With Edmonton’s city officials finally striking a deal with the Oilers to build a new hockey arena, investors have started asking whether this massive project will come to affect real estate values. Experts often say a new stadium project will significantly boost property values, but does the research support this line of thinking?
The idea is that the more attractive the location, the higher the value of a property.
As the demand for homes in an area increases with new amenities, the result is higher housing values. Supporters of stadiums believe that their creation and presence produces jobs during construction and operation, attracts other businesses to the area, and increases spending in the community.
Research by independent firms such as REIN indicates that the presence of a stadium increases quality of life (cultural importance, civic pride, city image, and community visibility). For many residents in Canada, the largest share of their personal net worth is tied directly to the value of their homes and investment properties, so these issues are of great importance.
The findings of a recent report by the Real Estate Investment Network (REIN) clearly support the following facts:
- An arena’s positive impact on housing values can be felt most within a 5 kilometer radius, and has the largest effect when appealing architecture, community plazas, park landscapes, retail, commercial, and entertainment spaces, and the stadium’s construction itself are incorporated into its design.
- A negative effect on property values is felt when the costs of a proposed stadium necessitates the increase of property taxes.
- Homes in neighborhoods close to new stadium builds (or proposed stadium builds), on average, have premiums ranging between 3% and 15%, depending on the different types of housing, parking options available, and the distance from the stadium itself.
- Housing values increase on average 1.75 % for each 10% decrease in distance from a stadium, with the positive price increase being highest for homes in closest proximity to the stadiums and decreasing gradually outwards within the aforementioned radius.
- When a stadium is located outside the downtown core of a city, and is not connected to any other economic development activities or an urban redevelopment program, residential property values around the facility will still see a positive increase in value. However, this increase will not be as dramatic as those that are built in, or with nearby accessibility, to the Central Business District (CBD).
- While close proximity to the stadium usually results in the largest price increases, the regular presence of fans may lead to a constant source of noise, incivilities, traffic congestion and a scarcity of parking. These are all factors with the potential to create a price depreciating effect.