As well as running your local services and collecting your garbage, local authorities could also hold the key to your real estate investment successes – or failures. That’s because decisions on urban planning and real estate development can have a significant and measurable impact on property prices, both positive and negative.
Urban planning encompasses every aspect of a city’s layout, infrastructure, transport and public spaces, guiding the use and development of different areas. That means the experience of living in a city is directly affected by urban planning decisions, which in turn affects the desirability of real estate there.
Here are just a few urban planning and real estate development issues to look out for when investing in a property.
Having good connections to surrounding business districts or neighbouring cities can increase the value of a property. This is particularly the case if a property is in a rural or semi-rural area but has efficient links to an urban centre where there are plenty of jobs and leisure options. Spain’s Alta Velocidad Española (AVE) is already the longest high-speed rail network in Europe and is growing rapidly. This could open up new opportunities for real estate investors savvy enough to pick up properties in picturesque rural or coastal areas that are soon to join the network.
In urban areas, particularly inner cities, green space is usually at a premium – and this shows in the value of real estate close by. In Helsinki, research has shown that homes near the inner city’s green spaces can benefit from a price boost of up to 6%. However, the same isn’t necessarily true for more outlying areas, showing that it’s specifically an oasis of greenery in the middle of a city that adds value to nearby properties.
Measures to ‘future-proof’ a city by encouraging young people to settle there can have a positive impact on real estate prices. Younger people are more likely to rent than they are to buy, so anywhere that promises them an exciting life and career can expect constant demand for real estate investment properties. In Berlin, a successful mix of infrastructure investment, cultural amenities and tax incentives is attracting young people and start-ups alike. The result is that Berlin is one of the best places to invest in real estate, and it’s showing no signs of slowing down.
When investing in real estate, it’s important to study a local authority’s urban planning and real estate development plans first. Are problems like flood risks being addressed? Will there be more green spaces as well as homes? Is transport being expanded or upgraded? Look beyond the rhetoric and imagine who would want to live there in the future and why.