Branding and share price performance of real estate companies – empirical evidence from Hong Kong

Ervi Liusman, H.T. Chan and Kwong Wing Chau

ERES from European Real Estate Society (ERES)

Abstract: This study examines the impact of brand value of a real estate developer on its share price performance. While similar studies have been conducted on multinational companies, there is a notable gap in research specifically focused on real estate developers. The empirical results from existing literature indicate a positive relationship between the branding of listed companies and their share price performance. However, quantifying the brand value (BV) of real estate developers presents a significant challenge. To address this, we quantify the BV of a real estate developer by analyzing the average premium (PRE) of the housing units it develops compared to the market-wide average housing prices in the second-hand housing market, while controlling for all known factors that influence housing prices. A high PRE indicates that second-hand buyers are confident in the quality of the housing units produced by the developer, leading them to pay a higher premium. Conversely, a negative PRE suggests a discount. We exclude first-hand transaction records from our analysis, as the observed first-hand sales prices are not true market prices; they are influenced by various factors such as payment methods, the developer's pricing and marketing strategies, and the time elapsed between the sale and the completion date for presale units. The results of our study demonstrate that the BV of a developer positively impacts its Sharpe and Tobin’s Q ratios. This suggests that the brand value of a real estate developer is indeed reflected in its share prices, highlighting the importance of branding in the real estate sector.

Keywords: Brand Value; Price Premium; real estate companies; Share Price Performance (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-ure
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