Cross-border shopping accessibility and housing rents: A case study of HK residents flocking north to Shenzhen

Abstract

Since the reopening of the border in 2023, Hong Kong (HK) residents have been flocking north for weekends due to the cost-effective commercial offerings. This study investigates the extent to which accessibility to Shenzhen commercial spaces affects HK's housing rents. The Difference-in-Differences (DID) method was utilized to infer the marginal implicit price of cross-border accessibility in the HK rental market. Treatment houses within 34 km of border crossings experienced an approximately 3.51 HK$ per square foot extra increase in rent, confirming the positive and non-linear net effect of cross-border accessibility. One standard deviation increase in accessibility was related to an approximately 0.65 HK$ per square foot extra rent increase, of which the magnitude ranked only second to floor (height) and number of rooms. Therefore, the convenience of shopping in Shenzhen has become a non-negligible factor appreciated by specific HK households when renting houses. Traditionally less-preferred residential areas have seen increased demand, indicating that when interregional economic ties strengthen, the impact of cross-border accessibility on the real estate market in neighboring cities can be substantial. Our findings provide a timely and valuable reference to inform interregional policies and transportation infrastructure investments that foster economic integration while accounting for the consequent spillover effects on local markets.