The Spatial Dimensions of Real Estate Markets: Analysis of Spatial Effects on Rental Values in the CBD Wards of Kisutu, Kivukoni and Mchafukoge in Dar es Salaam

The location of commercial real estate in Central Business Districts (CBDs) is crucial for determining their Property Rental Values (PRV). Real estate economics predicts that properties close to amenities in prime spatial locations command higher PRV. This study focused on three wards in the CBD of Dar es Salaam, Tanzania: Kisutu, Kivukoni, and Mchafukoge. Using a Hedonic model, the research analyzed data by regressing PRV per square meter on property and neighborhood characteristics, while spatial dependence was represented through a dummy variable reflecting enjoyment from spatial amenities offered by the ocean (e.g., proximity to walkable areas/beach, ocean scenic view, quality air/breeze) and proximity to open spaces like a golf playground. The regression results indicated that proximity to walkable areas/beaches and perceived air/breeze quality positively and significantly influenced PRV, leading to USD 1.798 and USD 1.043 higher rent per square meter respectively, for areas enjoying the amenities than those otherwise. However, the presence of an ocean scenic view and proximity to open spaces did not significantly affect PRV. These findings highlight the importance of spatial amenities in contributing to PRV in CBD properties, informing real estate developers, investors, and policymakers in making informed decisions on property development, investment strategies, and promoting sustainable and equitable urban development.