Winky K.O. Ho

Zone Separation: A Probit Analysis of Hong Kong Planning Application Statistics

In this paper we demonstrate the use of a probit model to evaluate whether two classes of apparently similar/dissimilar zones with identical uses, that may be carried out with planning permissions, are in fact similar (and hence ‘inseparable’) or otherwise. Four empirical hypotheses about comprehensive development area, commercial/residential, and community-use zones in Hong Kong are tested by using nonaggregate planning application statistics of 793 observations. Acknowledgements. We wish to thank Professor Wing Suen of the School of Economics and Finance, The University of Hong Kong for his useful comments. We are also indebted to three anonymous referees who deserve our special thanks for their careful review and thoughtful suggestions. All faults are ours. This paper is partially sponsored by a CRCG grant (Number 10203311) of the University of Hong Kong.

Small is beautiful: a probit analysis of development control of small houses in Hong Kong

In this paper we apply the probit model, an econometric technique that has been used in urban economics to examine nonaggregate cross-sectional data, to investigate the development control (planning application) data regarding the so-called ‘small houses’ in Hong Kong with respect to two classes of statutory zones, namely the ‘green belt’ and ‘unspecified uses’ zones. Four refutable hypotheses relating to the scale of the development, exogenous policies, and internal planning guidelines confronting the planning permission mechanism are tested by using a probit model adapted for the purpose. The data set with 826 individual observations over a period of 24 years from 1975 is part of the first systematically collected and unpublished planning statistics data set for Hong Kong. Although the hypotheses are specific to Hong Kong, they can be easily adapted, where nonaggregate planning statistics are available, to evaluate three general issues: rent seeking, the dependence of planning decisions on announced policies, and the spatial variation in success rates of planning applications.

On land supply and the price of residential housing

This paper develops an econometric model to examine the impact of land supply on residential housing prices. Specifically, this study examines the role of population, permanent income, real mortgage interest rates, construction cost, speculative demand, land supply and government land policy in the determination of private housing prices in Hong Kong. Empirical results provide strong evidence that an increase in land supply will bring forth a decrease in housing prices. The results also reveal that housing prices are dominated by the fundamental demographic and economic factors. The relatively small response coefficients suggest that speculative demand and land supply have a significant but modest impact on housing prices.

Planning for Open Storage of Containers in a Major International Container Trade Centre: An Analysis of Hong Kong Development Control Statistics Using Probit Modelling

The authors describe the nature of the planning policies relating to the container industry of Hong Kong, a major international container trade centre, at territorial and district planning levels. Informed by the concepts of transaction costs, the authors attempt to ascertain whether the planning permission system in Hong Kong is promarket, antimarket, or market-neutral with respect to the container industry, and whether the stated statutory district planning policy of permitting and concentrating open storage in specifically designated Open Storage (OS) zones has been followed. A probit model is developed to evaluate 195 sets of nonaggregate and cross-sectional data regarding planning applications to the Town Planning Board for the years 1991 to 1998. The evaluation is conducted in terms of two refutable empirical hypotheses regarding the container industry. The findings suggest that the Hong Kong planning permission mechanism is market neutral towards the container industry and that the statutory district forward planning policy for that industry has not been followed in the development control process.

Region-specific Estimates of the Determinants of Real Estate Investment in China

This paper utilises a reduced-form equilibrium model to investigate the possible sources of real estate investment differentials among 22 provinces, five autonomous regions and four municipalities of the People’s Republic of China. The model is estimated using panel data from 2001 to 2006, yielding a total of 186 observations. Specifically, empirical results suggest that demographic, economic and planning factors are the major determinants to cause real estate investment to vary among Chinese regions. The relatively small coefficient estimate of real interest rates indicates that it has a significant but modest impact. Based on the coefficient estimates, this paper finally suggests that the Chinese government should focus and work on several policy parameters in order to achieve a more balanced state of real estate investment across Chinese regions.

Modeling the dynamics of the Hong Kong office market under economic structural change

The author adopts reduced-form equilibrium models to investigate the relations among vacancy, employment, space consumption, and rent in the Hong Kong office market under economic structural change. The models are estimated with the aid of data from Hong Kong during the period 1980–2002—a total of twenty-three yearly observations. It is hoped that empirical results will shed light on the adjustment mechanism of the local office market. In line with the existing literature, the author shows that, on the one hand, office rent is positively related to office employment, but inversely related to office stock. On the other hand, the demand for office space is inversely related to rent, but positively related to office employment. Moreover, the elasticity of space consumption with respect to rent is estimated to be inelastic. Historical simulations of the model are performed, and it is suggested that the equations simulate reasonably well as indicated by Theils inequality.

Region-Specific Estimates of the Determinants of Residential Investment

This paper adopts a reduced-form equilibrium model to investigate the possible sources of residential investment differentials among 22 provinces, five autonomous regions, and four municipalities in the People’s Republic of China. The model is estimated using panel data from 31 Chinese regions during the period between 2001 and 2006, yielding a total of 186 observations. Empirical results should hopefully shed light on the adjustment mechanism of the Chinese residential-property market. Specifically, this paper suggests that change in population, income, and business confidence are the major determinants that cause residential investment to vary among different regions. The relatively small coefficients of real interest rates and planning regulations suggest that they have significant but modest impacts on residential investment.

Cross-Sectoral Influence, Planning Policy, and Industrial Property Market in a High-Density City: A Hong Kong Study 1978–2012

Why did Hong Kong property developers continue to produce a large amount of new industrial accommodation despite the city exhibiting a strong trend of deindustrialization since the late 1970s? This study addresses this question by examining a longitudinal cross-sectoral interaction between industrial and office property markets and its relationship with planning policy. It theorizes about the substitutability between industrial and office accommodation and hypothesizes that the use of new industrial premises by nonmanufacturing operators may be the answer. Using the methodology of Johansen cointegration and a vector error correction model, our estimations have found that industrial rent, price, and supply were influenced by both changing economic structure and office market parameters. Cross-sectoral influences between industrial and office property markets were confirmed.

Modeling Speculative Activity in the Hong Kong Residential Property Market

Using the Granger definition in a bivariate context, this paper investigates the relation between speculation and real estate prices in Hong Kong. Based on monthly data, the paper shows that in the mass residential property market, speculation and property prices are each integrated of order one, and hence cointegrated. A vector error correction model is then estimated for speculation. The error correction term is found to be statistically significant, implying Granger causality running from property prices to speculation in the mass residential property market. The empirical findings provide evidence that fluctuations in residential property prices cause fluctuations in housing speculation. A long-term solution to curb speculative activities and stabilize property prices is to increase the supply of housing land, and in turn the supply of private residential property. Steady property supply of will reduce acceleration of property prices and thus restrict speculation.