A study on the impact of the West Kowloon Cultural District development on the nearby residential prices

Abstract

The West Kowloon Cultural District (WKCD) is a prominent cultural and arts development initiative situated in Hong Kong. Its inception can be traced back to the establishment of the West Kowloon Cultural District Authority (WKCDA), a statutory body, in 2008. The primary objective of the WKCD is to offer exceptional cultural, entertainment, and tourism programs that possess an undeniable allure for both local residents and visitors. Considering the profound transformation occurring in the neighbourhood of West Kowloon, the spillover effect of the WKCD is anticipated to have varying impacts on nearby residents at different levels. In light of this phenomenon, this research aims to study the empirical relationship between the neighbourhood transformation in WKCD and the residential property price changes among the private residential estates in the South West Kowloon. The study will base on four major pivotal factors: tourism gentrification, local employment growth, walking accessibility and public open space. Given the focus of the research on quantifying the influence of various factors, a quantitative regression analysis is employed within the framework of a hedonic price model. This approach enables the examination of the relationships between the variables of interest and the impact they have on housing prices. By employing rigorous statistical techniques, the study aims to provide objective insights into the factors influencing housing prices and their quantifiable effects. Throughout this study, three hypotheses are proposed. First, the WKCD development is expected to generate a positive impact on the residential prices in West Kowloon, owing to the drastic neighbourhood transformation from the development. The positive impact will increase over time. Second, it is envisaged that the peripheral regions in South West Kowloon (including Austin, Olympic and Nam Cheong) will be benefited by the development as well. However, it is predicted that there will be no significant increase in these regions over time. Finally, the development will exert a pricing gradient across the South West Kowloon over distance, without accounting the residential units from West Kowloon due to the significant price discrepancies before the WKCD development. The empirical findings of this study suggest a positive association between the development of the WKCD and residential prices in the West Kowloon area. Moreover, it is projected that the influence of the WKCD development on the region will continue to grow, primarily driven by the ongoing expansion efforts within the WKCD. This positive impact can be attributed to the establishment of high-end local businesses within the WKCD as well as the environmental improvements resulting from the creation of public open spaces. The study also examines the impact of the West Kowloon Cultural District (WKCD) on neighbouring regions within South West Kowloon. It reveals an immediate increase in residential prices following the completion of the public open space, known as the Art Park, within the WKCD. This finding demonstrates the spillover effect of the Art Park, which generates local demand and influences the momentum of the residential market in these regions. Conversely, there is no significant rise in housing prices in these areas due to the ongoing tourism expansion of the WKCD, indicating that the primary driver of residential price growth is the presence of the public open space within the WKCD. Furthermore, the study reveals the presence of a pricing gradient within South West Kowloon based on proximity to the public open space in the WKCD. As the distance moves farther away from the WKCD, a decrease in residential prices is observed. Importantly, the analysis confirms that this price over distance gradient in South West Kowloon exhibits a higher degree of linearity following the implementation of the WKCD, thereby substantiating the third hypothesis put forth in the study. In conclusion, the empirical findings of this study shed light on the housing dynamics within the vicinity of the WKCD following its development. The results highlight the positive impact of the WKCD development on nearby residential areas, underscoring the significance of the diverse and high-quality cultural amenities offered by the site. These insights are valuable for real estate investors seeking to maximise their property portfolio within the WKCD, as well as for the WKCDA in their role as policymakers, aiming to optimise the site's value and enhance its financial viability.