Hedonic analysis of open spaces in urban residential neighborhood of Dhaka

Abstract

Urban open spaces and public recreation lands enhance the environment, economy and quality of life in cities by improving air quality, providing recreational opportunities, and enhancing aesthetic values, among many other benefits. Development decisions in the Dhaka city frequently fail to consider the values of such open spaces. As a result, development occurs in ways that greatly reduce or destroys these open spaces with negative environmental, economic, and social consequences. This study only concerns with the valuation of open spaces specially parks and water bodies of different urban residential neighborhoods of Dhaka city in Economic terms. The real estate is one of the vital catalysts for a country’s economy as urban land value is determinative in both urban planning and real estate activities in economies of today’s world. Within the context of the economic valuation of open space, the presence and absence of open space has an effect on the residential property value in Dhaka is assumed and verified. Together with a set of structural, location and socio-economic variables use to explain residential property prices; the study focuses on three amenity or environmental variables which include the existence of views of park or lake, the distance from the housing unit to the nearest open space, and the size of that open space. To analyze the impact of open space attributes on real price of residential properties, an empirical analysis is carried out by employing Hedonic Price Method (HPM). The regression analysis results from the first stage hedonic estimation reveal that homebuyers are willing to pay only for scenic views and living in the closest proximity to open spaces especially as parks and lakes for both owned and rental houses. This study estimates that the presence of open space views increase the house price on an average 14% of actual price for owner occupied houses and increase the rent price on an average 12% supplementary for rental houses. In the same way, distance from the house to the nearest park is negatively related to the house price. This indicates the marginal implicit price for owner occupied houses increase 5.3%, by reducing the distance between a house and the closest open space by 100ft. In contrast empirical results for proximity to open spaces for rental houses and the size of the nearest open space for both owned and rental houses do not show a statistical significant relationship on nearby property values. As in Dhaka supply of open space is far short of demand therefore less choice makes it difficult to clearly determine the value of property due to the size of nearby open space. This estimated valuation of open spaces and their amenity benefits will be useful in urban design, land use planning and open space preservation decision making.