The Spatial Dimensions of Real Estate Markets: Analysis of Spatial Effects on Rental Values in the CBD

The location of commercial real estate properties within Central Business Districts (CBDs) has traditionally been considered a crucial factor in determining their Property Rental Values (PRV). Theoretical predictions in the field of real estate economics suggest that properties situated in prime spatial locations and close to amenities command higher PRV. It is however, still questionable on whether such higher PRV is a response to spatial dependence to amenities or purely a hedonic attributes effect of the property. This study examined three study wards of Kisutu, Kivukoni, and Mchafukoge within the CBD of Dar es Salaam city. Through a hedonic model analysis using questionnaire data from 180 tenants, the results suggests that tenants in these areas primarily consider PRVs based on their intuitive considerations to other buildings, rather than assessing the marginal effect brought about by spatial amenities such as ocean views, wind and open spaces. Proximity to services, particularly for business purposes, also drives tenant choices. These findings challenge the conventional understanding of spatial amenities as key determinants of PRV in the CBD, highlighting the unique dynamics of the case study areas. These findings can inform real estate developers, and policymakers in making informed decisions in property development, and investment strategies aimed at promoting sustainable and equitable development in urban areas.