Retail Development Externalities for Housing Values
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|Julkaisu||Journal of Housing Research|
|Tila||Julkaistu - 2019|
This research study investigates one of the most frequently debated questions in real estate development today: what impact does retail development have on surrounding residential property values? We utilize a property registry dataset that provides comprehensive records for all retail developments in a market and merge this with residential transactions data. A propensity-score matching procedure is applied to condition the sample so that housing values in close proximity to retail development are related to similar properties. We estimate that new retail development has a positive and significant impact on housing values. The estimated increase is 1.5 percent within a 0.5 kilometer radius, dropping to 0.6 percent for the 1.0 kilometer radius. Thus, positive externalities resulting from new retail development appear to more than offset potential negative externalities. The positive impact diminishes with distance from the development site and is also affected by project size.