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Urban areas in
Landscape view, height preferences Indonesia
and apartment prices: evidence
from major urban areas in Indonesia
Andi Nidaul Hasanah 701
Department of Economics, Faculty of Economics and Business,
Universitas Indonesia, Depok, Indonesia, and Received 11 September 2017
Revised 31 October 2017
Accepted 1 November 2017
Muhammad Halley Yudhistira
Institute for Economic and Social Research, Department of Economics,
Faculty of Economics and Business, Universitas Indonesia, Jakarta, Indonesia

Abstract
Purpose – Landscape view is a crucial factor in house-buying decisions. Landscape views provide an
amenity to residents, and this can influence the house or apartment owners in their residence decisions. Yet,
the relative value of different types of view potentially differs. Additionally, the value of each type of view
may differ depending on an apartment’s elevation above the ground level. In this study, the authors aim to
estimate the value of landscape views on apartment prices in major urban areas in Indonesia.
Design/methodology/approach – This paper evaluates to what extent various landscape views
including mountain, sea, river, lake, street, urban village, garden and sports center views affect apartment
prices in major urban areas in Indonesia. Two hedonic regression approaches are used: ordinary least squares
and semiparametric regression. The latter is used to accommodate a possible non-linearity in the relationship
between price and apartment characteristics. The model also incorporates housing and locational
characteristics as control variables.
Findings – Using online apartment market data, the estimates in this paper show some degree of
heterogeneity in the value of various views to the extent of providing negative externalities. Mountain, street
and sports center views are associated with higher apartment prices. Sea, lake and garden views are
statistically insignificant in explaining the prices. In contrast, the unappealing nature of the rivers and their
surrounding creates a negative impact on prices. The estimates also suggest that an apartment’s floor height
plays a significant role in the valuation of views.
Originality/value – There is little research on landscape view effects on apartment prices, especially in
Indonesia. In addition, the relationship between the value of views and height preferences has seldom been
analyzed. This paper provides the valuation of an extensive list of landscape views in urban areas
in Indonesia. The estimation results also suggest that the value of views may differ depending on the floor on
which an apartment lies.
Keywords Indonesia, Hedonic price, Semiparametric regression, Urban areas, Apartment prices,
Height preference, Landscape views
Paper type Research paper

1. Introduction
Landscape amenities are a crucial factor in determining urban property prices. A
survey conducted in Malaysia shows that a majority of respondents (90.4 per cent)
International Journal of Housing
Markets and Analysis
Vol. 11 No. 4, 2018
The authors thank for comments from audiences at the Universitas Indonesia and the 2nd pp. 701-715
International Conference on Indonesian Economy and Development 2017. This research is funded by © Emerald Publishing Limited
1753-8270
PITTA Grant Universitas Indonesia. DOI 10.1108/IJHMA-09-2017-0082
IJHMA support that a good landscape design can increase the value of a property (Hussain
11,4 et al., 2014). In the Jakarta Metropolitan Area, property with a green view can influence
the perception of household toward property price (Rahadi et al., 2015). Views of certain
landscapes provide view amenities to the residents of surrounding buildings, which
could influence house or apartment owners in making residence decisions. An
apartment has not only structural characteristics (e.g. number of bedrooms, number of
702 bathrooms, apartment size, apartment age and floor level) but also environmental
characteristics, including views (Chen and Jim, 2010). As view is one of the
characteristics of apartments, the presence of views around an apartment becomes an
important factor for people in making apartment purchase decisions. Hussain et al.
(2014) found 68.2 per cent of respondents stated that landscape can influence their
decisions in buying houses in Malaysia. Most developers also believe that landscape
views, such as green spaces in residential area, are key factors in house-selling
decisions (Jim and Chen, 2006). Various landscape types affect individual preference
and utility through visualization of landscape (Nassar, 1988). The utility derived from
landscape visualization would influence a person’s willingness to pay for an apartment
with their preferred view. A number of studies have found that apartment owners are
willing to pay a price premium for apartments with scenic views (Luttik, 2000;
Rodriguez and Sirmans, 1994). However, other studies have also found that several
types of views create the opposite impact on apartment prices. Some types of view that
have a negative impact on prices are urban village (Chen and Jim, 2010), street view
(Hui and Liang, 2016; Hui et al., 2012), avenue, (Hui et al., 2012) and industrial and
building view (Bishop et al., 2004).
This study aims to analyze the effect of various types of landscape views on
apartment prices in urban areas in Indonesia. To the best of our knowledge, this is the
first study of the effects of landscape views on major urban areas in Indonesia. Our
analysis uses online apartment market data provided by OLX.com from the period from
August 2016 to April 2017. After the data cleaning process, the data represent 3,224
posted apartment sales advertisements in Jakarta, Bandung, Surabaya, Bekasi and
Tangerang. Our choice of location is also driven by data realities; apartments in these
urban areas have diverse landscapes components so that we can estimate the impact of
various types of landscape views on apartment prices. Our sample locations,
nevertheless, cover some of Indonesia’s biggest urbanized areas, including the Jakarta
Metropolitan Area, Surabaya Metropolitan Area and Bandung Metropolitan Area. We
use a hedonic model to relate the apartment prices and landscape views. To obtain the
empirical evidence, we use ordinary least square (OLS) and semiparametric regression
approach, and we use control for a group of other characteristic factors that may affect
apartment prices.
This paper has two goals:
(1) to estimate how landscape views affect apartment prices; and
(2) to explore why this impact may differ due to apartment height.

On the first goal, we find that the effect widely varies across views to the extent that views
may have a negative impact on prices. On the second matter, we find that some landscape
views have a greater or lesser impact on price as apartment height increases.
This paper is structured as follows: the Section 2 provides a literature review on the
relationship between apartment attributes and prices. The Section 3 presents the data and
methodology, giving a description of the hedonic approach, OLS and semiparametric
regression. Section 4 analyses the empirical results. Section 5 presents conclusions.
2. Literature review Urban areas in
2.1 Landscape view attributes Indonesia
Landscape view is one attribute that influences apartment prices. Several previous studies
have investigated the impact of views on apartment prices. The impact, however, varies
across views and locations. Several studies have found that several types of view can
generate positive value. For example, a study in Shenzhen, China, showed that garden,
urban park and bay views bring an amenity effect on apartment prices (Chen and Jim, 2010).
A similar study conducted by Hui and Liang (2016) in Guangzhou concluded that park 703
views had a positive impact on apartment prices. Hui et al. (2012) also found that sea and
garden views can increase condominium prices. These studies suggest that green areas were
consistently found to increase apartment prices across different study areas.
However, other studies also indicate that not all types of views have a positive
relationship with apartment prices. Chen and Jim (2010) showed that urban village
views induced lower apartment prices in Shenzhen, China. A dirty urban village in
Shenzhen, China, created a negative relationship between urban village views and
apartment prices (Chen and Jim, 2010). Studies by Hui and Liang (2016) in the
Guangzhou urban village and Hui et al. (2012) in Hong Kong Island found a negative
correlation between the availability of street views and property prices. Traffic noise
and air pollution are the main reasons why roadways generate negative value. Hui et al.
(2012) also investigated the impact of main avenues in front of the apartment on
apartment prices in Hong Kong. Their findings indicated that main avenues have an
adverse impact on apartment prices owing to noise pollution. Other types of views that
bring negative effects on apartment prices are industrial and building views (Bishop
et al., 2004). The results from earlier studies suggest that some types of artificial
landscape views adversely affect property prices.
Other studies also find that several types of views have an insignificant influence.
Hui and Liang (2016) suggested that river views do not significantly affect apartment prices.
The reason for their finding is that there are a limited number of apartments with river
views. A similar study conducted by Anastasia and Tandono (2014) found that city views
had an insignificant impact on apartment prices in Surabaya, Indonesia. Results from
previous studies indicate that the value of views can vary depending on the type of view.
Most previous studies assumed that the value of apartments’ views is homogeneous
across different floor levels of apartments. Preferences on height will affect the range of a
perceived landscape, because the size of an object depends on the distance between the
object and the observer (Pandey and Yadava, 2014). This means that apartment owners on
higher floors will get a wider view of their surrounds (Jim and Chen, 2006). However, a small
object cannot be seen clearly from higher floors. Therefore, the value of view may vary
depending on an apartment’s floor level. This study also aims to fill this gap in the research
by assessing the value of view based on floor level.

2.2 Non-landscape view attributes

Other apartment attributes or characteristics are divided into five categories (Sirmans et al.,
2005). These categories are:
(1) building characteristics (number of rooms, number or bathrooms, size of building,
age of building, kitchen size and availability of balcony);
(2) internal characteristics (fireplace, heating mode and air conditioning);
(3) external characteristics (availability of garden, swimming pool, elevator and
parking lot);
IJHMA (4) environmental characteristics (river, lake, mountain or sea views); and
11,4 (5) location and neighborhood characteristics (distance to city center, distance to
public transportation, social facilities, tourist areas and quality of schools) and
other features (the wear of the house, previously occupied or unoccupied status).

Many studies show that some building characteristics incur a positive and significant price
704 impact, such as apartment size (Chau et al., 2004) number of bedrooms (Conroy et al., 2013)
and number of bathrooms (Ayan and Erkin, 2014; Jim and Chen, 2006; Li et al., 2016). The
floor level of an apartment also generates positive value (Jim and Chen, 2006). Apartments
on higher floors will enjoy some benefits, such as better ventilation, brighter rooms and
wider views. Apartment age is negatively correlated with apartment prices (Ayan and
Erkin, 2014; Conroy et al., 2013). The negative correlation of apartment age means that each
year the price of apartments tends to decrease, because older properties may need more
repairs (Conroy et al., 2013).
Some previous studies also found a positive correlation between apartment prices and
apartment facilities. According to Chau et al. (2004), the existence of a balcony increased
property prices in Hong Kong. An apartment with a large balcony and landscape views
tends to sell at a higher price than an apartment with no balcony and similar views, because
a balcony in an apartment can provide a panoramic view. A study conducted by Ayan and
Erkin (2014) in Metropolitan Izmit, Turkey, showed that the availability of a swimming pool
in an apartment complex is positively correlated with apartment prices. Apartment
furniture and air-conditioning also exhibited a positive effect on the value of property
(Sirmans et al., 2005).
For the location characteristic, distance to city center is negative and significant in its
effect on property prices (Jim and Chen, 2006). This indicates that increased distance from an
apartment to the city center significantly reduces the selling price of an apartment. Access to
public facilities also plays an important role in influencing property price. For example, the
distance to railway stations and main roads strongly affects the value of property.
Łowicki and Piotrowska (2015) found that an increase in the distance to railway stations and
main roads reduced the price of property in Poznan County, Poland. Access to public
transportation and main roads are important factors in apartment value, because they can
improve the accessibility of residents to their offices, shopping centers and other important
places (Li et al., 2016). Neighborhood characteristics such as quality of schools are also
significant determinants of apartment value. Apartment owners are willing to pay more for
apartment units located in districts with high-quality schools (Ayan and Erkin, 2014).

2.3 Valuing the landscape views using hedonic price model

We use a hedonic price model developed by Rosen (1974) to elicit the impact of landscape
views on apartment prices. The hedonic price model assumes that the value of a good is a
function of its characteristics or the attributes contained in that good. A hedonic price model
can be represented as P = P(z), where P, the selling price of a good, is determined by the
implicit prices of characteristics of the good z. The hedonic property price model, therefore,
will elicit the marginal valuation of each apartment attributes (Schläpfer et al., 2014).
OLS is a common approach to estimate the hedonic property price model (Chau et al.,
2004; Behrer, 2010; Gencay and Yang, 1996; Li et al. 2016; Schläpfer et al., 2014). The OLS
approach, however, assumes that the property attributes are linearly associated with the
property prices. This assumption tends to be restrictive, as the relationship between the
property attributes and prices is not necessarily linear. To accommodate nonlinearity issue,
it is preferred to estimate the model using nonparametric approach (Koster et al., 2014). The
literature also shows that nonparametric approach can perform better than the OLS Urban areas in
(Anglin and Gencay, 1996; Bontemps et al., 2008; McMillen and Redfearn, 2010). In this Indonesia
study, we estimate the hedonic model using both the approaches. Detailed discussions of
OLS and nonparametric approach used in this study are to be provided in Section 3.

3. Methodology and data

3.1 Data on apartment characteristics 705
We obtain the data set used in the present study from multiple sources. The main source is
OLX.com, an online property site in Indonesia, which was used because housing transaction
data in Indonesia are not publicly available. The site provides more complete information
about apartment characteristics compared to other Indonesian property sites. The data set
contains information about apartment characteristics, including selling price, number of
bedrooms, floor level, availability of swimming pool, whether the apartment is furnished
and various types of views available. Other apartment characteristics – total floors and age
of apartment building – were collected from each apartment’s website. After a cleaning
process, a total of 3,224 sets of data for apartments in Jakarta, Bandung, Surabaya, Bekasi
and Tangerang were collected. These areas were chosen because they have diverse
landscapes and sufficient apartment data were available for those cities through OLX.com.
The sample period is from August 2016 to April 2017. Figure 1 presents the location of
samples, as well as landscape views.
The dataset enabled us to create eight dummy variables to represent view
characteristics, i.e. mountain, sea, river, lake, street, urban village, garden and sports center
views. We also included variables that represent building characteristics, such as number of
bedrooms, age of apartment, total floors of apartment, floor level on which the apartment is
located, availability of furniture and selling status.
We use geographic information system (GIS) software to generate location
characteristics of apartments. Location characteristics consist of distances between
apartments and the nearest railway station, toll gate and city center. For location
characteristics, we created variables to represent the distance between apartments and city
centers, railway stations and toll gates.
Figure 2 presents the average price of apartments by type of view. The figure provides
an overview of the potential effect of various types of view on the price of apartments. The
figure shows that apartments with river views have the lowest average price compared to
apartments with other views. Although the figure provides an insight into the potential
impact of views on apartment prices, it only shows the relationship between price and view
without considering other variables that can also affect prices. Using regression analysis, we
control other apartment characteristics to examine the effect of landscape views on
apartment prices. Internal and location characteristics are included into control variables,
because these variables also affect the price of apartment. These control variables are
included in a regression model as independent variables.

3.2 Methodology
This section describes the empirical model used to assess the effect of various types of views
on apartment prices. We used the following log-linear estimation model in this study. The
log-linear model is widely used across the hedonic price model (Jim and Chen, 2006; Chau
et al., 2004; Behrer, 2010; Ayan and Erkin, 2014) and provides a good fit with the data in our
study. The estimation model in a log-linear form is expressed as:
IJHMA
11,4

706

Figure 1.
Location of samples
and landscape views

X
j

lnPi ¼ a0 þ g j Viewji þ X 0i b þ « i (1)

j¼1

where Pi represents the posted selling price of apartment i in rupiah. View represents the
dummy variable for all types of views, including mountain, sea, river, lake, urban village,
garden, street and sports center view. The variable takes value 1 if an apartment has the
respective view and zero otherwise.
The X vector in Equation (1) contains an extensive list of additional characteristic
variables, which can be categorized into two groups: internal and locational variables. The
variables of internal characteristics include number of bedrooms, floor, total number of
floors, age of apartment, selling status (urgent or not), furnishing status (furnished or
 1,200 Urban areas in
1,000 Indonesia
800

600

400 707
200
Figure 2.
0 Average price of
Mountain Sea River Lake Street Urban Garden Sport
Village Center
apartment by type of
view (in million
rupiah)
Source: olx.com (2016)

unfurnished) and presence of a swimming pool. A complete list of variables and their
definitions used in this study is presented in Appendix 1. Summary statistics are presented
in Appendix 2.
We applied the hedonic price model to analyze the relationship between apartment prices
and various types of views, as well as a set of other characteristic variables. The model uses
cross-sectional data and adopts two regression techniques. First, we estimated a linear
parametric technique via OLS method. Parametric techniques are the most widely used
techniques in estimating the hedonic price function (Preez et al., 2013). Second, we applied
semiparametric regression because the relationship between the logarithm of selling price
and apartment characteristics is not necessarily linear. Semiparametric regression was used
under some very general non-linear functional forms assumptions. This approach assumes
that the relationship between the floor level apartment and the logarithm of selling price of
apartment is not necessarily linear, so that we also apply semiparametric regression.
Semiparametric regression is generally used to fit a parametric model in which the
functional form of a subset of explanatory variables is not known and/or in which the
distribution of the error term cannot be assumed to be of a specific type (Verardi, 2013).
Some studies showed that semiparametric regression is more appropriate to explain the
property price model and outperform the OLS result (Anglin and Gencay, 1996), as the
parametric approach may create biased estimates (Grislain-Letrémy and Katossky, 2014).
Furthermore, we chose the partially linear model defined as y = X b þ m(z) þ « , where the
parameter b is the parametric part of partially linear model, while the unknown function
m(z) is the non-parametric part of that model. In this study, we put dummy variables that
represent the availability of view in the linear function, while continuous variables were
used in the unknown function. Dummy variables were placed in the linear part, because this
would not affect the curvature of the function (Anglin and Gencay, 1996).

4. Result and analysis

4.1 Base estimates
Our estimates of equation (1) are presented in Table I. Columns 1 and 2 use OLS and
semiparametric regression, respectively. We obtained similar results for both estimates. The
similarity of OLS and semiparametric results suggests that linear hedonic model
assumption is sufficient in explaining the apartment prices. The estimates suggest that the
landscape views have a different effect on apartment prices. Out of eight types of views,
IJHMA Dependent variables: (ln) posted price OLS Semiparametric
11,4
Natural view
Mountain 0.0821*** (0.03) 0.0850*** (0.03)
Sea 0.0107 (0.03) 0.00642 (0.03)
River 0.108** (0.05) 0.108** (0.05)
Lake 0.014 (0.02) 0.0192 (0.02)
708
Artificial view
Street 0.0796*** (0.02) 0.0716*** (0.02)
Urban village 0.00441 (0.01) 0.00401 (0.01)
Garden 0.0297 (0.03) 0.022 (0.03)
Sports center 0.0860*** (0.03) 0.0870*** (0.03)
Internal characteristics
Number of bedrooms 0.127*** (0.01) 0.126*** (0.01)
Floor 0.00486*** (0.002) 0.00482*** (0.002)
Floor2 0.000139*** (0.00004) 0.000139*** (0.00004)
Total floors 0.00807*** (0.001) 0.00833*** (0.001)
Age 0.00672*** (0.002) 0.00644*** (0.002)
Urgent sale 0.0482*** (0.01) 0.0492*** (0.01)
Unfurnished 0.0670*** (0.01) 0.0672*** (0.01)
Swimming pool 0.0141 (0.01) 0.0124 (0.01)
Location characteristics
Distance to railway station 0.007 (0.01) 0.00754 (0.01)
Distance to toll gate 0.0366*** (0.01) 0.0378*** (0.01)
Table I. Distance to city center 0.137*** (0.01) 0.136*** (0.01)
Adjusted R2 0.395 0.385
Estimation result of
Observations 3,224 3,223
OLS and
semiparametric Notes: Robust standard error in parentheses. *, **and ***indicate significant levels at 10, 5 and 1%,
regression respectively

there were four types (mountain, river, street and sports center) that were found to have a
statistically significant impact on apartment prices. The results indicate that these views
strongly affect the selling price of apartments in the study area. The coefficient of view
variables shows that river views generate a greater impact on apartment prices than other
types of view.
Mountain, street and sports center views exhibited a positive and significant effect
on apartment prices. Apartment owners were willing to pay more to get an apartment
with these types of views. A positive value for mountain views indicates that mountain
views are considered to be pleasant, which can impact on apartment purchase decisions
(Behrer, 2010). Although the distance between an apartment and the mountain that can
be viewed is relatively large, apartment owners still can enjoy a full view of the
mountain. We also found a positive valuation of street views, in contrast with the
empirical study by Hui and Liang (2016) in the Hong Kong apartment market. A
plausible reason for our finding is that street views have aesthetic value, especially at
night. Lights from high-rise buildings and vehicles on highways offer a scenic view to
nearby residents. Apartment owners tend to spend their evenings in their apartments,
so they can enjoy these scenic, nighttime street views. We also found that sports center
views have positive value. Based on our data, most sports center views are golf course
views. Golf courses – a form of green, open space in urban areas – provide some
advantages. For example, people who live in urban areas with more green space have Urban areas in
less mental distress and higher well-being (White et al., 2013). Indonesia
On the contrary, river views exhibited a negative and significant coefficient to the selling
price of apartment. The negative value of river views arises as most rivers in the urban
areas are heavily polluted (Statistics Indonesia, 2014). The Citarum and Ciliwung Rivers,
two long rivers that flow through Bandung and Jakarta urban villages, are categorized as
“heavily polluted” rivers (Statistics Indonesia, 2014). The lowering of the quality of the
rivers is caused by household and industrial waste that is discarded into the rivers directly. 709
In addition, slum areas along the riverbanks may degrade the scenic view of rivers, and
further, decrease the value of river views (Gunawan and Yoshida, 1994). Other types of
views, namely, sea, lake, urban village and garden views, were statistically insignificant in
influencing apartment prices. These findings indicated that people disregarded these views
in determining their willingness to pay for apartments. This effect may be caused by the
visibility of each view. The visibility of the view is related to the distance between an
apartment and the relevant landscape view. The insignificant impact of sea views is caused
by the long distance between apartments with sea views and the sea (6.3 km, on average).
The long distance from the sea means that a full view potentially cannot be enjoyed, because
the sea view becomes obstructed by high-rise buildings. Garden views also cannot be seen
clearly because, on average, apartment units with garden views are located on the ninth
floor. Some apartment facilities, such as shopping centers, gymnasiums and other facilities,
are generally located on the lower floors of apartment buildings, with apartment units
occupying the upper floors above these facilities. Meanwhile, apartments with lake views
are located on the fourteenth floor, on average (middle floor), so apartment owners cannot
enjoy the full extent of lake views. Urban village views also had an insignificant effect on
apartment prices. Urban village is a common view in urban areas, so the existence of an
urban village view is unremarkable for residents in these areas.
Table I also presents the impact of other apartment characteristics on apartment prices.
The number of bedrooms and total floors of an apartment have a positive and significant
value on prices. Apartment prices tend to increase as the number of bedrooms and the total
number of floors of the apartment building increase. Apartment age is positively correlated
with apartment prices, indicating that older apartments tend to sell for higher prices. This
result is different from that presented by Ayan and Erkin (2014) in their study based in
Metropolitan Izmit, Turkey, and Conroy et al. (2013) in San Diego, where age of property
was negatively correlated with property price. A possible explanation is that older
apartments usually have a strong construction, and this indicates its fitness for occupancy.
Furthermore, a negative sign of the “urgent sale” variable suggests that sellers will offer a
cheaper price when they need to sell their apartment immediately.
Estimates suggested a non-linear relationship between floor and price. A negative
coefficient of floor and a positive sign on the squared term (floor2) coefficient suggested a U-
shaped relationship. Initially, the relation between price and floor level was negative – price
decreased as floor level increased – yet once the apartment reached a certain level of floor,
the relation became positive. This result tells us that apartment owners prefer to stay in
either low or high floor levels. A lower-level apartment provides better access, while higher-
level apartments offer less traffic noise, brighter rooms and wider views. The availability of
furniture is also a significant attribute – fully furnished apartments are more expensive than
apartments with no furniture – while the availability of swimming pools is not significant.
For location characteristics, our results indicated that distance from the city center is an
important characteristic. The closer an apartment is to the city center, the higher is its value.
We also found that distance to toll gates and apartment prices are negatively correlated.
IJHMA This finding suggests that apartment owners prefer to live closer to toll gates to improve
11,4 their accessibility and reduce travel time. Distance to railway stations, another location
characteristic, was statistically insignificant. One possible reason for our result is that
apartment owners may have another transportation option, such as their own private car, so
the proximity to railway stations becomes a less important attribute in choosing an
apartment.
710
4.2 Interaction effect between floor level and view
The value of a view may vary depending on the floor level on which an apartment unit is
located. Floor level can affect the visibility of views. Apartment owners on higher floors will
enjoy wider views from their apartments. Meanwhile, small views are less visible from
higher-floor apartment units. Furthermore, we are interested in examining whether the
value of each type of view will differ depending on where the apartment lies. To estimate the
result, we add an interaction term between floor level and some types of view by modifying
equation (1) as follows:

X
j

lnPi ¼ a0 þ g j Viewji þ u j Viewji *Fi þ X0i b þ « i (2)

j¼1

We focus on four types of views, namely, lake, river, garden and sports center. We only
estimate these views because other views such as mountain, sea, street and urban village
views can only be enjoyed from apartments on certain floor levels. For example, apartment
owners will get sea or mountain views only if they are on higher floors. Based on our data,
apartments with mountain and sea views were on fourteenth and nineteenth floors (on an
average), respectively.
Table II presents the estimation results of the interaction effects between floor level and
the selected view types. Column (1) shows the interaction effects between floor level and lake
view, while Columns (2), (3) and (4) present the interaction effects between floor level and
garden, sports center and river views, respectively. We also included the same control

Dependent variables:
(ln) posted price (1) (2) (3) (4)

Lake 0.0415 (0.032) 0.0137 (0.017) 0.0139 (0.017) 0.0141 (0.017)

Garden 0.029 (0.029) 0.101** (0.047) 0.0292 (0.029) 0.0297 (0.029)
Sports center 0.0862*** (0.027) 0.0859*** (0.027) 0.0435 (0.046) 0.0860*** (0.027)
River 0.109** (0.046) 0.108** (0.046) 0.108** (0.046) 0.00153 (0.077)
Lake  floor 0.00388** (0.002)
Garden  floor 0.00762** (0.004)
Sports center  floor 0.00256 (0.002)
River  floor 0.00730** (0.004)
Control variables Yes Yes Yes Yes
Adjusted R2 0.395 0.395 0.395 0.395
Observations 3,224 3,224 3,224 3,224
Table II.
Estimation result of Notes: Standard error in parentheses. *, ** and *** indicate significant level at 10, 5 and 1%, respectively. The
OLS set of additional control variables for each column is the same as that of the control variables in Table I
variables as in Table I. The results indicated that the interaction effects between floor level Urban areas in
and garden, sports center and river view were statistically significant at the 5 per cent level. Indonesia
The positive sign of the interaction variable between floor and lake views indicates that
apartment owners tend to pay more to get a higher-floor-level apartment with lake view. A
higher floor level allows apartment owners to enjoy a full view of the lake. Furthermore, this
result also shows that the price of apartments with garden and river views tend to decrease
as the floor level increases. A small garden view becomes less visible if the apartment
owners are on a higher floor, while the low quality of river views makes apartment owners 711
not interested in seeing the full view of the river from higher-floor levels.

5. Conclusion
We have examined the impact of presence of various landscapes on apartment prices in
Indonesian major urban areas. Landscapes potentially generate positive externalities, such
as improving psychological well-being and relieving stress, as well as amenities, so potential
apartment owners are willing to pay more for apartments with good views. Comparing with
previous studies, our analysis is also centered into what extent the height of apartments
affects the views’ value.
Our empirical evidence showed mix effects on apartment values in Indonesian major
urban areas, supporting international findings of values of landscape views. Mountain,
street and sports center views significantly affected the selling price of apartments for the
case of Indonesia’s urban apartment market, while the low quality of river views brought an
adverse impact on apartment price. On the height–view relation, we found that the effects of
views may vary across apartment height. The quality and visibility of views is a crucial
factor in determining the direction of the height–view relation. For instance, a lake is
observed better at a higher position, and hence, its value commands a higher premium as the
position of the apartment increases. In contrast, lower floors were preferred for apartments
with garden or river views.
Our empirical results provide information for Indonesian developers on which views are
valuable for residents. The results also direct further policy implications for landscape and
urban planning. A negative value of a river view indicates that the local government needs
to prioritize programs that improve the quality of river views and also clean up slum areas
along the riverbanks. Furthermore, as the price of apartment varies across the floor level
and view, the government can also charge a property tax based on the floor level of an
apartment unit and type of view that can be seen through the window.
Our empirical evidence is, however, drawn from secondary data of apartment prices in
Indonesian major urban areas. Therefore, the estimates could differ if consumers are directly
asked to evaluate their preferences toward apartment views through surveys. We leave it to
future researchers to investigate to what extent the stated and revealed preference of
apartment views converge for the Indonesian apartment market.

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Appendix 1. Variable definitions

(ln) selling posted price
Log posted apartment price in rupiah. Source: olx.com (2016).
Mountain view dummies
1 for apartment with mountain view; 0 otherwise. Source: olx.com (2016).
Sea view dummies
1 for apartment with sea view; 0 otherwise. Source: olx.com (2016).
River view dummies
1 for apartment with river view; 0 otherwise. Source: olx.com (2016).
Lake view dummies
1 for apartment with lake view; 0 otherwise. Source: olx.com (2016).
Street view dummies
1 for apartment with street view; 0 otherwise. Source: olx.com (2016).
Urban village view dummies
IJHMA 1 for apartment with urban village view; 0 otherwise. Source: olx.com (2016).
11,4 Garden view dummies
1 for apartment with garden view; 0 otherwise. Source: olx.com (2016).
Sports center view dummies
1 for apartment with sports center view; 0 otherwise. Source: olx.com (2016).
Bedrooms
714 Number of bedrooms in apartment. Source: olx.com (2016).
Age
Age of apartment since construction. Source: Apartment website (2017).
Total floors
Number of floors of apartment. Source: Apartment website (2017).
Floor level
The floor level on which the apartment is located. Source: olx.com (2016).
Selling status dummies
1 for apartment to be sold quickly, 0 otherwise. Source: olx.com (2016).
Furnish dummies
1 for apartment with complete furniture, 0 otherwise. Source: olx.com (2016).
Swimming- pool dummies
1 for apartment with swimming pool, 0 otherwise. Source: olx.com (2016).
City center
Distance between apartment and city center. Source: olx.com (2016), Geospatial Information
Agency (2017).
Railway station
Distance between apartment and the nearest railway station. Source: olx.com (2016), Geospatial
Information Agency (2017).
Distance to toll gate
Distance between apartment and the nearest toll gate. Source: olx.com (2016), Geospatial
Information Agency (2017).
Appendix 2 Urban areas in
Indonesia

Variables Mean SD
715
(ln) Price 8.774 0.327
Natural view
a
Mountain 0.0502 0.218
a
Sea 0.0363 0.187
a
River 0.00744 0.0860
a
Lake 0.0471 0.212
Artificial view
a
Street 0.0496 0.217
a
Urban village 0.545 0.498
a
Garden 0.0282 0.166
a
Sports center 0.0323 0.177
Internal characteristics
Number of bedrooms 1.464 1.061
Floor 15.55 8.923
Floor2 321.4 343.6
Total floors 29.03 8.923
Age 4.077 3.730
a
Urgent sale 0.171 0.376
a
Unfurnished 0.691 0.462
a
Swimming pool 0.375 0.484
Location characteristics
(ln) Distance to railway station 8.043 0.816
(ln) Distance to toll gate 8.255 0.635
(ln) Distance to city center 9.031 0.567 Table AI.
Summary statistics
Note: aDummy variable of variables

Corresponding author
Muhammad Halley Yudhistira can be contacted at: mhyudhistira@lpem-feui.org

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