Cultural Amenities and the Influence on Residential Property Prices

This research presents a quantitative report on cultural amenities and its influence on residential property prices in Rotterdam. The first part of this research is descriptive and presents the levels of possible influences of cultural amenities. Consumers are expected to derive utility from cultural amenities, both indirectly as directly. The direct utility is the utility derived from consuming the cultural good, the experience for instance. The indirect utility is presented in twofold, namely the existence value and its regeneration benefits. The utility derived by consumers can be reflected by a higher attractiveness (or: price) for a residential property or a neighborhood. The influence of the existence and proximity of cultural amenities is tested by means of a hedonic pricing model. This model (regression) is shaped with residential attributes and neighborhood characteristics as control variables. A differentiation is made between non-profit and for-profit cultural amenities. Because of their nature and characteristics, non-profit organizations are expected to have a different influence than for-profit organizations. The existence of cultural amenities is researched by adding a count of cultural amenities per neighborhood to the regression. The proximity of cultural amenities is researched by adding a count to the regression in an area (buffer) of different distances around one transaction. The influence of the existence of cultural amenities is different for non-profit and for-profit organizations. However, the results from the instrumental variable analysis are not significant and this causes the other results to be unreliable. Outcomes therefore cannot suggest causality between the existence or proximity of cultural amenities and the prices of residential properties.