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On FDI-led growth and the price of residential properties in Guangdong

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Abstract

Previous studies suggest that FDI inflows enhance economic growth in developing countries through spillover effects and more employment opportunities. This research attempts to go one step further by offering a theoretical framework for estimating the influence of FDI inflows on residential property prices through expanding the host country’s economy. Utilizing a panel of 21 Guangdong cities from 2001 through 2009, the current study indicates that although the estimated coefficient for FDI inflows is positive and significant, its impact on prices is only modest. Moreover, most foreign real estate developers, especially those from Hong Kong, Macao and Taiwan, who concentrate on investing in commercial and deluxe residential developments, help preserve open space and green areas in less developed parts of Guangdong Province. Given that FDI inflows will not drive up property prices significantly, this research proposes that Guangdong Province, especially its inner cities, should create better business environment to attract foreign investment to develop the economies of inner cities, in order to enjoy more balanced economic growth in Guangdong.

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Notes

  1. Official statistics suggested that in 2011, Hong Kong people spent HK$365 million in Guangdong Province.

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Acknowledgments

The writers have benefited greatly from careful review and thoughtful suggestions by the editor and anonymous referees. We also thank the research grant from the Hong Kong Polytechnic University for financial support of this research project (PolyU Research Grant A-PJ59). Of course, the writers are responsible for the contents.

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Authors and Affiliations

  1. Department of Building and Real Estate, Hong Kong Polytechnic University, Kowloon, Hong Kong

    Lennon H. T. Choy

  2. Department of Urban Planning and Design, University of Hong Kong, 8/F., Knowles Building, Pokfulam Road, Pok Fu Lam, Hong Kong

    Winky K. O. Ho

  3. Department of Mathematics and Information Technology, Hong Kong Institute of Education, Tai Po, Hong Kong

    Stephen W. K. Mak

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  1. Lennon H. T. Choy
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  2. Winky K. O. Ho
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  3. Stephen W. K. Mak
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Correspondence to Winky K. O. Ho.

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Choy, L.H.T., Ho, W.K.O. & Mak, S.W.K. On FDI-led growth and the price of residential properties in Guangdong. J Hous and the Built Environ 30, 39–51 (2015). https://doi.org/10.1007/s10901-013-9379-9

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  • DOI: https://doi.org/10.1007/s10901-013-9379-9

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