Neighbourhood Attractiveness and Residential Property Prices

This paper concerns an empirical exploration of the effect of local restaurants on neighbourhood attractiveness as reflected by residential property prices. Rich restaurant amenity data is created on the basis of consumer generated content on iens.nl (a Dutch restaurant review website) and by using geographical information system techniques. Two methods of spatial data aggregation are considered. A multilevel hedonic pricing methodology is used in combination with a three-staged estimation strategy. The results indicate the presence of substantial neighbourhood price premiums and the importance of the quantitative, qualitative and cuisine diversity aspects of restaurants for local housing prices. Specifically, it is found that only restaurants of the medium to upper segment of the quality spectrum are positively related to residential property prices, although the causality can not be proven on the basis of the cross-sectional dataset. The sensitivity analysis further suggests marginal diminishing returns for the price effect of restaurants and the subordinate importance of cuisine diversity to restaurant presence. Lastly, the partly inconsistent results on the basis of the neighbourhood aggregation and continuous space buffer aggregated restaurant measures indicate the presence of the modifiable areal unit problem.