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The Impact of Implementation of Individual Visit Scheme on the Price of Street Level Retail Shops

The Impact of Implementation of Individual Visit Scheme on the Price of Street Level Retail Shops. PhD Candidate: Liu Yan, Ivy Supervisor: Prof. K. W. Chau. 3rd , July, 2013. Individual Visit Scheme (IVS)

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The Impact of Implementation of Individual Visit Scheme on the Price of Street Level Retail Shops

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  1. The Impact of Implementation of Individual Visit Scheme on the Price of Street Level Retail Shops PhD Candidate: Liu Yan, Ivy Supervisor: Prof. K. W. Chau 3rd , July, 2013

  2. Individual Visit Scheme (IVS) • began on July 28, 2003, allowed travelers from Mainland China to visit HK and Macau on an individual basis • Street Level Retail Shops • ground floor shops within tenant-mixed buildings with a street-faced frontage and are commonly found in the older parts of the urban area Definition of Keywords

  3. Figure 1 Street level retail shops

  4. Outline 5 6 Data and Sources Expected Outcome 1 2 3 4 Background Research Questions & Objectives Literature Review & Hypotheses Research Design

  5. Tourism Industry • in 2009, it contributed to 3.3% of GDP, employed over 193,200 persons (5.5% employment) • visitor arrivals in 2011 reached 41.9 million • Mainland China Visitors • In 2011, largest source market with 28.1 million - 67% • increases 19.43% annually from 1991 to 2011 • spend 73% expenditures on shopping on average 1 Background

  6. Figure 2 Visitor Arrivals by Country/Territory of Residence (1993-2011)

  7. Figure 3 Receipts from Visitors (1993-2001)

  8. Figure 4 Consumption Expenditure of all Visitors ($million) (1998-2011)

  9. Retail Industry in HK • total retail sales: $325 billion (2010) • HK$64 billion, or 20%, was directly attributed to shopping spending of Mainland Chinese tourists • Retail Property • over 97% is in the private sector • a large amount of very small retail business types and a rather small scale of huge retailers • shopping malls, street-level retail shops, open air bazaars, markets and cooked food stalls

  10. 2.1 Research Question • Shoppers can be classified into local-shoppers and tourist-shoppers • This study examines whether there is any relationship between changes on shopper mix and the implicit prices of street level retail shops attributes • Makes use of the implementation of IVS in Hong Kong, which changed the shopper mix to undertake empirical tests 2 Research Questions & Objectives

  11. 2.2 Research Objectives • Examine the differences in shopping behaviors between local & tourist shoppers • Identify factors that affect street level retail shops price in urban areas • Identify attributes of street level retail shops which are likely to be affected by changes in local & tourist shopper mix • Formulate and test hypotheses on the impact of IVS on the implicit prices of street level retail shops attributes

  12. 3.1 TourismShopping • local-shoppers and tourist-shoppers have different shopping behaviors (Christiansen & Snepenger, 2002) • Heung and Qu (1998), tourism shopping: expenditure on goods purchased in HK, by international visitors, either for consumption in HK or for export but not including expenditure on food, drink or grocery items • Law and Au (2000): visitors’ total expenditures on non-F&B items could have been consumed locally, or could have been taken abroad 3 Literature Review

  13. 3.2 RetailProperty • Macro view • Eppli and Benjamin (1994) : central place theory, retail agglomeration economics, positive effects of large anchor-tenants and valuation of shopping centers • Others: Sirmans and Guidry (1993), Benjamin, Boyle, and Sirmans (1990), O'Roarty, McGreal, and Adair (1997), etc

  14. Microview • Craig, Ghosh, and McLafferty (1984): area or market, potential shops, optimal, physical features • Sirmans and Guidry (1993) summarized four kinds of main factors: market condition, customer drawing power, building design and location • Others: Yuo, Crosby, Lizieri, and McCann (2003), Gatzlaff, Sirmans, and Diskin (2001), etc. Teller (2008)

  15. Hong Kong case • Richard S. Tay, Clement K. Lau, and Marie S. Leung (1999) • Chau, Pretorius, and Yu (2000) studied street level retail shops in Mong Kok • Ning (2011) conducted a further research

  16. 3.3 Property Price Determinants • Many studies have been done to study various factors that affect property prices or rentals, say Archer, Gatzlaff, and Ling (1996), Gibbons and Machin (2008), Tsun (2010), etc • Building Age • Hottest variables: Knight and Sirmans (1996), Lee, Chung, and Kim (2005), Rehm, Filippova, and Stone (2006), etc • Depreciation & negative effect v.s. positive influence

  17. Neighborhood Attributes • Rodriguez and Sirmans (1994), Wolverton (1997), Yiu, Chau, and Wong (2008), Kestens, Theriault, and Rosiers (2004), Hui, Chau, Pun, and Law (2007) etc • Parks, hospitals, banks or supermarkets, sea view, mountain view • For retail properties, the most important issue is the power of generating potential customers (R.S. Tay, C.K. Lau, & M.S. Leung, 1999)

  18. Transportation • bus, railway, MTR availability, distance to certain stations or CBD • positive effect: Chalermpong (2007), Shin, Washington, and Choi (2007), Tse (2002), Choy, Mak, and Ho (2007) • negative effect: Poon (1978) and Forrest, Glen, and Ward (1996), Nelson(2008), Chau and Ng (1998) • little has been done with reference to retail property: Damm, Lerman, Lerner-Lam, and Young (1980)

  19. 3.4 ResearchGap • Previous research objectives focused mainly on shopping malls or shopping centers, nearly no studies on street-level retail shops • There is no empirical study on the relationship of shopper mix and implicit prices of retail shops attributes

  20. 3.5 Hypotheses • H1: Implementation of the Individual Visit Scheme will increase the positive impact of building age on prices of street level retail shops, other things being equal Rationale • Older street level shops occupy premier locations first as the urban area develops • AGE is a proxy for how well-known these locations are

  21. H2: Implementation of the Individual Visit Scheme will increase the positive impact of upper level retail use on the prices of street-level retail shops, other things being equal Rationale • Upper-level properties always carried out for other use; • Different property type has different pedestrian drawing powers

  22. H3: Implementation of the Individual Visit Scheme will increase the positive impact of proximity of the shops to tourist accommodation facilities, other things being equal Rationale • Proximity to accommodation facilities is of value to tourists but not local shoppers.

  23. H4: Implementation of the Individual Visit Scheme will increase positive impact of proximity of the shops to MTR stations, other things being equal. Rationale • Proximity to MTR is a measure of accessibility of shops • Accessibility of shops is more important to tourist than local shopper

  24. Hedonic Price Model ln(RP) =a0+a1AGE+a2AGE2+a3SIZE+a4SIZE2+a5FRON +a6FRON2+a7COR+a8MTR+a9MTR2+a10AC +a11AC2+a12IVS+a13IVS*AGE+a14IVS*FRON +a15IVS*AC+a16IVS*MTR+ε • ln(RP) -natural log of the real price per saleable floor area • ai - coefficients • ε - error term 4 Research Design

  25. Variables Description

  26. 5 Data and Sources

  27. 6 Expected Outcome

  28. THANK YOU

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