The effect of contemporary supermarket formats (superstores) on surrounding residential property values

Abstract

This study examines whether housing prices are affected by proximity to contemporary supermarket formats known as superstores. The hypothesis is that both amenity and disamenity effects exist. Supermarkets are generally considered to be an amenity and a convenience in residential communities where they are located. It is thus hypothesized that households will prefer to live near superstores to enhance shopping opportunities. On the other hand, it is also hypothesized that households will wish to avoid disamenities such as noise, traffic congestion and potential crime effects (real or perceived) associated with living too close to superstores. Hedonic price equations are estimated using house transaction data sets for four superstore locations, and the effects of distance are examined. The study concludes that there are both amenity and disamenity effects present in the neighborhood of superstores located in existing commercial centers. Disamenities dominate nearer to the store reflecting the influence of negative externalities like increased traffic and noise. Amenity effects dominate further away from the store as residents benefit from the convenience of having the superstore within a close driving distance, without any associated traffic or noise effects. No statistically significant effects of proximity were found in the case where the superstore was located at a site where no previous retail existed.