A hedonic price analysis of the value of industrial sites

Abstract

Hedonic price modelling is a widely used technique to explain the value of different types of individual property. Following the notion that areas within the city can suffer from devaluation, the question arises what factors influence the value of urban areas. In this paper, we use hedonic price analysis to answer this question for a specific type of urban area, the industrial site. We use the average property value per hectare as a representation of the value of an industrial site. A distinction is made between three types of explanatory variables: physical characteristics of the industrial site, regional economic characteristics and general economic trends. Although the overall explanatory value of our model appears to be modest compared to existing hedonic pricing studies of individual property, results show that most explanatory variables in our model have the expected coefficients and signs, indicating that this method can be applied in a meaningful way to gain insight into the valuation of urban areas.