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Locations of State Interventions: an Optimization Model. Effects on the Housing Market

Author

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  • Roberto Cervelló Royo
  • Baldomero Segura Gar del Rio

Abstract

European local government policies have placed a strong emphasis on urban regeneration and existing buildings accommodation, especially in the nearest CBU degraded urban areas, not only to improve urban environments, but also to relieve the great demand of housing in growing cities. This paper examines the effect of a State Intervention by an Index which measures the efficiency that the development of a regeneration project carried out by the public sector, in close partnership with the property development industry, has on the housing market. The hedonic price function is seen as the most suitable methodology to isolate its effect, which is supposed to be uniform all along the intervention area. For this, we built two optimal investment location models: a pre-intervention one and a post-intervention one. The first one, before the intervention, allows determining in which places and at which cost would be better to carry out the intervention to get the desired effect, provided that we are able to minimize the variability of the investment influences as well as to concentrate investment in some places. The second one, after the intervention, allows judging the actions carried out and fixing the best amount of investment for each place in which the intervention took place so that the effects will get the most possible homogeneous distribution. Both models will assess the best performance according to the housing market and the local policies.

Suggested Citation

  • Roberto Cervelló Royo & Baldomero Segura Gar del Rio, 2007. "Locations of State Interventions: an Optimization Model. Effects on the Housing Market," ERES eres2007_402, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2007_402
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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