Emerging Consumer Cities - Mixed land use, amenities and housing prices in Shanghai The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:37925655 Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA Emerging Consumer Cities - Mixed land use, amenities and housing prices in Shanghai A dissertation presented by Jingyi Zhang BA, Peking University MPP, Harvard University to The Harvard University Graduate School of Design in partial fulfillment of the requirements for the degree of Doctor of Design Harvard University Cambridge, Massachusetts October 2018 © 2018 by Jingyi Zhang All rights reserved. Dissertation Advisors: Jingyi Zhang Professor Peter G. Rowe, Richard B. Peiser, and Anthony Saich Emerging Consumer Cities -Mixed land use, amenities and housing prices in Shanghai Abstract This research quantitatively studies how mixed land-use planning impacts the housing prices in Shanghai. To answer the question, I collected data and constructed a database on housing price and land use to measure the impacts of urban amenities and mixed land-use on housing prices in Shanghai. This work makes an important empirical contribution to existing studies in the field of consumer city, mixed land-use, valuation and housing prices, and the on- going debate on land market reform in China. This study provides a key quantitative analysis of the efficiency of current land use structure in Shanghai and the level of willingness-to-pay for mixed land-use. This can shed light on a major policy debate about land efficiency in China, including Shanghai, and the land market reform which has been a key policy under the current administration. Based on the analysis, an oversupply of industrial lands intended to attract foreign investors and an inefficient public land market is found to have attributed to the distortion of land structure in China. This research quantifies the impact of land use pattern on housing prices and proposes improvements in land use planning. In terms of methodology, this research applies multiple regression models in iii addition to the traditional hedonic models, in the estimation of willingness-to-pay for mixed land-use or amenities. Based on the analysis of first-hand collected land use and housing price data of Shanghai, this study provides estimates for the land use’s impact on housing value and offers policy considerations on efficient land use. The 2013 China’s Third Plenum of the 18th Congressional Conference has highlighted optimizing land use structure and city’s physical structure as a major reform objective; however, so far there has been limited quantitative studies that assess the relationship between land use patterns and housing prices in China, which reflects the lack of and the difficult access to related data. Using a novel dataset, the analysis produces a variety of quantitative results. One estimate is that one percent more land use in greenspace in a 500 by 500 meters grid attributes to an increase of RMB6,600 in property value. Similarly, having one percent more land use in shophouse and shopping center in such a grid also elevates property values, by RMB5,900 and RMB7,900 respectively. The results drawn from Shanghai can serve as a good starting point to understand other cities in Yangtze River Delta economic zone – China’s most vibrant economic agglomeration. The empirical and methodological framework developed in this study can be generalized in future research and applied to other cities. iv Table of Contents CHAPTER ONE: LITERATURE REVIEW ........................................................................................... 1 CONSUMER CITY ....................................................................................................................................... 1 Global Context ...................................................................................................................................... 1 Local Context: Shanghai ....................................................................................................................... 4 MIXED LAND-USE .................................................................................................................................... 12 HOUSING PRICE - DETERMINANTS OF HOUSING PRICE .......................................................................... 16 Classic Hedonic Price Model ............................................................................................................. 16 Spatial Hedonic Model........................................................................................................................ 21 MIXED LAND USE AND HOUSING PRICE ................................................................................................. 23 CHAPTER TWO: METHODOLOGY ................................................................................................... 26 TYPAL DISTRICTS IDENTIFICATION......................................................................................................... 26 Descriptive Analysis of Typal Areas ................................................................................................... 35 MAPPING AND SATELLITE IMAGE PROCESSING ...................................................................................... 47 Land Use Type .................................................................................................................................... 47 Grid Scale ........................................................................................................................................... 47 Mapping Results .................................................................................................................................. 50 OLS REGRESSION ANALYSIS WITH DISTANCE TO FACILITIES ............................................................... 59 OLS REGRESSION ANALYSIS WITH LAND USE ....................................................................................... 60 DIVERSITY INDEX.................................................................................................................................... 60 QUANTILE REGRESSIONS WITH DIVERSITY INDEX ................................................................................. 60 CHAPTER THREE: HYPOTHESIS AND DATASET ........................................................................ 61 HYPOTHESIS ............................................................................................................................................ 61 DATASET ................................................................................................................................................. 62 CHAPTER FOUR: MAPPING RESULTS ............................................................................................ 64 LAND USE CLUSTERING .......................................................................................................................... 64 AMENITIES CLUSTERING ......................................................................................................................... 75 CHAPTER FIVE: QUANTITATIVE RESULTS .................................................................................. 80 ORDINARY OLS MODEL ......................................................................................................................... 80 Regression Residuals .......................................................................................................................... 84 Model Improvement - Spatially Lagged Variables ............................................................................. 86 Ordinary OLS Results Analysis........................................................................................................... 90 HEDONIC MODELS WITH LAND USE VARIABLES .................................................................................... 96 Results Analysis by Land Use ........................................................................................................... 103 HEDONIC MODELS WITH DIVERSITY INDEX ........................................................................................... 107 Quantile Regressions with Diversity Index ....................................................................................... 110 CHAPTER SIX: CONCLUSION .......................................................................................................... 112 BIBLIOGRAPHY ................................................................................................................................... 115 v List of Figures Figure 1: Shanghai International Settlements Map in the 19th Century ........................................................ 5 Figure 2: Consumer Equilibrium ................................................................................................................ 16 Figure 3: Production Equilibrium ............................................................................................................... 16 Figure 4 Administrative Districts of Shanghai ........................................................................................... 26 Figure 5 Satellite Image of Shanghai ........................................................................................................