Theoretical and empirical studies on how building performance is valued by the property market abound in the literature. Some of them investigate changes in property prices after building renovation, but little has been done on pricing the safety performance of buildings. This article presents a study that explores whether residential properties in safer buildings command higher market values in Hong Kong. Hong Kong is a good laboratory for this study because building failures can pose a serious threat in such a densely populated high-rise environment. The study measures the safety performance of a building by the weighted number of unauthorised building works (UBWs) on the external walls of the buildings. By their nature, UBWs are building works that are constructed without prior approval and consent from the government. A hedonic price model is developed to assess the market value of building safety. For the model estimation, apart from the property transaction data, the number of unauthorised appendages (i.e., UBWs attached to the building facades) in each building studied is obtained through a building survey. Based on the analysis results, several hypotheses built upon the theories of selfprotection and self-insurance are tested.
|Number of pages||13|
|Publication status||Published - Jul 2015|
Bibliographical noteThe work described in this article was fully supported by a grant from City University of Hong Kong (Project No. 7003049). A previous version of the article was presented in the Asian Real Estate Society 19th International Conference held in Gold Coast, Australia in July 2014. The author would like to thank the delegates for their valuable comments and suggestions on the article.
- Building safety
- Hedonic pricing model
- Unauthorised building works