Regeneration of former industrial areas: The expectation effects of the "energizing kowloon east policy" on office properties in Hong Kong

Improvement of urban infrastructure, which is meant to enhance the built environment, is presumed to bring positive externalities to property values in the vicinity. In 2010, the Government of the Hong Kong Special Administrative Region introduced the Energizing Kowloon East policy in order to transform Kowloon East into another premier central business district (CBD). The purpose of this study is to explore the expectation effects of the announcement of this policy on office property values in the Kowloon East new business area. The results suggest that this policy announcement did exert a net positive effect on the office property prices in Kowloon East. The findings suggest that potential office property buyers are willing to consider the "expected" area improvement as a positive factor in pricing a property. This study provides further evidence about the perceived links between urban development facilities and property prices: meaning, the anticipated benefits brought about by urban development policies are capitalized into property values.