Data-Driven Business Decisions

CHAPTER 14

Investigating Relationships between Business Variables

DEEPWATER BAY REAL ESTATE: CASE BRIEFING

Justin Ho is a HK property developer and investor considering investing in the area of Deepwater Bay. He needs to be able to identify apartments that are selling at or below their fair market price. He is also interested in redeveloping apartments into different configurations and wants to maximize their resale value.

Justin obtains data on 108 properties that had sold during 1995. The total sales was over $105M. There was a wide range of prices that had been realized—from about $600K to $2M, expressed in 1995 U.S. dollars.

The main features that are likely to drive the value of an apartment are its total floor area, its age, the number of bedrooms and bathrooms, and the number of dedicated car spaces.

Justin wants to know which apartment features are the strongest drivers of price. He has an idea of what he thinks these should be but wants confirmation from the data, if for no other reason than to confirm to himself that these data are to be trusted.

He is to prepare a short report that describes which features are the most important drivers of price and what their effect on price is. Are there any obvious but easily measured features of the apartments that you can think of that Justin should make an extra effort to collect?

14.0. Introduction: What Is the Issue?

You sell apartments in Deepwater Bay, Hong Kong, and you need a sensible way of estimating values before you ...