The Effect of Sustainable Urban Planning and Slum Disamenity on The Value of Neighboring Residential Property: Application of The Hedonic Pricing Model in Rent Price Appraisal

Abstract

This study is the first to perform a focalized analysis on city development, sustainable urban planning, and the negative impact of slum area disamenity on property valuation in suburban and posh areas of the Islamabad region, Pakistan. Slums exist in almost every country in the world. However, in the process of urbanization and city development, researchers have focused merely on the crumbled infrastructure, crimes, and other social problems associated with slums. Studies have covered the adverse effects of these factors on property value, although this unmatched study is the first to examine the negative impact of slum proximity on the valuation of properties in the surrounding areas and on the rental value of houses located in Islamabad. The survey method is applied to obtain feedback from inhabitants, and the study incorporated the hedonic price model to assess rental values within a range of one kilometer from selected slum areas. The findings revealed that slum neighborhoods negatively impact sustainable house rental values, as compared with the rental values of houses located far away. Rents became higher as the distance from the slums increased. The results showed that having slums in the vicinity caused a decline of almost 10% in rent. However, the rental value of a similar house unit, located 500 meters away, was found to be almost 10% higher. In the semi-log model, house rental values increased by approximately 12.40% at a distance of one kilometer from slums, and vice versa. This study will use residents’ feedback to help government officials and policymakers to resolve slum issues, which is essential for maintaining sustainable development and adequate city planning. This study sample’s findings are not generalizable to all slums, as the results are specific to this region.