An Investigation of Site Selection Decisions of Residential Development Projects in Hangzhou Based on Potential Market Segmentation

Ling Zhang (), Bohong Wu and Sijie Chen
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Ling Zhang: Center for Balance Architecture, Architectural Design and Research Institute, Zhejiang University, Hangzhou 310058, China
Bohong Wu: College of Civil Engineering and Architecture, Zhejiang University, Hangzhou 310058, China
Sijie Chen: College of Civil Engineering and Architecture, Zhejiang University, Hangzhou 310058, China

Land, 2025, vol. 14, issue 1, 1-18

Abstract: Since 2016, strict regulatory policies have limited the size and financing channels of China’s urban real estate market. To adapt to the new situation, real estate developers need to adjust their development strategies and adopt more precise investment methods. In this respect, cost reduction, an accurate market positioning, and conducting detailed market research are particularly crucial. Given that the uneven development of the urban housing market has exacerbated urban segregation, urban residential space was subdivided into multiple potential submarkets. This study focuses on the land acquisition and the development of commercial residential projects in Hangzhou, China, from 2003 to 2022. Using the latent class analysis method based on the discrete choice model, the potential submarkets of Hangzhou’s housing development market are identified, and the project positioning and land selection preferences of developers are assessed. The results show that Hangzhou’s residential projects can be divided into five potential market categories: high-rise basic demand dwellings, high-end-improvement-type dwellings, luxury low-density dwellings, primary-improvement-type dwellings, and large-scale mixed-density dwellings. The importance of different land elements for developers when developing various types of projects is evaluated by calculating the willingness-to-pay coefficient. The findings of this study provide a comprehensive perspective for the government, real estate developers, and property owners to better understand the development dynamics on the supply side of the real estate market.

Keywords: real estate market; residential developers; latent class analysis; project positioning; project site selection (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2025
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