Threshold effects of incremental redevelopment of an industrial property on a residential neighbourhood

Abstract

The threshold effect refers to the presence of a tipping point at which incremental action triggers an abrupt change. It is ubiquitous in both the environment and society. In this study, we identify the threshold effects of the continuous renewal of an industrial area on nearby housing in Hong Kong. Rather than using hedonic or difference-in-differences models, threshold regression models are used to detect the changes in the price-distance gradient of apartments near an industrial redevelopment project over two decades. We found a significant change in the value of apartments located in close proximity to the redevelopment site after a critical mass of new office space was built. Differential responses are also found across geography and for different building types. A possible explanation for these effects is the gentrification of the entire neighborhood. It is likely that a new spatial mix of blue- and white-collar households emerged in the surrounding neighborhoods along with the development of industrial property. Different building features appeal to different housing classes, resulting in dissimilar price-distance responses of the apartments. Integrative spatial design and good connectivity of industrial redevelopment with its neighborhood can possibly generate a wider geographical spread of its positive spillover in urban regeneration.