An empirical study on the effect of developer brand on the prices of the residential flats in Hong Hong

Abstract

Branding plays a crucial role in marketing and sales, and extensive research has been conducted on its impact in traditional industries such as retail and luxury goods (Keller, 2003). Surprisingly, the effect of branding in the real estate market has received little attention and discussion. While it may be assumed that the impact of branding in real estate is straightforward and requires no investigation, there is a need of literature to support the existence of the impact of branding. Furthermore, understanding the potential attributes of branding can assist valuers in conducting more comprehensive property valuations. Although developer branding may be considered subjective, it can be defined objectively using specific criteria. This study examines the effect of good developer branding on the prices of residential flats in Hong Kong, with a focus on its long-term impact using second-hand sale transactions as the sample. The empirical findings and implications are summarized as follows. The study finds a long-term positive effect of good developer branding on residential prices, even for buildings that were not originally sold by the developer. This aligns with the expectations and theories mentioned by Henson (2002), Keller (2003), Tsao et al. (2006), Li et al. (2010), and Viitanen (2004). Furthermore, the premium associated with branded developers does not significantly outperform unbranded developers when compared to the impact of other attributes. The premium of branded developers falls within a normal range of 1% to 15%, with an average of 8.2403%. This suggests that buyers consider developer branding along with other factors such as size, age, and proximity to transportation. These findings are consistent with the research of Tsao et al. (2006), indicating a low level of brand differentiation in the market. In markets with higher brand differentiation, buyers may have a higher belief in the quality of unbranded products. The moderate premium observed in this study suggests a reasonable level of differentiation between branded and unbranded developers in Hong Kong. Additionally, the Diagnostic test confirms the accuracy of the regression model, indicating its reliability and the ability to interpret parameter estimates with confidence. However, further analysis is recommended to validate the absence of significant autocorrelation. This study fills a research gap by providing insights into the effect of developer branding on residential buildings in Hong Kong. It offers a literature basis to support professionals in their investment and valuation of residential properties by considering developer branding. The study also provides developers with insights on developing their branding strategies, as the significant impact of developer brands may encourage them to invest more resources in promoting their brand and increasing differentiation to command a higher premium from buyers. While every effort has been made to conduct this study diligently, it is important to acknowledge its limitations and recognize the potential for further improvements to enhance the credibility of the findings. One limitation is the potential omission of relevant independent variables that influence residential property prices. For instance, factors such as views are often considered important in the housing market, and their exclusion from the models may have led to an oversight of their effects on property prices. Another limitation stems from constraints in time and resources, which affected the accuracy and coverage of the results. Due to these limitations, the study could only focus on a small sample size and a limited scope, which may have implications for the accuracy and significance of the variables and the overall model. Furthermore, this study only examines a specific group of developer brands, and comprehensive coverage of all developer brands could not be achieved within the given time constraints. Additionally, due to time limitations, a questionnaire was not conducted to aid in the selection of good developer branding, potentially introducing bias in the definition of developer brands. In short, expanding the study areas and collecting a larger dataset would undoubtedly enhance the credibility of the results. Moreover, additional resources, such as readily available information and data, should be utilized to broaden the scope of the research. By doing so, the study can provide a more comprehensive and robust analysis of the subject matter. To enhance the comprehensiveness of the results, several improvements can be made. Firstly, collecting more data, including a larger number of transactions spanning multiple years, would provide a more extensive dataset. Additionally, increasing the sample size by including more buildings from each district would enhance the representativeness of the findings. Nonetheless, conducting a questionnaire to investigate the reputation of developer brandings would contribute to a more objective definition and yield more representative results. This would provide a better understanding of how buyers perceive and value different developer brands. Moreover, incorporating additional attributes such as views into the model would improve its explanatory power and increase the R square of the results. This would allow for a more comprehensive analysis of the factors influencing residential property prices. In short, collecting more data, conducting a questionnaire, and including additional attributes in the model would contribute to a more comprehensive and robust study, enhancing the authenticity and reliability of the findings. For future study, future scholars can focus on the effect of developer branding on residential properties in the first-hand sale market. This would allow for a comparison between the effects of branding in the first-hand sale market and the second-hand sale market. Furthermore, future scholars can focus on a detailed analysis of each developer brand which can provide a better understanding of the premium or discount that buyers are willing to pay for specific developer brands. This would allow for a more nuanced examination of the branding effect in the real estate market. Additionally, scholars can explore the impact of branding on other types of properties, such as industrial and office buildings which would provide a more comprehensive understanding of the branding effect in different sectors of the real estate market. Lastly, scholars can investigate the impact of developer branding on investment decisions. Understanding how branding influences investors' perceptions and decisions could provide insights for both developers and investors in the real estate market. In conclusion, future research on the impact of developer branding should consider studying the first-hand sale market, conducting a detailed analysis of individual developer brands, exploring other types of properties, and investigating the impact on investment decisions. These areas of research would contribute to a more comprehensive understanding of the branding effect in the real estate market.