1# RECORD 66b74975968370c75371207845d963de2413a23e2# TITLE: Does urban centrality influence residential prices? An analysis for the Barcelona Metropolitan Area3# YEAR: 2017.0 VENUE: nan DOI: 10.7764/rdlc.16.1.574# AUTHORS: Carlos Marmolejo-Duarte5# PAGES: 9 CANDIDATE TABLE PAGES (1-based): [7]6# ABSTRACT: DOI: 10.7764/RDLC.16.1.57 The bid rent theory (BRT), originally conceived for a monocentric city suggests a trade-off between land value and transport costs. Thus, in most of the practical applications, the simply distance/time/cost to the CBD is used as a proxy of accessibility. Nonetheless, in contemporary metropolises, employment and services do not cluster in one CBD but in many centers, furthermore the centrality quality does not follow a smooth gradient as distance to centers increases. Consequently, taking the distance/time/cost to centers in the context or hedonic models is problematic for collinearity issues and too simplistic since it directly assumes a smoothed gradient function. In this paper we test in Barcelona Metropolitan Area, a very well recognized polycentric city, whether some continuous indicators of centrality are key determinants of housing prices. Using listing prices, a hedonic model is built, and the asking price is regressed over two continuous indicators of centrality, one of them calculated departing of the spatial-temporal behavior of people, which itself is a novelty in this kind of studies. The results suggest that continuous centrality indicators do exert a moderate influence on housing prices after controlling for other structural and locative attributes. Nevertheless, the main determinants of prices are related to the socioeconomic stratification not accessibility as suggested by BRT. Energy class appears also as a factor influencing dwellings’ price.789===== PAGE 1 (score 8, numeric-paren 0, table-words 0, var-words 8) =====101157 12 13Does urban centrality influence residential prices? An analysis for the 14Barcelona Metropolitan Area 15 16¿Incide la centralidad urbana en la formación de los precios residenciales? Un análisis para la 17Barcelona Metropolitana 18 19Carlos Marmolejo-Duarte (Main and Correspondant Author) 20 21Departamento de Tecnología en la Arquitectura, Centro de Política de Suelo, Escuela Técnica Superior de Arquitectura 22de Barcelona, Universidad Politécnica de Cataluña 23Diagonal, 649, 4a, Arq Legal, 08028, Barcelona, Spain 24carlos.marmolejo@upc.edu 25 26Manuscript Code: 638 27Date of Acceptance/Reception: 27.03.2017/21.05.2015. 28DOI: 10.7764/RDLC.16.1.57 29 30 31Abstract 32The bid rent theory (BRT), originally conceived for a monocentric city suggests a trade-off between land value and transport costs. Thus, in most of 33the practical applications, the simply distance/time/cost to the CBD is used as a proxy of accessibility. Nonetheless, in contemporary metropolises, 34employment and services do not cluster in one CBD but in many centers, furthermore the centrality quality does not follow a smooth gradient as 35distance to centers increases. Consequently, taking the distance/time/cost to centers in the context or hedonic models is problematic for collinearity 36issues and too simplistic since it directly assumes a smoothed gradient function. In this paper we test in Barcelona Metropolitan Area, a very well 37recognized polycentric city, whether some continuous indicators of centrality are key determinants of housing prices. Using listing prices, a hedonic 38model is built, and the asking price is regressed over two continuous indicators of centrality, one of them calculated departing of the spatial-temporal 39behavior of people, which itself is a novelty in this kind of studies. The results suggest that continuous centrality indicators do exert a moderate 40influence on housing prices after controlling for other structural and locative attributes. Nevertheless, the main determinants of prices are related to 41the socioeconomic stratification not accessibility as suggested by BRT. Energy class appears also as a factor influencing dwellings’ price. 42 43Key words: Hedonic price models, real estate valuation, polycentrism, time-geography, Barcelona. 44 45Resumen 46La teoría de la renta ofertada (TRO) originalmente concebida en un contexto monocéntrico sugiere la existencia de un efecto compensatorio entre el 47valor del suelo y los costes de transporte. Por ende, en la mayor parte de las aplicaciones empíricas, la simple distancia/tiempo/coste al centro es 48usada como un indicador de la accesibilidad. Sin embargo, en la mayor parte de las metrópolis contemporáneas tanto el empleo como los servicios 49se localizan en varios centros, mientras que la cualidad de centralidad no se desvanece de forma uniforme a medida que la distancia a los centros 50incrementa. Por tanto, utilizar la distancia/tiempo/coste a los centros en el contexto de los modelos hedónicos es problemático debido a la 51multicolinealidad y demasiado simple, puesto que se asume una función de un gradiente suavizado. En este artículo probamos hasta qué punto dos 52indicadores continuos de centralidad son elementos clave en la formación de precios residenciales en la policéntrica área metropolitana de Barcelona. 53A partir de precios de oferta se construye un modelo hedónico en el cual los precios son regresados sobre dos indicadores de centralidad, uno de 54ellos construido a partir del análisis del comportamiento espacio-temporal de la población, lo cual en sí mismo es una novedad en este tipo de 55estudios. Los resultados sugieren que los indicadores de centralidad continuos ejercen una influencia moderada sobre los precios una vez que se 56controlan los atributos arquitectónicos y locativos de la vivienda. Sin embargo, los principales determinantes de los precios están relacionados con la 57estratificación socioeconómica y no con la accesibilidad como sugiere la TRO. La clase energética aparece también como un factor con influencia en 58el precio de la vivienda. 59 60Palabras clave: Modelos de precios hedónicos, valoración inmobiliaria, policentrismo, geografía del tiempo, Barcelona. 61 62Introduction 63 64The “standard urban model” based in the bid rent theory, with roots in the von Thünen’s (1826) and Hurd’s (1924) 65works, as it was depicted by Alonso (1965), explains that both land rent and urban density declines as the distance to 66center increases. In such model, it is assumed that most of the employment is concentrated in the center, which foster 67a daily commuting between peripheral residential zones and it. By having the employment clustered in the center it also 68is assumed that services follow such spatial trend. All in all, result in increasing transport cost and time (Haig, 1926) as 69distance to center increases, and consequently a trade off with rent allocated to residential land. It is the existence of 70the land rent gradient that underlies the formation of density in a competitive market scenario. If it is considered that 71developers invest capital in land and building when developing a site, and constant returns per unit of land are relaxed 72(i.e. once substitution between land and building costs is allowed), real estate developers economize on the use of 73expensive land in more central locations where prices peak. In optimizing developments, they add more building capital 74per unit of capital invested on land (i.e. they build multi-story structures instead of low rise ones), despite the fact that 757677===== PAGE 7 (score 21, numeric-paren 0, table-words 2, var-words 10) =====787963 80 81 82Table 3. Model coefficients. Source: Own elaboration. 83Model 84Unstandardized 85Coefficients 86Standardized 87Coefficients 88t 89Sig. 90B 91Std. Error 92Beta 9314 (Constant)9410.297950.05596186.731970.00098Area (Sq. M.) 990.018 1000.001 1011.023 10223.435 1030.000 104Residents with 105university degree (%) 1060.005 1070.001 1080.112 1094.452 1100.000 111AC 1120.101 1130.013 1140.095 1157.503 1160.000 117Area (Sq. M.)^2 118-4.104E-05 1190.000 120-0.505 121-11.880 1220.000 123Built density 1240.038 1250.006 1260.097 1276.264 1280.000 129Interaction lift*story 130level 1310.013 1320.002 1330.070 1345.846 1350.000 136Swiming pool 1370.136 1380.026 1390.055 1405.204 1410.000 142Number of baths 1430.062 1440.012 1450.065 1465.189 1470.000 148Heating 1490.046 1500.013 1510.046 1523.453 1530.001 154PCA factor for high 155professional profile 1560.061 1570.014 1580.096 1594.466 1600.000 161Residential buildings 162with doorkeeper (%) 1630.005 1640.001 1650.063 1664.128 1670.000 168Centrality synthetic 169index 1700.010 1710.003 1720.049 1733.481 1740.001 175Renewal 1760.043 1770.017 1780.027 1792.512 1800.012 181Energy qualification 1820.009 1830.004 1840.022 1852.076 1860.038 187 188 189Figure 2 Analysis of residues. Source: Own elaboration. 190 191 192 193Conclusions 194 195Our findings suggest that, apart from structural variables concerning the quality and fittings of studied flats, centrality 196does exert an intermediate impact on real estate values. By using continuous centrality indexes such as that related to 197built density or the actual use of the city (synthetizing the spatial-temporal behavior of population) some of the habitual 198problems in multicentric hedonic price models have been solved with basic econometric approaches. 199 200As it has been found previously in Barcelona (Roca, 1986, 1988, Roca et al., 2003, Marmolejo, 2008), most of the locative 201variables with the highest incidence on residential values are associate to the spatial segregation of population. So, 202locations characterized by very well educated population employed in managerial and professional positions do imply 203a significant and important positive impact on asking prices in our model. According to the b coefficient, which measures 204semi-elasticity in our log-lin model, by increasing 1% the neighbors with university studies, asking prices rise 0.5%, that 205206207===== PAGE 8 (score 13, numeric-paren 0, table-words 0, var-words 12) =====20820964 210 211implies that the value gap between the zone with the lowest presence of high educated residents and the zone with the 212highest level of such population foster residential values 3.2 times (320%!), by solely modifying this factor. Whether 213such finding is masking a higher acquisitive power and not or not only the existence of a market premium linked to the 214social perception (prestige/prejudice) remains in the impossibility to isolate the income effect since in Spain such data 215is not asked in the Census. It is necessary, thus, to review the enthroned importance of trade-off theory by relativizing 216it with other important factors such as socioresidential segregation. Especially in cities where real estate markets 217arbitrate both the formation of land values and land use allocation. 218 219Acknowledgments 220 221This paper has been produced in the framework of two research projects LugarES (MINECO CSO-2012-33441) and 222EnerVALOR (MINECO FEDER BIA2015-63606-R) leaded by the author. 223 224References 225 226 227Aguirre, C., & Marmolejo, C. (2011). El impacto del policentrismo sobre la distribución espacial de los valores inmobiliarios: un análisis para la Región 228Metropolitana de Barcelona. Revista de la construcción, 10(1), 78-90. https://dx.doi.org/10.4067/S0718-915X2011000100008 229Anas, A., Arnott, R. & Small, K. (1998). Urban Spatial Structure. Journal of Economic Literature, 36(3), 1426-1464. 230Alonso, W. (1965). Location and land Use: toward a general theory of land rent. Cambridge: Harvard University Press. 231Batty, M. (2001). Polynucleated Urban Landscapes. Urban Studies, 38(4), 635-655. https://doi.org/10.1080/00420980120035268 232Cerda Troncoso, Jorge, & Marmolejo Duarte, Carlos. (2010). De la accesibilidad a la funcionalidad del territorio: una nueva dimensión para entender 233la estructura urbano-residencial de las áreas metropolitanas de Santiago (Chile) y Barcelona (España). Revista de geografía Norte Grande, (46), 2345-27. https://dx.doi.org/10.4067/S0718-34022010000200001 235García-López, M.A. & Muñiz, I. (2010). The Polycentric Knowledge Economy in Barcelona. Urban Geography, 31(6), 774-799. 236http://dx.doi.org/10.2747/0272-3638.31.6.774 237Secchi, B. (1968). Hacia la Comprensión de la Metropoli. In Análisis de las Estructuras Territoriales (First Edition). Barcelona: Gustavo Gili. 238Hurd, R. (1924). Principles of City Land Values. (First Edition). New York, USA: Arno Press. 239Kau, J. B. & Lee, C. F. (1976). Capital-Land Substitution and Urban Land Use. Journal of Regional Science, 16(1), 83-92. 240http://dx.doi.org/10.1111/j.1467-9787.1976.tb00950.x 241McMillen, D.P. (1996). One Hundred Fifty Years of Land Values in Chicago: A Nonparametric Approach. Journal of Urban Economics, 40, 100-124. 242https://dx.doi.org/10.1006/juec.1996.0025 243McMillen, D.P. & McDonald, J.F. (2002). Land Values in a Newly Zoned City. The Review of Economics and Statistics, 84(1), 62-72. 244https://dx.doi.org/10.1162/003465302317331928 245Marmolejo, C. (2008). La incidencia de la percepción del ruido ambiental sobre la formación de los valores residenciales: un análisis para Barcelona. 246Revista de la Construcción, 7(1), 4-19. 247Marmolejo, C. & González, C. (2009). Does noise have a stationary impact on residential values? Journal of European Real Estate Research, 2(3), 259-248279. http://dx.doi.org/10.1108/17539260910999992 249Marmolejo, C. & Cerda, J. (2012). La densidad-tiempo, otra perspectiva de análisis de la estructura metropolitan. Scripta Nova, 16, 15. 250Marmolejo, C. & Cerda, J. (2014). En búsqueda de los lugares estructurales: un análisis de comportamiento espacio temporal de la población para la 251identificación de centralidades urbanas. In 10º Congreso Ciudad y Territorio Virtual. Monterrey, México. 252McDonald, 253J. F. (1987). 254The 255Identification 256of 257Urban 258Employment 259Subcenters. 260Journal 261of 262Urban 263Economics, 26421, 265242-258. 266https://dx.doi.org/10.1016/0094-1190(87)90017-9 267McDonald, J. F. & McMillen, D.P. (1990). Employment Subcenters and Land Values in a Polycentric Urban Area: the Case of Chicago. Environment and 268Planning A, 22(12), 1561-1574. https://dx.doi.org/10.1068/a221561 269Mills E.S. & Hamilton B.W. (1984). Urban Economics. Glenview, IL., USA: Scott Foresman. 270O’Sullivan, A. (2007). Urban Economics (Sixth Edition). McGrawHill. 271Pena Trapero, J. B. & Pena Trapero, X. (1977). Problemas de la medición del bienestar y conceptos afines. Una aplicación al caso español. Madrid, 272España: Instituto Nacional de Estadística. 273Roca, Josep (1986). Los precios del suelo en el ámbito metropolitano. Barcelona, España: Corporación Metropolitana de Barcelona. 274Roca, Josep (1988). La estructura de los valores urbanos: un análisis teórico-empírico. Madrid, España: Instituto de Estudios de Administración Local. 275 276