Multi-owned property, urban renewal and neighborhood property value externalities: Revisiting the Hong Kong case

Abstract

This paper seeks to gain a clearer understanding of Hong Kong's state-led urban renewal, its justification and value effects, with a concentrate on the redevelopment of occupied dwellings into new residences. This study revisits the establishment of the Urban Renewal Authority (URA) and analyzes key differences in how this agency differs from its predecessor. The theoretical analysis shows that the problem of multi-ownership has played a key role in fostering the pattern of urban renewal in Hong Kong. Given this we propose that the political power of resumption (i.e., taking or eminent domain) critically shapes the URA's low-cost advantage in land assembly and forms the basis that carves a niche for state-led redevelopment. This proposition is tested by estimating externalities of transforming Tong Lau—Hong Kong's unique type of historical strata titled housing—to residences fitting to the modern building structure using difference-in-differences techniques. Findings reveal significant and prolonged effects of urban renewal projects on nearby housing prices. This paper implores researchers and policy-makers to pay attention to residential renewal and questions about why a redevelopment project should be led by the public sector.