FROM INDUSTRY TO ARTS CENTER: ASSESSING THE NEIGHBORHOOD IMPACT OF INDUSTRIAL HERITAGE TRANSFORMATION ON HOUSE PRICES

Lasse Læbo Matthiesen^1*Marie Lautrup²Toke Emil Panduro³

• ¹Copenhagen Business School, Frederiksberg, Denmark
• ²University of Copenhagen, Copenhagen, Capital Region of Denmark, Denmark
• ³Aarhus University, Aarhus, Central Denmark Region, Denmark

This paper shows that revitalizing an industrial heritage site into a hub for creative businesses and art production can bring significant indirect economic benefits to residents. Using an example from the city of Aarhus, Denmark, we identify residents’ willingness to pay to experience the transformation of an old industrial site into a facility that invites residents and people from the entire city to engage in cultural activities and creative production.We identify willingness to pay by observing how housing prices evolve in response to the project. Using the hedonic house price method with a difference‑in‑differences design, we compare price changes in the impacted neighborhood against those in the rest of the cityAfter the completion of the revitalization project, apartment prices in the local neighborhood increased by 2.3-3% relative to the rest of the city. This increase can be interpreted as an aggregated welfare gain and amounts to 17.5 to 21 million EUR for the impacted neighborhood. This is one of the few papers investigating the indirect impact of revitalization using economic evaluation methods. Our findings shed light on the economic value generated by urban revitalization projects. Moreover, they can guide investments in converting former industrial buildings into cultural and recreational spaces that enrich local communities.