This paper assesses the effect of restaurants on house prices in Rotterdam. This research adds an important layer to the existing literature, namely that the impact of restaurants is heterogeneous over space. Glaeser, Kolko and Saiz (2001) stated that cities should have a large variety of consumer goods and services in order to grow as a consumer city, which can contribute to the quality of life and attractiveness of a city. Home owners derive utility from the presence of amenities, either by direct consumption or simply by enjoying a vibrant urban environment. The utility is capitalized in the house prices, as house prices are affected by location characteristics and the proximity to such amenities (Li & Brown, 1980). In order to measure the effects of restaurants and location characteristics on house prices, analyses of the spatial structure of Rotterdam have been made via multi-level modelling. The results show clear evidence of spatial heterogeneity in the effect of restaurants on house prices. Furthermore, here is no statistical evidence that restaurants inside the city centre have a positive significant effect on the house transaction prices. However, restaurants outside the city centre do have a significant positive effect on the house transaction prices. This finding raises questions on how the effect of restaurants in particular and consumer amenities in general, should be incorporated in housing models. These results complement earlier studies on the effect of restaurants and house prices. Various contributions delved into the diverse aspects of restaurants as a consumer amenity. Such as the quality, quantity, price levels (Kuang, 2017) and diversity of restaurants (Schiff, 2014). The key addition of this research is that the effect of restaurants on the house transaction prices does not solely depend on these previously identified restaurant factors, but is also highly dependent on where the restaurants are situated. The results in this paper are relevant in the wider debate on amenities. The findings are academically relevant as restaurants can serve as a proxy for other amenities and it is socially relevant because it reveals a deeper understanding of the role restaurants play in urban attractiveness. A such, policymaking in urban development can incorporate the results in spatial planning by recognising the different value of amenities in different place.

Additional Metadata
Thesis Advisor J. van Haaren
Persistent URL
Series Business Economics
J.Y. Li. (2019, September 20). The effects of restaurants on the house transaction prices in Rotterdam. Business Economics. Retrieved from