Estimating the mediating effect of privately-supplied green space on the relationship between urban public green space and property value: Evidence from Shanghai, China

Much of the housing in China's cities built since the opening up of housing markets in the 1990s is organized in residential clubs, with neighbourhood civic goods and services constructed by private developers, financed by residents' fees, managed by property-management companies and governed by resident associations. This means that there are now three important types of green space in Chinese cities: public green space (open-access parks), private green space (gardens, exclusive to a private home) and club green space (greenery exclusive to fee-paying estate residents). We ask a simple but profound question: how does this three-fold green space morphology and economy influence housing prices and, by implication, locational preferences in the city? More specifically, we test the hypothesis that the privately supplied green spaces withing club-communities substitute for publicly supplied green spaces in the public realm. We find evidence in support of this hypothesis, showing for example, that unlike other kinds of green space, public district parks have no measurable use value to Shanghai home-buyers, using a hedonic valuation model. If urban planners in China understood that their cities have become 'cities of clubs', then they would plan open space differently and scarce public funds could be redirected to other public goods and services with measurable demand.