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1. Introduction
The value of real estate, like other market goods, is reflected in a marketplace by its price. However, due to attributes of fixity and durability, a high sensitivity to spatial externalities, and a high cost relative to incomes, residential property is one of the most complex commodities in the world. The value of residential property varies according to the macro-economic environment as political, economic, and socio-demographic factors alter market dynamics (Markmin, 1994). In a micro perspective, Roulac (2007, p. 428) concludes that "a property's value is determined by its use, specifically what people will pay for the right to the use of the property." Micro-determinants include location attributes, structural attributes, and neighborhood attributes of a residential property are considered the major criteria that determine the value of this heterogeneous commodity (Butler, 1982). Yet, there is one attribute of residential property that is extremely important in cases of multi-owner properties, but the value of which has been largely ignored in the academic literature: property management.
Property management is crucial to the residential environment of high-rise and high density in Hong Kong (Yuen and Yeh, 2011), as almost all of the city's residents live in multi-unit, multi-owner buildings. Multi-owner residential properties suffer from common problems - such as overuse of commonly owned spaces - as well as anti-commons problems - inefficient rates of redevelopment due to all owners having veto power (Hastings et al. , 2006). Many of these issues can be ameliorated by the outsourcing of property management services, especially in terms of regular maintenance to minimize the depreciation of the property. The importance of property management services became even clearer in Hong Kong with the SARS[1] outbreak in 2003. SARS raised people's awareness of the importance of the day-to-day details of property management, especially environmental hygiene in public areas.
In spite of the importance of property management services for a large proportion of the world's housing stock, there have been few efforts to measure its value quantitatively (with the notable exception of Hastings et al. , 2006). One reason for this limitation in the literature is the strong collinearity between the quality of a buildings property management company and its other characteristics, which makes it difficult to statistically separate the value of...