Impetus of infrastructure construction on real estate market development: Evidence from 22 major cities in China

This paper empirically examines the impetus and regional difference of urban infrastructure construction on the real estate market development based on the Structural Equation Modeling and Data Envelopment Analysis methods. Cross section data of the 22 major cities in China was used from China Urban Statistical Yearbook 2009. The results indicate that infrastructure construction has positive impact on the real estate market development. In particular, the construction of water supply and road traffic relating to the daily life of residents would significantly promote the local real estate industry. It is demonstrated that increasing the urban infrastructure investments blindly in cities such as Beijing, Shanghai, Tianjin, Chongqing, Chengdu, Guangzhou, Changsha and Guiyang has unchanged or diminished marginal revenue of promoting real estate development. More effort is needed by the government to optimize the infrastructure investment structure to improve the sustainable development of urban real estate market.