The Market Valuation of Interior Design and Developers strategies: a simple Theory and some Evidence

Leung, Charles Ka Yui and Ma, Wai Yip and Zhang, Jun (2013): The Market Valuation of Interior Design and Developers strategies: a simple Theory and some Evidence.

Abstract

How much do the market values of housing reflect its interior design? Does the interior design interact with other housing attributes? Following the recent research based on “graph theory,” this paper confirms the importance of internal design variables in a hedonic pricing model, which is applied to a large dataset of high-rise apartment buildings in Asia. The evidence is consistent with a simple theory that developers strategically use interior design to “dilute” the effect of location, which leads to a form of endogenous multi-collinearity. Directions for future research are also discussed.

• Item Type: MPRA Paper
• Language: English
• Keywords: endogenous multi-collinearity, interior design, market valuation, dummy variables, interaction terms
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R10 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R20 - General; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand

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