The Impact of Pedestrianization on Residential Property Rental Values

Abstract

Within the context of the economic valuation of open space, the aim of this study was to understand the impact of pedestrian ways as a public open space on rental price of residential properties. With this aim, the study also searched suitable variables to determine the factors affecting this impact.The study involved a two stage procedure as theoretical analysis and empirical analysis. In the first stage, fundamental concepts and approaches were evaluated by reviewing related literatures of urban design and environmental economics disciplines.In the second stage, to analyze the impact of pedestrian way attributes on rental price of residential properties, an empirical analysis was carried out by employing Hedonic Price Method (HPM) which is basically a regression analysis estimating the effect of each relevant variable on the price of the asset in question. The analysis was realized with a sample of 140 observations in the case of Forbes Pedestrian Way, which is called as .Sevgi Yolu. (Way of Romance), in İzmir.The study has put forward that pedestrian way as a public open space has a relative measurable economic value like other public open spaces; it impacts the rental price of residential properties. Regression analysis results have shown that, proximity to the pedestrian way and level of perceived quality of pedestrian way are significant determinants of rental prices of the residential properties. Consequently, the approach developed in this study has advanced the knowledge about open space valuation and provided the first evidence -in Turkey as well as in the world wide- of the impacts of pedestrian way on residential property.s rental prices. The case of Forbes Pedestrian Way has shown that pedestrian way is desirable and valuable from a housing-market perspective. This evidence has also supported previous researches reporting open space provides a premium for property prices. Besides, Hedonic Price Method is promising in measuring the impact of pedestrian ways on residential property rental prices. Key words: Economic valuation of open spaces, environmental economics, urban design, Hedonic Price Method, Forbes Pedestrian Way.