Impact of Regeneration initiatives on Neighbourhood Residential Property Values
One of the initiatives to boost an economic decline is regeneration. In the real estate market, properties in many towns and cities are being revitalised, as a positive economic growth draws more businesses to the locality. In turn, this creates employment opportunities which lead to increasing tenant demand or housing supply which, ultimately, reflects on house prices. We look at the effect of regeneration on residential property values.
According to an authorised source, “Properties within 750m of a regeneration zone were 3.6% higher in value per annum than the local authority average”. Of course, this depends on the locality and the market value in that particular area. If you are looking to get an independent property valuation, professional agents are the best ones to approach, as they have experience of local market conditions.
Improvement: Regeneration involves strategies to improve an area, especially one which has been neglected or allowed to decline. Refurbishing existing properties, construction of infrastructure, housing development, green space enhancement and cultural projects are all methods by which living standards are raised and investment opportunities are encouraged. Automatically, as the improvement takes place, the value of property will increase.
Amenities: Once infrastructure is enhanced, transport connectivity, shopping amenities, entertainment facilities and environmentally friendly spaces are transformed. This makes the area more appealing to live in, thereby increasing the demand for housing, leading to an increase in property values. For example, the Elizabeth Line rail running across London and the HS2 (under construction, which will connect London to the Midlands and North England) make transportation so convenient. The areas connected by the rail links will become more popular, leading to an increase in demand for living there and, sequentially, higher house prices.
Investment: As areas are regenerated, the capacity for economic growth becomes a potential for investors in the property market. It could be in both the commercial and residential areas. With investment increasing property development, the ever-constant lower supply against higher demand level can be overcome, resulting in increase in property value.
Gentrification: While regeneration has many positive outcomes, it can also cause gentrification – “the process whereby the character of a poor urban area is changed by wealthier people moving in, improving housing and attracting new businesses, often displacing current inhabitants in the process.” It can lead to economic inequality, threat to local businesses and displacement of locals. Prof. Henry Overman’s research shows that many benefits of regeneration projects in Manchester City and the London Docklands did not help the original residents of those places.
Socioeconomic results: Regeneration can draw more higher-income people to a certain area which will lead to an increase in property prices. However, it will also increase lifestyle costs, making it difficult for the lower socioeconomic residents to meet expenses and remain in the area. Displacement of such individuals will result in tension and cause conflict in the society. Also, the cultural character of the location is likely to change because of the economic and social upgrades. This can be viewed in two ways – emptying the unique historical culture of the location or benefitting the people by improved services and infrastructure. However, if there is social tension, automatically the unity is broken which may lead to “less appeal” in the area and have a negative impact on property values there.
Targeting regeneration initiatives: Often, regeneration is carried out to suit the commercial needs of developers rather than the human expectations of the community. People feel neglected that important decisions which affect their locality are taken without their knowledge or consideration of their needs. The Managing Director of a major property group stated that regeneration is “great news for those areas due to benefit. If, however, the government does not target its regeneration efforts properly, there is a risk that yet more money will be poured into the wrong places, with the resulting house price increases only creating greater inequality within the market”. Steps need to be taken to ensure that the considerations of long-term residents and community identity are met. Affordable housing quotas and development plans inclusive of the requirements of the community are under way to bridge this concern.
Conclusion: Regeneration has a significant impact on residential property values. With the improvement in the living standards by adding amenities and infrastructure, leading to investment benefits as well, there will be an appreciation of property values. However, the chasm between the positives and the negatives (gentrification and socioeconomic values) of regeneration needs to be bridged to ensure that regeneration initiatives meet the goal of maintaining stability between economic growth and community welfare.