An empirical study on the effect of Kai Tak development to the residential property price of Kai Tak district

Abstract

Kai Tak Development (KTD) was conceived as an integral component of the Energizing Kowloon East (EKE) strategy, which was introduced in the 2011-12 Policy Address. In contrast to other districts within the EKE strategy such as Kwun Tong, Kowloon Bay and San Po Kong, which already possess established urban centers and have predominantly undergone redevelopment, Kai Tak stands out as a newly developed town. It is specifically designated as the central hub for CBD 2.0 development within the EKE region, incorporating comprehensive growth in residential, commercial, retail, infrastructural, and recreational aspects. Kai Tak not only dominates the market for new private residential developments but also exhibits the highest average property price among the districts in Kowloon East. To investigate this phenomenon, Regression Analysis and the Hedonic Price Model are employed to examine three hypotheses concerning the spillover effect of KTD, the changing trends in housing values in neighboring areas and the establishment of a housing price gradient within the district's context. Based on the development of two comprehensive models, all three hypotheses have been substantiated. The ambitious KTD project is highly likely to generate positive spillover effects on residential properties values in the immediate vicinity. These effects can be attributed to the increased demand resulting from the growing working population in KTD, as a consequence of the CBD 2.0 commercial development. The presence of sustainable building attributes, along with noteworthy anticipation effects regarding district connectivity, open space and amenities, further validate the upward trend in property prices over time. Furthermore, the impact of development in the KTD area continues to hold substantial importance within the district housing market. Analysis of the “distance-to-KTD” variable reveals that the significance of KTD surpasses that of community revitalization efforts in more distant districts. This observation aligns with the bid rent theory, as a housing price gradient is observed, wherein property prices decrease as the distance from KTD increases. Regardless of the limitations in data collection and minor deficiencies in the Hedonic Price Model, the empirical findings generally capture the buyer's price expectation effect on the significant transformations in the KTD, especially in the aspects of enhancing connectivity and providing ample open spaces and amenities. These findings hold important policy implications for the ongoing development in the KTD, particularly as many features are still in the planning stage. Implementing structured project planning processes can further amplify the positive buyer expectation effect. Furthermore, the research highlights the need for improvements in the walking accessibility of Kai Tak, indicating opportunities for targeted interventions in this area.