Exploring some spatially constrained delineation methods in segmenting the Malaysian commercial property market

Abstract

This study delves into the property submarket in Kuala Lumpur and Selangor, Malaysia. The submarket is anticipated to be simple, uniform, and dense, making it highly influenced by neighbouring properties. However, traditional data-driven methods that overlook spatial contiguity disregard this density condition. To tackle this problem, the study investigates spatially constrained data-driven methods utilizing Principal Component Analysis (PCA) and cluster analysis. The findings reveal that spatially constrained methods outperform traditional methods by minimizing errors and enhancing model fit. Specifically, the two-step cluster method and k-means cluster method reduce errors by 6.96% and 7.22%, respectively, but at the cost of model fit by 11.23% and 13.94%. Conversely, the spatial k-means and spatial agglomerative hierarchical cluster methods reduce errors by 8.68% and 8.17%, respectively, while improving model fit by 7.1% and 6.35%. Hence, the study concludes that spatially constrained data-driven methods are more effective in differentiating commercial property submarkets than traditional methods.

Keywords

• submarket
• segmentation
• delineation
• commercial property market
• spatial constraint
• cluster analysis