EconPapers    
Economics at your fingertips  
 

Modeling of residential property rents in Somalia using two-stage modeling: Hedonic regression and artificial neural network

Mohamed Ibrahim Nor, Tajul Ariffin Masron () and Sharif Yusuf Gedi

International Journal of Housing Markets and Analysis, 2019, vol. 13, issue 2, 331-356

Abstract: Purpose - Real estate is one of the fundamental growth engines for developing economies as it contributes urbanization and infrastructure development. In recent years, Somalia has witnessed massive real estate development in both housing and commercial buildings. The purpose of this study is twofold. First, the study examines the determinants of residential property rents. Second, it investigates whether residential property rents are fairly valued. Design/methodology/approach - This study uses two-stage modeling. A hedonic regression model is used in the first stage, while an artificial neural network is applied in the second stage. Findings - After analysis, this study established that size, location and security of a residential property have a significant influence on its monthly rents. Alternatively, the study identified that residential property rents are not fairly valued in Mogadishu and overvaluation is more frequent than undervaluation. Originality/value - This implies that Somalia’s real estate industry is more speculative-driven than real demand-driven. Though Somali real estate is an infant industry with huge potentials in the long run, it may end up disastrously following the well-known bubble-then-burst behavior. To avoid such crisis, this study recommends formulating government policies that regulates, supervises and protects the infant real estate industry without undermining the needs of the poor and low-income citizens.

Keywords: Housing; Housing affordability; Housing prices; Residential property; Macroeconomics; Valuation; Monthly rents; Mogadishu; Real estate; O18; R21; R31; N17; C21 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/IJHMA-04-201 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijhmap:ijhma-04-2019-0042

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgrouppublishing.com/JPIF.htm

Access Statistics for this article

International Journal of Housing Markets and Analysis is currently edited by Professor Richard Reed

More articles in International Journal of Housing Markets and Analysis from Emerald Group Publishing
Bibliographic data for series maintained by Jade Turvey ().

 
Page updated 2021-09-06
Handle: RePEc:eme:ijhmap:ijhma-04-2019-0042