Which investments into residential areas cause the property value to rise in the long run, and which do not? This is the central question that Jan Brouwer of ABF Cultuur researches in his report Residential areas with value, Value creators in residential areas, (in Dutch ‘Wijken van waarde, Waardemakers in de wijk’, Delft, August 2008).
After all, Value creation is a more and more often used reason to invite owners and housing corporations to co-invest into residential areas that need re-development. The findings of the report are especially of interest to those who are active in urban development and in urban regeneration. Of the many factors, most of all arts, culture and the creative industries turn out to be positive value drivers. Below, we give a short summary of the report, only available in Dutch, which leads to some surprings conclusions.
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Photos in this article are from the Robodock Festival at the NDSM-wharf in Amsterdam - photos Hans Karssenberg
Participation
High levels of social participation and economic participation highly influence the property value. A higher level of economic participation means more money in the area. A higher level of social participation means more satisfaction with the house and the area, which translates into higher property prizes. However, the report signals the problem that it is hard to come up with meaningful and effective projects to contribute to these levels demonstrably.
Local economy
The local economy within the residential area has, perhaps unexpectedly a disadvantageous effect on property value. More jobs in the residential area means – in most sectors of the economy – more noise, traffic and parking problems.
Property value of houses and creative industries. Blue is no creative area, purple area with creative potential and pink existing creative area. To the left are the Dutch problem areas, in the middle the other urban areas and to the right highly urban areas.
Creative industry
An important exception to the rule is the creative industry. The report uses the broad definition of this industry: not only arts and culture, but also design, architecture, research, consulting, media and ICT. These sectors have a very positive effect and generate property value. Arts and culture are easily accessible in terms of labour and offer diversity, which causes the level of participation to rise. Arts and culture are also good for the area’s image, which is good for value. On top of this, the creative industry likes to inventively re-use old buildings, which generates employment and increases value.
Housing
Building new houses into the area increases property value, but only in the direct zone surrounding the newly built area and not for larger areas as a whole. Selling social houses is in general a very profitable measure for housing corporations (provided there is enough market to buy, this is harder in shrinking cities) for it generates income AND causes the value of the rest of their property in the area to rise.
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Safety and amenities
Social problems, litter, riots etc (logically) cause the property value to decrease, therefore it pays off to invest into safety and reduce trouble in the area. The presence of public amenities in general, often thought to be a solution, does not cause property values to rise, a tailor-made approach is needed. (Of course, this does not address the social benefits of these amenities – the report focuses on the relation between investments and property value solely).
A high level of jobs in the care sector does not lead to a higher property value. In contrast to cultural facilities, care facilities are no attraction; no one spends a nice day out in a hospital. Only when the whole area becomes known as care friendly, a slight increase can be seen. It is unclear however, whether this is in balance with the investments, from a financial point of view. There is no connection between education in the residential area and property value. Only in areas with a lot of low income families and little competition of other schools does creating new schools lead to higher property values.
Property value and presence of monuments. Red are problem areas, yellow other urban areas. To the left 0-10 monuments in the residential area, in the middle 10-50, to the right 50 and more.
Culture
Again, the great exception to the rule is culture: in all cases there is a positive connection between property value and the presence of monuments, cultural institutions and cultural employment. Culture is a value creator for value and a catalyst for employment. The presence of icons is demonstrably important for property value. Icons are meaningful monuments, cultural history, and probably also unique architecture and different other icons such as squares and parks, art in public space.
Property value and the size of the culture sector. Red are problem areas, yellow other urban areas. To the right 0-10 cultural jobs per 1000 residents, in the middle 10-50 and to the right 50 and more.
But also facilities such as theatres, cinemas, arts centres, libraries, galleries, pop podiums, education in arts and so on are investments that pay off. Areas with higher levels of employment in arts and culture have higher property values. Arts and culture are outstanding value creators.
Download The report ‘Wijken van Waarde’ van ABF Cultuur (PDF, in Dutch).
See also
- The Voorzieningen Compagnie (Facilities corporation, Dutch website) in Enschede Zuid, originated in the Stipo-project Wish I were a 'Brinker'
- The KEI/SEV/Kopgroep file 'Wijken van Waarde' (Dutch website)
- The English website on Value Oriented Planning, one of four strategies in the international project for urban regeneration ReUrbA which Stipo accompanied
- ReUrbA publication on Value Oriented Planning (PDF).