Effect of an Open-air, Mixed-use Shopping Center on the Price of Nearby Residential Properties

In this paper, we examine the nonlinear effect of an open-air, mixed-use shopping center on residential property prices in the surrounding area. Using difference-in-difference estimators and accounting for spatial correlation in house sales data and correcting spatial correlation in house sales data, we find that the open-air shopping center has a negative impact on the price of residential properties within a critical radius to the center, and a positive impact on the price of residential properties beyond the critical radius. This indicates that the negative externalities of noise and traffic dominate in the close vicinity of the open-air shopping center, while the convenient access to the shopping center outweighs the negative externalities beyond a critical radius. We also find that the impact of the open-air shopping center on nearby house prices is similar in the opening stage and post-opening stage, which indicates that the positive externalities persist over time.