Measuring The Effect of Public Space on Property Value: A Hedonic Pricing & Multi-Attribute Analysis in Addis Ababa, Sheger Park’s Friendship Square
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Date
2026-01-01
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Addis Ababa University
Abstract
Urban public spaces and recreational areas are vital components of city life, providing environmental, economic, and social benefits. They act as "green lungs," enhancing air quality, offering recreational opportunities, and adding aesthetic value to urban environments. In Addis Ababa, however, urban development has historically neglected the importance of such spaces, often resulting in their reduction or complete loss. This neglect has had adverse environmental, economic, and social consequences. Moreover, the direct economic value of green amenities is rarely quantified in monetary terms, and empirical studies on urban green amenity valuation in developing countries, including Ethiopia, remain limited. This study focuses on the economic valuation of public spaces, with particular emphasis on Sheger Park and its surrounding water features in Arada Sub-city, Addis Ababa. It examines how proximity to these public spaces influences residential property values, including both sales and rental prices. The study employs the Hedonic Pricing Method (HPM) to analyze the impact of key environmental attributes, such as distance to Sheger Park and views of the park or artificial lakes, on property values. The regression results indicate that both homebuyers and renters are willing to pay a premium for properties located near public spaces or those with scenic views. Specifically, the value of owner-occupied houses increases by approximately 183,359.2 ETB for every 100-meter reduction in distance to Sheger Park. The model explains 64% of the variation in residential property prices (R² = 0.64), indicating a good model fit, while the remaining 36% is attributed to other unobserved factors. The 95% confidence interval for the distance coefficient ranges from −137,608.8 ETB to 370,890.3 ETB, suggesting that property prices increase within this range for every 100-meter decrease in distance to the park. Similarly, rental properties located closer to public spaces exhibit a statistically significant increase in value. These findings confirm that public spaces, such as parks and lakes, are critical amenities influencing housing prices in Arada Sub-city. This indicates that residents are willing to pay for green amenities in their neighborhood. Incorporating green amenities in designing urban residential areas and real estate developments can provide premium benefits to investors. Despite the clear demand for public spaces in Addis Ababa, their availability remains limited, making them highly sought after. The economic benefits estimated in this study highlight the importance of incorporating such spaces into urban design and land use planning. However, the redevelopment of Sheger Park has also triggered gentrification, displacing over 800 households to the city outskirts. This displacement has disrupted social ties, destabilized livelihoods, and caused psychological distress for affected families. The study concludes by emphasizing the need for a balanced approach to urban development that recognizes the value of public spaces while minimizing the negative impacts of gentrification. Policymakers must prioritize inclusive planning strategies that address the needs of displaced residents and ensure equitable access to urban amenities.
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Addis Ababa, economic valuation, gentrification, property values, regression, urban amenities