Why do Scandinavian cities maintain higher housing and office values than other cities? Alexander Ståhle, CEO from Spacescape kindly shared his research for Stockholm, Copenhagen and Oslo with ULI that highlighted the key urban attributes that determine asset values.
There are various hypotheses as to why housing values are higher across Stockholm, Copenhagen and Oslo, compared to other European cities. To fully understand why Nordic cities retain higher growth values Alexander Ståhle, CEO from Spacescape has undertaken research to explore which city attributes contribute most to value and see if these attributes would be consistent across all three cities?
When the project started over 5 years ago there were a plethora of hypotheses and little to no evidence that illustrated urban factors that influence sustained housing values. Interestingly Stahle’s study was able to deduct seven core variables that created the most significantly impact and these are:
Centrality (to the city centre)
Walk to transit*
Walk* to services
Walk* to park
Walk* to water
*Walking and walkability refers to a 10min walk from a dwelling.
The research found that if the results for each of these variables can be calculated, then house prices can be explained. In addition, these variables show the connection between urban design and value, whilst also creating a language for talking about value that are all measurable and quantitative. As such these measures can be used to value real places and support the master planning stage of a development or regeneration area.
Alexander provided some examples of the degree to which the proximity of one of the variables has on the inflation of house sale prices. A house that is 1000m closer to a centre will have an increase of 1,190Krona per square metre in Stockholm and subsequently assessments of Copenhagen and Oslo have resulted in the same results.
The availability of services (retail, health and other civic services) and train or metro stops within 10 min walk of a dwelling can add 25,000Krona to the value of each apartment. Interestingly the correlation does not apply bus stops and may be due to trains as a preferred mode of travel or that bus stops can be relocated.
Alexander then looked at whether the concept could also apply to the office market across the three cities. The research found that the office market is much simpler and less about quality of surrounding place and can be explained through four variables:
transit access (mainly trains or metro)
walk to service
modernity (newer buildings and developments attracted higher values)
Comparisons and Similarities across the housing and office markets
90% of housing and office values can be attributed and explained to the associated variables
Transport accessibility determines the value across both the housing and office markets
Office developers across these cities are only focused on spaces at subway stations
High quality green spaces are a key value factor for house prices
Green and Open Space
The inclusion of parks and open spaces within proximity to a dwelling will create a significant value increase. Not all cities have enough space to build new parks but to illustrate this further, Alexander shared that the development costs for a park built over motorway would pay for itself when measured against the value uplift per dwelling.
Further research by Alexander investigated how Stockholm could most appropriately grow and what the types of dwellings could be developed to meet the city’s housing targets. Studying the city as a whole, the study found that 140,000 new homes could be delivered by 2030 as a result of a new transit route. In addition, the size of the proposed regeneration resulted in a holistic city regeneration discussion that no longer focused solely on a housing crisis but instead created a dialogue around sustainable city growth, the provision of transport and services.
A further study of New York showed that the value relationship with parks, transport and services was also applicable outside of these three Scandinavian cities, while a study of Gothenburg’s growth illustrated how density will shift organically towards station areas as businesses wish to be closer to public transport links. Both studies prove that density is fuelled by centrality but raises the question are all cities looking at growth in the most sustainable or appropriate areas?
Eco City, Techno City or Free City?
From identifying four key drivers to growth and development (urbanisation/increased traffic, ICT development, energy/economy and social value) three scenario options were put forward to a vote in the local newspaper in Sweden to understand what sort of future people would aspire to.
Eco City- requiring input to convert roads to cycleways, increase planting, allow for allotments and a generally a less polluted ‘green’ way of life
Techno City- required technology input to deliver driverless pod cars, increased tram use, data driven knowledge
Free City-this was the libertarian option, that would result with increased levels of car use, congestion and a general sense of disorder, but also reflective of a city growing in terms of current usages.
The FreeCity was by far the least popular option, with the Techno City and Eco City scenarios being over three times more popular. Interestingly opinions from roundtable attendees mirrored the survey results.
Who benefits from urban growth?
The roundtable discussion centred on how the studies could influence a more holistic approach o city development. In Sweden the city municipality acknowledge the fact that amenities cause a direct value increase for house prices and also provide deeper value that is also not currently measured. As such the municipality are then able to use the viability studies for valuable discussions with developers.
Deeper values such as crime, health and equality have not been looked at but it was acknowledged that this should be looked at on a specific site basis. Also, healthcare and schools did not factor because they are so evenly distributed in Stockholm so far, highlighting the importance of social infrastructure to underpin the urban value. However, the uneven distribution of shops, restaurant and culture did affect values.
It was acknowledged that the studies have not influenced national policy, but they are influencing city municipality planning controls which are highly influential. National policy is very weak and is very different to the English or US planning context. However, Alexander’s research highlights that as cities densify there is a growing need to ensure walkability, access to services and transport are better integrated but also that wider societal benefits such as health and culture need to be better understood.
Please view related links and Alexander Stahle’s presentation below: