Abstract
In this research study, we investigate one of the most frequently debated questions in real estate development today: What impact does retail development have on surrounding residential property values? We utilize a property registry dataset that provides comprehensive records for all retail developments in a market and merge this with residential transactions data. A propensity score matching procedure is applied to condition the sample so that housing values in close proximity to retail development are related to similar properties. We estimate that new retail development has a positive and significant impact on housing values. The estimated increase is 1.5% within a 0.5 kilometer radius, dropping to 0.6% for the 1.0 kilometer radius. Thus, positive externalities resulting from new retail development appear to more than offset potential negative externalities.
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