Case Study: Brownfield Externalities' Valuation in Wuhan, China

Qinna Zhao, Qixin Xu and Mengling Liu

Journal of Sustainable Real Estate, 2018, vol. 10, issue 1, 59-80

Abstract: Brownfields can have a number of adverse effects on the local environment and social welfare, including diminution of property values. Although many brownfield sites exist in China, there has been relatively little research done to quantify the negative externality affects there. This study considers the effects of reclaimed brownfield sites on residential property values in Wuhan City, Hubei province. A hedonic pricing model is used on the sale of more than 850 residential units in almost 31 multifamily buildings within 5 kilometers of brownfield sites in December 2015. Results show that proximate properties show decreases in their initial listing price of up to 3.3%, and using the distance-rings approach, the effect manifested as an approximately 7.4% reduction in value within the ring closest to the site. The adverse price effects diminish as the distances to the brownfield sites increase. The result for spatial autocorrelation shows that moving further away from the brownfield is associated with an increased list price, at a rate of 3.7% per kilometer, which does not change our conclusion that brownfields significantly affect housing prices.

Date: 2018
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DOI: 10.1080/10835547.2018.12091912

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