PROPERTY PRICE, FLOOR LEVEL, AND BUILDING DENSITY

摘要

High-rise high-density building developments are one of the most spectacular features in Hong Kong's urban areas. Buildings are built as tall as possible, subject to statutory and contractual controls, in order to maximize development profits. Developing tall apartment buildings has at least two implications in the occupancy stage: 1) the availability of more shared facilities and 2) overcrowding. This paper aims to study the economic impacts of building density and the disposition of building services on property prices. It also sheds light on the important question of how floor levels are priced by property buyers in high-rise buildings. Our sample came from the transaction records of a unique estate-type development in Hong Kong. It comprises buildings which, except for their heights (ranging from 11 to 26 floors), are highly homogeneous. This means that other factors affecting property prices, such as location and views, can be effectively held constant. Based on hedonic pricing analysis, we found that taller (and thus denser) buildings were sold at a discount compared to shorter buildings, ceteris paribus. These results suggested that while developers build taller buildings for better returns, they should be reminded that it also comes with a decrease in sales for units on lower levels.