ANNOUNCEMENT EFFECTS OF MIXED-USE DEVELOPMENTS ON RESIDENTIAL PROPERTIES

Abstract

This paper aims to establish the announcement effects of retail-residential mixed-use properties on surrounding residential developments. As a foray into the field of the retail-residential type of mixed-use development, this study seeks to kick-start research on the impact of the retail-residential development, specifically, in view of the increasing focus on the mixed-use concept in Singapore. The net effect of the mixed-use developments as expected at announcement is quantified by analysing the implicit price effect of the mixed-use factor through the hedonic pricing model. Two models are used in the analysis, one of which takes into account proximity effects via interaction terms. A qualitative discussion based on on-site observations made by the researcher is then undertaken to establish possible explanations and supplement the quantitative results. Through an analysis of 453 resale transactions at private residential properties around three retail-residential mixed-use developments that are still under construction, it is found from the model that is more statistically significant, that there is a positive announcement effect exerted by the mixed-use development on surrounding residential property values. Transaction prices reflect a positive effect that declines as distance from the mixed-use site increases, indicating the presence of proximity effects as well. Based on qualitative observations, it is also proposed that the quality of existing neighbourhood amenities may influence the generally positive effect of the retail-residential development. The effects of the retail component also seem to have more weightage than those of the residential component in constituting the net effect of a retail-residential development.