Quantifying the value of high-quality property management

Purpose Ill-maintenance of common areas in multi-owner residential properties is described as the tragedy of anti-commons problem. The problem can be addressed by outsourcing the management of the property to a company possessing quality property management (PMGT) certification. The PMGT certification is normally hailed as an effective means of reassuring occupiers and prospective property buyers of the good level of quality of the property management to be expected. This study investigated whether PMGT certification carries with it a price premium for residential properties. Design/methodology/approach A fixed-effects modelling approach was employed in relation to a large residential properties dataset in Hong Kong, in the period 2009-2018. Findings The results indicate, on average, that the PMGT certification commands a price premium of between 3.3 and 3.9%. This premium can be called, the tragedy of anti-commons premium (TAC premium). The results further suggest that significant price premium differences relate to the four different types of certifications studied. The price of a residential unit managed by a property management company (PMC) with Q-mark certification is about 3.4% higher than a unit managed by a non-certified PMC, ceteris paribus. Likewise, corresponding price premiums for units certified related to ISO9001 and HKMAQA certifications are 3.5 and 2.4%, respectively. Originality/value To the best of author's knowledge, this is the first attempt to investigate if there is any relationship between the property price premium attributed to tragedy of anti-commons and PMGT certification.

Automated summary

This study explores the relationship between the property price premium attributed to the tragedy of anti-commons and PMGT certification. The results show that PMGT certification commands a price premium of 3.3 to 3.9% on average, with significant differences relating to different types of certifications.