Investigating the differences in the impacts of redevelopment and building rehabilitation on house prices: A Hong Kong case study

Abstract

While redevelopment is a common approach to housing improvement or urban renewal, increasing numbers of scholars, urban managers and sociologists started promoting the use of building rehabilitation, which is more sustainable. In Hong Kong, public administrators have been facing challenges in choosing between redevelopment and building rehabilitation when executing urban renewal projects. For more informed policymaking, it is necessary to know and compare the benefits generated from different housing improvement projects. The literature suggested that redevelopment and rehabilitation could add values to the nearby properties, yet it is still unclear whether there are any differences in the positive externalities posed by the two processes, for example in terms of magnitude of price change and affected distance. In this regard, this study aims to investigate the differences in the effects between redevelopment and building rehabilitation on house prices in Hong Kong. Two housing improvement projects in the old urban area are targeted for investigation, using hedonic price analysis. Yet no significant positive net externalities are identified from both redevelopment and rehabilitation. The findings of this study offer valuable insights to the public administrators into the policy formulation regarding urban renewal in the city.