The value of property management services in housing: an experiment

Abstract

Nowadays, as people have higher aspiration for quality of life, the way they value housing no longer looks for provision of fixed structure and physical comfort, but also the pleasure they enjoy from the spatial fixity and the service available in attached with the property. Historically, hedonic pricing model is the most popular way for valuation of housing by modeling the implicit price of attributes comprised in a residential premise. This research, based on the hedonic pricing framework, creatively and skillfully adopts the experimentation method to measure the value property management services in the residential properties in Hong Kong.

After a thorough literature on both development of property management as well as the determinants and appraisal of property value, the experiment manipulates the criteria that potential property buyers would consider and simulate the information processing environment for decision making of home purchase, through which the value of property management services is then measured from the users' perspective. The experiment result confirms the importance of property management services, and statistically testifies the hypotheses to reveal the interaction between property management and property value. It finds that property management services in general have contribution to the value of the property being managed, and higher quality of service significantly contributes more. Even for same service quality, the role of property management becomes prominent to inferior grade of residential building, or presents larger impact when the property depreciates over time.

Adoptability of experiment methodology is successfully justified. Hedonic regression approach in return examines the setting of the experiment and proves its subsequent result. Experimentation not only provides a powerful way of moving beyond simple questions about "do you think property management is important" or "how important is it" in normal survey, but also makes real time data available rather than analyzing the historical property transaction records in common hedonic modeling. People's appreciation to the intangible management services is well and truly measured from careful experimental arrangement. Such result surely expands the application of hedonic pricing model in measuring the magnitude of an intrinsic attribute, and provides good reference to the property management industry, real estate developers, academic researchers, and the society at large.