The value of property management services: An experiment
- Author(s): Li, J
- Monkkonen, P
- et al.
Published Web Locationhttps://doi.org/10.1108/PM-06-2013-0035
Purpose: Assessing the value of property management services is challenging because of collinearity between property quality and the quality of property management companies. In order to overcome this challenge and isolate the impact of property management services, the purpose of this paper is to use an experimental approach inspired by work in labor economics (Bertrand and Mullainathan, 2004) to measure the value of property management services for residential properties in Hong Kong. Design/methodology/approach: The authors surveyed over 150 experts in the real estate industry and asked them to estimate the value of five hypothetical properties. In each survey, the authors randomly assign different property management companies, which we have ranked by levels of quality, to the properties. In this way the authors were able to test whether property management services significantly impact property prices and whether this impact varies across types of residential buildings. Findings: Results show that property management does add value, especially to older and more dilapidated properties. Practical implications: Findings suggest that there is money to be made by high-quality companies providing services for lower quality buildings. Originality/value: The experimental survey methodology applied in this paper provides an innovative way to measure company value. © Emerald Group Publishing Limited.
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