Improvements in transport were commonly found to have a positive effect on the price of housing. As the construction of infrastructure often lasts for years, it is plausible to assume that investors will take expected improvements into consideration when pricing and trading neighbourhood properties. However, there have been few investigations of such effects. This paper is an empirical study of whether premiums were paid for the expected benefits offered by a new tunnel before its completion. The results showed that there were positive price expectation effects well before the completion of the tunnel. The expectation effects allow the government to finance infrastructure projects by selling land in the affected districts in advance.

There have been very few empirical studies investigating the value enhancement effects of refurbishment and most rely on cross‐sectional data, which cannot show the before and after effects conclusively because of the heterogeneous nature of the properties. The problem of refurbishment is more complicated in buildings or housing estates with multiple‐ownerships, since refurbishment is a collective decision, which can sometimes be difficult to achieve. Uses panel data in Hong Kong to estimate the impact of refurbishment on the market value of properties in a large housing estate. The results show that the refurbishment brought about approximately a 9 per cent increase in the market value of the properties, which far exceeds the cost of refurbishment. Suggests that property owners of a housing estate will benefit if they can reach a collective decision on renovation.

The efficiency of a market is challenged when price dispersion occurs. Previous studies focused on non-durable consumption goods. This study extends the analysis to the case of residential property, whose transactions are dominated by a second-hand market with many potential buyers and sellers. We demonstrate that housing price dispersion exists, and the degree of dispersion changes systematically with some macroeconomic factors, though the second and the third moment of the price distribution react differently to the macroeconomic variables. Some directions for future research are suggested. Copyright Springer Science + Business Media, Inc. 2006Price dispersion, Search models, Macroeconomic factor, Time aggregation, C320, D610, D830, E300, R310,

A high-density built environment poses challenges to the idea of sustainable development in respect of health (e.g. SARS outbreak) and safety (e.g. fire and structural problems). To examine the seriousness of the high-density problem, this study aims to survey the health and safety performance of apartment buildings in a densely populated city, Hong Kong, using a simplified assessment scheme. An assessment scheme based on a hierarchy of building performance indicators concerning the quality of: (a) architectural design, (b) building services design, (c) the surrounding environment, (d) operations and maintenance, and (e) management approaches was developed. One hundred forty (140) apartment buildings were surveyed and assessed through site inspections, desk searches, and interviews. A performance analysis was conducted to examine and compare the overall health and safety performance of the buildings. We found that there were considerable variations in health and safety conditions across buildings, even though they are located within a single district. Most of the variations in building health and safety conditions were attributed to differences in building management systems rather than building design. Enhancing strategic management approaches (e.g. a better delineation of owners' rights and duties) appears to be the most critical factor that underperformers should consider in order to improve their buildings.

The paper examines how building height is determined in the absence of building height regulatory restrictions. A model is developed for determining optimal height using simple neo-classical economic analysis; this is then tested using empirical data from Hong Kong. The results show that the observed building heights are consistent with the optimal height predicted by the model. In addition, it was also found that the point of optimality varied positively with the quality of the external environment. An important practical implication is that town planners and policy-makers can make use of the model as a benchmarking tool to assess and quantify the effect of imposing or relaxing height restrictions.

This is an empirical study on the pricing of two vertical property attributes: floor level and building height. Floor level is the vertical location of a unit in a multi-storey building; the extra price paid for a higher floor level is labelled a floor-level premium. Previous hedonic price studies unequivocally showed that the floor-level premium is positive, but they were silent on whether its magnitude varies with floor levels and with buildings of different heights. Indeed, building height is a feature of a building, not its constituent units, so it is not clear whether building height alone should affect the units' prices. Based on a sample of highly homogeneous housing units in buildings of varying heights, we found that (1) the floor-level premium was not constant, but diminished as floor level increases; (2) there was no significant difference in the pattern of the floor-level premium between high-rise and low-rise buildings; and (3) there was a positive and significant premium for units in low-rise buildings over those in high-rise ones. These findings can help developers determine the optimal height and shape of their development.

We examine the effect of forward sale (pre-sale) activities on the volatility of spot prices in the real estate market. The abundance of pre-sales data and major changes in regulatory control on the pre-sale market during the 90's in Hong Kong allow us to undertake empirical tests using Hong Kong's real estate data. Our results show that the volatility of spot prices increased significantly after forward sales were severely dampened by regulatory control measures introduced in 1994, but decreased again when the measures were partly relaxed in 1998. The results contribute to the long lasting debate on whether the introduction of a futures market reduces the volatility of spot prices. Previous studies were mainly conducted in markets with low transaction costs, notably financial markets. By utilizing the unique regulatory changes in the pre-sale market of Hong Kong, we are able to conduct an experiment on the conditional volatility of spot prices in a high information-cost environment, thereby shedding light on the important role of forward housing contracts in providing price expectation information for spot trading. Copyright Springer Science + Business Media, Inc. 2006Forward contract, GARCH model, Pre-sale, Price volatility,

Developers often conduct forward sales (or presales) before building completion to relieve financial risk and burden. However, there are worries that housing units sold in this way will turn out to be substandard because developers, who have been paid for the unfinished units, may have incentives to cut costs by lowering the quality. This is a typical moral hazard problem. Nonetheless, forward sales have been very popular in some Asian cities such as Hong Kong, Singapore, and Taiwan. A plausible explanation is that the market has efficiently adjusted the forward price for this potential quality problem according to developers’ reputations. This paper aims to theoretically explain and empirically test (1) whether reputation is reflected in forward prices and (2) whether the expected quality level matches with the actual quality level. Using the forward and spot sales data of the Hong Kong real estate market, we found that even though housing quality was not observable during presales, the market was able to capitalize developers’ reputations into forward prices accurately. This suggests that the optimal strategy for developers is to stick to the quality level implied by their reputations. Copyright Springer Science+Business Media, LLC 2007Real estate forward sales, Moral hazard, Reputation, Market efficiency,