Flood Risk and Its Effect on Property Value in Kuala Krai, Kelantan

Abstract

The effect of flood risk on property value is vital because property is the most asset coveted by people for ownership. The attraction to live in a location induces people to give less priority to environmental threat such as flood. This study investigates whether the value of the properties was affected by flood risk by taking Kuala Krai, Kelantan, as a case study. By combining spatial analysis, Geographic Information System mapping and statistical analysis, this study included flood risk as one of the tested variables to determine whether it has affected property value. The statistical methods used were the Ordinary Least Squares regression model (OLS) and Geographically Weighted Regression (GWR). Market prices of a total of 811 transacted properties in the district of Kuala Krai were used to generate statistical model and property maps. The ArcGIS software was used to display and store modeled flood in the study area. The findings showed that higher property values were found around urban centers such as Kuala Krai, Dabong, and Manik Urai, although these areas were among the areas with deep flood inundation. The study disclosed that despite living in areas exposed to flood, the value of property was unaffected. On the other hand, the strategic location in the population concentration area has made it a more important factor than flood risk in determining the impact on property value. Furthermore, people’s receptiveness, adaptability, and risk-taking attitudes were likely to have caused flood to have failed to dislodge the population from flood-prone areas. Another possibility was that flood-prone areas were important economic activity zones so much so that people were more interested to live and work there rather than responding to flood risk.