Development of Floods
Economic Valuation
Model for Residential
Properties

Sr. Siti Hafsah Zulkarnain
Assoc. Prof. Dr. Muhamad Ali Muhammad Yuzir
Dr. Muhammad Najib Razali

Introduction
In Malaysia, floods are caused by a
combination of natural and human factors.
Heavy rains continue in Malaysia since theseasonal rains began from the end ofDecember 2016 and have cause flooding insix (6) states in Peninsular and East Malaysia.
The situation of floods in several areas
affected and most of the families need to be
evacuated and the figure involved in theevacuation as Table 1.
The frequent occurrence of flooding inMalaysia, the damage caused can besignificant in relation to both property
damage and service disruption. Property withphysically damaged requires higher operating
cost of repair and maintenance which might
affect directly the value of the property.

Table 1: Evacuation of floods as 1 February 2017
StatesKelantan
Terengganu
PerakPahangJohor
Sabah
Selangor

Total number of families
2130
181
891
384
011

Total number of people
105
93576
3210
1390
062

(Source: National Disaster Management Authority (NADMA)Flood scenario in Malaysia

Pulau Pinang (15 Sept 2017)

Kuala Lumpur (Dec, 2014)

KL- Petaling Jaya (March, 2017)

Kuala Krai (Dec, 2014)

Rantau Panjang (Jan, 2017)

Cameron Highland (Oct, 2013)

Latest flood – Pulau Pinang (23 Sept 2017)

Heavy rain in Penang.

Problem statement
Lack of knowledge
amongst valuer

Lack of consistency
in assessing flooddamage

Building material

Magnitude of flood•the difficulties in assessing flood damage because of the lack ofknowledge amongst valuer.

•During the flood generally the valuer not present and they must
rely on second hand information from local residents about flood
velocities and contamination content.
•The valuation process in determining the current market after
disaster might be different between one and another property insame location. Only rely on Dept of Social Welfare.

•Basically, building in flood-prone area were constructed with moreporous material including block and concrete including bricks withvulnerable services located on the ground floor.

•Depths of over 1 metre (m) can damage the structure due toincreased hydraulic pressure and velocities of water. Contaminationof floodwater will change the absorption and drying out
characteristics of material and treat to human health and increases
the clean-up cost.

Research Objective:
1To develop Economic Valuation Model of flood impact toproperty value.

2
2

3

To investigate the property valuation model based on
economic characteristics from the impact of flooding.

To calibrate and validate the economic valuation modelwith integration with GIS.

Case study: Langat River Basin
Overview
Transboundary

Description
Covers 3 states including Selangor(78%), Negeri

Sembilan (19%) andFederal Territories of Putrajaya (3%).
Location

Situated approximately 27 km to thesouth of Kuala Lumpur (capital city ofMalaysia).

Total basin area

2,350 km.sq. and 200 km long

Topography

Approximately 90% mountainous with amaximum height of 1400m above sea
level.

ClimateTropicalwithamean

annualtemperature of 32oC.
Average annual

Approximately 2,400mm ranging fromrainfall depth

1,800 to 3,000mm.

Population

1,184,917 million in 2000, growth rate
7.64%

Geographical

Located ant latitude 02o50’48”N andlocation

longitude 101o40’48”E.

Main catchment

Dividedarea

comprisingintofiveof(5)thecatchments
Lui,Kajang,Semenyih, Dengkil and combined small
catchments of Beranang and Labu.
Monsoon seasons

Two monsoon seasons in a year, thenortheast monsoon from November toMarchandsouthwestmonsoon

between May and September.

Selangor Flood Map

Hulu Langat Flood Map

RESEARCH NOVELTY : Development of Flood EconomicValuation Model and Integration with GIS
ECONOMIC ATTRIBUTES

Building characteristics
Age of house
Number of rooms
Number of bathroom
Land area
Build up area
TenureBuilding conditions
Location characteristics
Distance to MRT / LRTDistance to shopping mall
Distance to highway
Distance to school
Distance to hospital
Data sources: National
Property Information
Centre, NAPICFLOOD HAZARD
PARAMETER+Flood depth
Flood frequency
Flood duration

Data sources:
Department ofIrrigation andDrainage (DID)& Flood Model
Data sources:
Department ofSurvey andMapping
Malaysia (JUPEM)=Integration with GIS

R
E
S
E
A
R
C
H

RESULT 2:
Flood Property
Value Map (Langat
River Basin area)

NO
V
E
LT
Y

RESULT 1:
Formulation ofFlood Economic
Valuation Model11.0 Integration of Valuation Model with GIS
Stage 1:Data collection

Data collection
Economic attributes affecting
Residential Property value

GIS Data(Base map of Langat River Basin)

Processing by ArcGIS 10.5
Multi Criteria Decision Analysis (MCDA)

Economic attributes(Add information to layers of map)

Layer 1:
Layer 2:

Housing attributes
Locational
attributes

Layer 3:

Microeconomicattributes

Layer 4:

Environmental
attributes (flood)

Integration

Valuationmodel(HedonicPricingModel)

Stage 2:
Data processing

Perform
regression
analysis

Result:Residential Valuation Model and GIS Flood map

Stage 3:ResultEconomic Valuation Model - method ofestimating demand or value of properties

Description of variables

Research Contribution
1.

Represents how economic valuation method can be used todetermined the impact of floods towards property value.

2.

Represents a development of flood risk framework based themagnitude of floods.

Publications
1.

A conceptual Framework of Determining the Property Value using
Economic Valuation Method towards Floods Disaster, 1st Economic
Business Conference (EBIC) 2017, Grand Aston Hotel, MedanIndonesia, 25 October 2017 (Scopus Index).

2.

A Conceptual Framework of Economic Valuation Towards Floods
Disaster, Asian International Multidisiplinary Conference 2017 (1-2Mei 2017, Universiti Teknologi Malaysia, Johor).

3.

Chapter of book – Integration Of Disaster Management Towards
Sustainable Housing And Community Redevelopment.

Conclusion
The generic floods framework and modeling presented
explores the interaction between different internal andexternal factors affecting the economic value ofproperties. An extensive review of previous studies in
economic valuation of property for different floods disasterstudies considered to be main restrictive factor resulting inlack of empirical studies in this field.
This study brings together two existing research domains offloods and property value. Practitioners and researchers willfind this study useful in developing an improved
understanding of the economic valuation to flooding. The
flood framework and modeling are important outcome of
the research which will encourage further research in thisarea of study.

THE ENDTHANK YOU