Determining Optimal Building Height
Urban Studies, Vol. 44, No. 3, pp. 591-607
23 Pages Posted: 1 Apr 2009 Last revised: 26 Dec 2012
Date Written: January 1, 2007
The paper examines how building height is determined in the absence of building height regulatory restrictions. A model is developed for determining optimal height using simple neo-classical economic analysis; this is then tested using empirical data from Hong Kong. The results show that the observed building heights are consistent with the optimal height predicted by the model. In addition, it was also found that the point of optimality varied positively with the quality of the external environment. An important practical implication is that town planners and policy-makers can make use of the model as a benchmarking tool to assess and quantify the effect of imposing or relaxing height restrictions.
Keywords: Hedonic price, Building height, Construction cost, Property price, Hong Kong
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