Brownfield Areas and Housing Value: Evidence from Milan

Abstract

The existence of brownfield areas inside a city has negative effects on the real estate market due to the decrease of the demand for real estate assets nearby for both the prices and rents.The impact could be different on the basis of the different type of real estate investment considered and normally the impact is expected to be higher for residential assets. The paper evaluates the economic effect of abandoned real estate in the city of Milan for the time period 1993-2016 and shows that the city is characterised by a concentration of abandoned/dismissed assets in some city districts. Using standard hedonic models, the paper shows that the existence of brownfield areas nearby a real estate asset affects negatively its price and the negative contribution on price could be even higher than some district/building features.