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

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  • Leung, Charles Ka Yui
  • Ma, Wai Yip
  • Zhang, Jun

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 43896.

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Date of creation: Jan 2013
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Handle: RePEc:pra:mprapa:43896

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Keywords: endogenous multi-collinearity; interior design; market valuation; dummy variables; interaction terms;

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