First, a reliability analysis was carried out using SPSS statistical software. Then, the key variables were extracted using factor analysis.
3.2.2. Key Variable Extraction
We applied factor analysis to extract the key variables for decision-making on urban renewal from the 77 indices. The KMO (Kaiser–Meyer–Olkin) value was 0.812 and the significant probability of the χ2 statistical value for the Bartlett’s test was 0.000. The Kaiser test gives the common KMO metric: 0.9 is very suitable for representation, 0.8 is suitable for representation, 0.7 is general for representation, 0.6 is unsuitable for representation and 0.5 is extremely unsuitable for representation. If the statistical value of the Bartlett’s test is large, and the corresponding probability value is less than the given significant level, the assumption should be rejected. Otherwise, we can accept the hypothesis, the significant probability is 0, and it is not suitable for factor analysis. The questionnaire data was suitable for factor analysis according to the above basis.
In total, 45 indices, I’
i (i = 1, 2, …, 45), were extracted after the first factor analysis. The cumulative explained variance was 67.81%. Wu [
27] suggested that if the combined interpretation of reserved factors can achieve greater than 60% after extraction, it is an ideal result for use in science. Therefore, the 45 indices are good representations for the impact of all variables in urban renewal decision-making. A second-time factor analysis was performed because the factor structure changed after some of the indices were deleted. We classified the indices of these second factor analysis results according to their contents and internal relationships. Nine key variables (
Table 3) were classified: social welfare (V
1); economic and real estate development level (V
2); public facility (V
3); demolition and resettlement compensation (V
4); infrastructure (V
5); ecological environment (V
6); policy and planning (V
7); construction status (V
8); and investment behaviour of developers/investors (V
9).
The nine key variables corresponded with the statistical requirements in the second factor analysis mentioned above in regards to internal consistency, and also explain the variance and KMO value. Therefore, the factor analysis is valid.
3.2.3. Key Variables Analysis
(1) Social welfare (V1)
The social welfare variable includes the employment rate, employment opportunity, occupation, income, job skills, internal and external social contacts, education, medical condition and level indices. Among them, employment and education explain the majority of the variation in the social welfare variable, with Wang et al. [
4] also reporting that local employment and education are key influencing factors. Employment and education might reflect the physical and mental states of residents living in districts to be regenerated. Negative emotion of low-income residents easily leads to social problems and is harmful to social stability due to the low level of social welfare, updated job insecurity, poor income and livelihood insecurity. To mitigate social conflicts, reduce the gap between rich and poor and stabilise regional migration, the government tends to provide employment opportunities and increase educational and medical institutions via urban renewal. However, renewal attempts often force indigenous people to leave the region. The social welfare of indigenous peoples has not improved because social welfare efforts following renewal are focused on new residents.
(2) Economic and real estate development level (V2)
The economic and real estate development level variable includes gross domestic product, commercial activity, business and real estate investment, housing price and rent level and differences in the average level of urban real estate market indices. This variable was fully recognised by most scholars who have performed similar studies, such as Sun and Yan [
17], Liu and Zhao [
19] and Wang et al. [
20]. Regional economic development levels are not only the embodiment of current economic situations, but also reflect the development potential following renewal, and are the main consideration factor that the real estate developers take into consideration for investment decision-making and the judgment basis that the government balances the regional development on. Commercial activity and business investments are the economic basis of regional development, and are economic and feasible evaluation criteria in urban renewal decision-making. Regional economics, real estate development level and the feasibility of urban renewal are positively correlated, and help promote each other. Therefore, the regional choice of urban renewal, which is dominated by real estate development, tends to be based on economic benefits and not on the ageing of buildings.
(3) Public Facility (V3)
The main public facility indices relate to education, health, sports, entertainment and other public facilities, which were detailed by Zhao [
18] in his research. The government supplies the public facilities to meet the demand for these and for space. Shortages of public facilities inconvenience residents living in the district, negatively affecting their quality of life. The government tends to use real estate development for the supply of public facilities. However, real estate developers who only pursue profits reduce public facilities to improve their own benefits, contrary to the original intentions of the government. This pattern of urban renewal is not effective for improving the shortage status of public facilities in the district to be regenerated.
(4) Demolition and Resettlement Compensation (V4)
The demolition and resettlement compensation variable has five indices, which are housing demolition and relocation difficulty and cost, land use, and the compensation method for demolition and resettlement. Demolition and resettlement are not only the primary link, but are also the most important factor that impacts the overall progress of urban renewal. Urban renewal creates an increase in regional housing prices because real estate developers have to increase housing prices to protect yields. Lees [
28] holds the view that indigenous people living in limited financial conditions are forced to move out because they cannot afford the expensive housing prices. To protect their rights and interests, indigenous people require very high compensation. However, due to financial constraints, the government cannot meet these requirements, resulting in conflicts over compensation levels, making demolition difficult. The high housing prices then lead to more compensation conflicts between indigenous people and the government. Demolition and resettlement compensation is the biggest conflict between stakeholders of urban renewal.
(5) Infrastructure (V5)
The indices with the highest interpretation degree include water, electricity, gas and sewage treatment, which are associated with local infrastructure and are basic living securities. These variables were also considered by Frantal et al. [
16] as being the key factors affecting urban renewal. The government invests in constructing infrastructure to maintain the needs of residents. However, due to financial constraints, the government cannot fully meet the needs of all regions and, therefore, can only selectively invest in infrastructure construction. The government tries to obtain the maximum urban development effect with the lowest fiscal expenditure in district selection. High amounts of governmental revenue are needed to compensate for not providing funds to ignored regions due to their neglected infrastructures. The high cost associated with regenerating these areas results in further neglect by the government. Additionally, the outdated infrastructure acts as an obstacle for real estate development because it limits investment options for real estate developers.
(6) Ecological environment (V6)
The ecological environment variable mainly considers water, soil, noise and light pollution. Good ecological conditions are the basis of a good living environment and residents cannot be healthy when they live in a highly polluted area. Wang et al. [
4] and Frantal et al. [
16] both insisted that ecological burden is an obstacle to the healthy development of a city and a driving force to promote urban renewal. Due to the low-income levels of many indigenous communities, the ecological environment of the region to be regenerated cannot be maintained in a timely manner, resulting in the ecological environment worsening. Many indigenous communities are eager to improve the quality of their ecological environment. However, they must rely on the government to do so due to the poor financial situation of these communities. The government attempts to change the current situation via regional development; however, because regional development often results in the removal of these communities, they do not personally benefit from increased governmental assistance.
(7) Policy and planning (V7)
Urban renewal is subject to urban development policy. Frantal et al. [
16] and Zhao [
18] illustrated that national policy is a key factor that influences urban renewal implementation. However, urban renewal also affects urban planning. The local development strategy not only guides the developmental direction of urban renewal, but also guides the investment direction of real estate developers via preferential policies. Through urban planning, the government restricts development behaviour by real estate developers so that the renewal results are in line with the overall development of the city. The old district’s current development situation and the possibilities and feasibilities for renewal can also provide a basis for urban planning.
(8) Construction status (V8)
The construction status variable that affects urban renewal decision-making can be explained by four indices: building function layout, building density, building size and building scale, which are summarised in “living environment” by Chan et al. [
10]. The original building function layout has gradually been eliminated by residents due to changing living habits. To adapt to modern lifestyles, residents meet their demand for building functional layouts by housing replacement. Within the scope of their financial conditions, residents also tend to move to low-density housing in better environments. However, the building density, building size and building scale of the district to be regenerated have an impact on costs and make compensation difficult. These three indices are some of the main considerations associated with renewal implementation by the government and investment decision-making of real estate developers.
(9) Investment behaviour of developers/investors (V9)
Although urban renewal is mainly led by the government in China, it is implemented by real estate developers, so developer investment behaviour plays an important role in urban renewal decision-making. It is also the most important variable for the implementation of urban renewal, matching the conclusion that Mao et al. [
23] and Nappi-Choulet [
15] regarded “investment” as a key factor in their studies. The key indices identified using factor analyses are the impact on corporate image and the behaviour of competitors. Although it does not directly highlight the pursuit of profit, the corporate image established by redevelopment projects can broaden future development paths for the enterprise. It can also deepen the cooperation between the government and these enterprises, contributing to their long-term development. The behaviour of competitors can provide the basis for an enterprise’s investment decision-making. However, it also relates to the growth of the enterprise. Therefore, investment decision-making of real estate developers tends to be for those districts that can enhance the corporate image and ensure a better earning rate.