dark toilets do not seem to be appealing among buyers because of the hygienic concerns from the lack of natural daylight and natural ventilation. The hygienic concerns of dark toilets are further raised during the outbreak of SARS in Hong Kong because of the evidence that dark toilets could be more liable to vertical transmission of the disease. Vertical transmission means that there is a transmission of disease from the resident of one flat to residents who live in a vertically aligned flat. Vertical transmission is common during both SARS and COVID-19, which are two major pandemics in Hong Kong started in 2003 and 2020 respectively. This study examines how dark toilets may impact the price of residential properties in general and during pandemics. It adopts a regression approach with the assistance of hedonic price models to control for various attributes of the buildings, which encompasses data from 16 residential developments across the territory. The empirical results of the study suggest that dark toilets decrease the value of the residential flat by 2.40% on average, which implies that dark toilets are penalised by buyers in general compared to toilets with windows. The result confirms the observation that dark toilets are not appealing to buyers in general. During the period of SARS, it is discovered that the prices of flats with dark toilets were 11.71% lower than that of flats with toilets with windows only. A possible reason is the fear of vertical transmission during SARS because dark toilets are more liable to vertical transmission according to a report published by the Department of Health (2003) in June 2003. For the outbreak of COVID-19, it is discovered that the prices of flats with dark toilets only are 0.24% lower than that of flats with toilets with windows only. A possible reason for such a great difference is the availability of information. More paths of vertical transmissions were discovered during COVID-19, some of which suggested that toilets with windows are also more liable to vertical transmission than dark toilets. Hence, dark toilets are less unfavourable during COVID-19 than that during SARS. There are very few previous studies regarding the impact of dark toilets on residential property prices. The outcomes of the study could contribute to the understanding of the impact of this new common building feature on residential prices. Apart from the academic contribution of the study, the result of the study could also have practical implications for residential property owners and developers. The result offers evidence of the reluctance of dark toilets of the buyers, which could provide insights into the building design for new residential developments to developers and insights to the sellers and buyers of the residential flats regarding the pricing of the units.