The Market Valuation of Interior Design and Developers Strategies: A Simple Theory and Some Evidence
45 Pages Posted: 22 Jan 2013
Date Written: January 20, 2013
How much do the market values of housing reflect its interior design? Does the interior design interact with other housing attributes? Following the recent research based on “graph theory,” this paper confirms the importance of internal design variables in a hedonic pricing model, which is applied to a large dataset of high-rise apartment buildings in Asia. The evidence is consistent with a simple theory that developers strategically use interior design to “dilute” the effect of location, which leads to a form of endogenous multi-collinearity. Directions for future research are also discussed.
Keywords: endogenous multi-collinearity, interior design, market valuation, dummy variables, interaction terms
JEL Classification: R10, R20, R21
Suggested Citation: Suggested Citation