New report demonstrates premium from walkable mixed use, mixed income development

23rd July 2007 — Press Release

A new report, Valuing Sustainable Urbanism, suggests that the government’s target of 3 million news homes by 2020 need not result in sprawl and environmental damage if we build walkable, mixed use, mixed income developments instead of car-dependent housing estates. The report published by The Prince’s Foundation for the Built Environment, also indicates that “sustainable communities” as exemplified by Poundbury in Dorchester and Crown Street, Glasgow, are at least as commercially viable as conventional developments, and in some cases more so. In the three cases studied, the sustainable urban projects had gross development values per hectare of 18 percent to 46 percent higher than conventional residential projects in the same market area. This is because these communities appeal to home buyers, commanding higher prices, and because of the higher building intensity. Furthermore property values in sustainable communities appear to increase at a greater rate over time than their conventional counterparts, making them a more attractive investment for buyers.

The Prince’s Foundation study was carried out by Savills Research department under a steering group chaired by Christopher Smallwood, policy advisor to The Prince’s Charities and former Chief Economic Advisor to Barclays plc.

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Echoes across the Atlantic!

It's great to see this fine study in the UK arrive at similar findings to studies by professor Mark Eppli of Marquette University and associate professor Charles Tu of the University of San Diego.

Their research is presented in a 1999-2000 book, Valuing the New Urbanism. Here's what the description at Amazon says, "Now there is solid evidence that consumers will pay good money to live in single-family homes in new urbanist communities. The first book to examine the new urbanism from a housing market perspective, this study compares the sales transactions and characteristics of homes in four regionally diverse new urbanist developments with homes in nearby conventional neighborhoods. After accounting for site traits, housing characteristics, unit quality, neighborhood, and other market factors, the authors found that buyers were willing to pay a premium for homes in new urbanist communities."

And even better, Eppli and Tu have updated their research and presented it a January 2007 U.S. EPA Conference. That research shows that buyers paid an average 16% premium for properties in Kentlands and a 6.5% premium for properties in Lakelands between 1997-2005 after controlling for site, interior, exterior, quality, market characteristics. Previous research in 1999 showed a 13% price premium for Kentlands (for years 1995-1997).


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