An empirical study on the relationship between the land uses in urban renewal authority redevelopment and the neighbourhood residential property prices

Abstract

Mixed-use redevelopment is regarded as a more efficient solution to urban decay in the densely populated urban areas in Hong Kong, as it meets the various needs of residents and induces more significant improvement to the neighbourhood compared to single-use redevelopment. The COVID-19 pandemic has accelerated the idea of integrating diversified land uses and facilities in a given community, leading to the "15-Minute City" concept, which emphasises proximity-based planning. This approach is expected to create numerous benefits on social, economic, and environmental scales, making diversified land use planning critical in future urban renewal projects. Therefore, it is worthwhile to study which land uses within the redevelopment can significantly improve the neighbourhood. As many studies have revealed that the improvement in neighbourhood quality can be reflected in the housing prices, in this study, it is argued that the external price impacts brought by an urban renewal project on the neighbourhood residential properties depend on the type of land uses provided within the project site, especially for those that are publicly accessible. Several hypotheses have been developed regarding how different land uses within the urban renewal projects affect neighbourhood residential property prices. After analysing over 23,000 transaction records of residential properties in the immediate vicinity of 8 selected mixed-use Urban Renewal Authority (“URA”) led redevelopment projects over a 20-year period, it is found that the degree of positive externalities brought by urban renewal depends on the scale of commercial, Government, Institution or Community (“G/IC”) and public open space components within the project site. The public open space component within the redevelopment project can create the most significant price impacts on the neighbouring properties, followed by the commercial part. On average, for a 1,000 m2 increase in the public open space of an urban renewal project, neighbourhood property prices can increase by approximately 1.6% to 3%; for a 1,000 m2 increase in the commercial area, neighbourhood property prices can increase by about 0.06% to 0.07%. The results reflect that people are willing to pay more for a larger, well-managed public open space compared to a more enormous shopping mall in their proximity, though both types of use are value-added. However, our results indicated that a larger G/IC component would depress the prices of the neighbourhood residential properties. For a 1,000 m2 increase in the G/IC area of an urban renewal project, neighbourhood property prices can decrease by 0.4% on average. It could be explained by the fact that G/IC use covers various types of public facilities and amenities and that not all are value-added to the nearby residents. On the other hand, it is also discovered that the external price impacts created by public open space and G/IC components diminish as the distance from the project site increases, while the externalities produced by commercial component increase with the distance from the site. This study provides an explanation of the overall externalities of urban renewal and explores the factors affecting the external impacts of the redevelopment projects on the nearby residential properties. The results of this study also have practical implications for the mixed-use urban renewal and future planning of such projects in Hong Kong.