Provision of fitting-out as a response to the presence of heterogeneous homebuyers: An empirical study

The decision of whether fitting-out shall be provided in residential units in China is an interesting area never explored. This paper proposes that the provision of fitting-out is a response to the presence of heterogeneous homebuyers who have different preferences for uniform fitting-out. A simple model has been developed to illustrate the economics underlying the decision whether fitting-out will be provided. The consumer and supplier welfare are also analyzed. Hypotheses were formulated and evaluated with a probit model. The data included 162 residential developments that were sold in Beijing in 2007. The results showed that the provision of fitting-outs does have a pattern, thereby confirming the existence of heterogeneity in consumer preferences.

► Homebuyers' preferences to economy of scale are heterogeneous. ► Provision of fitting-out is a response to heterogeneity of homebuyer preferences. ► Provision of fitting-out is correlated with some building characteristics.