1 The Quantitative Model for Residential Site Value

Although real estate development involves quite a large amount of capital investment, it is surprised that investors, decision makers and analysts of real estate market in determination of Gross Development Value (GDV) of the project tend to rely only on their experience, subjective judgment and intuition, i.e., the naive approach rather than on those of quantitative, objective and analytical methods. Site value plays an imperative role in real estate development appraisal which is considered an essential tool to evaluate the feasibility of an investment. In fact, land development is a rather complicated task. Real estate developers are required to cope with various extraneous factors and constraints in the process of development. These factors and constraints which come from various aspects including legal, contractual, economical, political and so on have imposed a great impact on the success of development. Accordingly, with the precise knowledge land cost of the development in the form of quantitative, analytical and rational model established in this paper, the chance of success will become more certain. A multiple regression analysis with hedonic pricing model forms the basis of the study. There were 130 transaction data for sites of domestic use collected from 2003 to 2006 from the Land Registry of the Government of Hong Kong for this study. Site area, class of site, percentage of land with its respective district, property price index, site coverage, height restriction, and transport linkage were noted to be significant in affecting the value of site