InternationalMarkets & Economy

Does it cost more to live near landmarks?

A look at London, New York City and Dubai
  • Land in Kensington W8 comes with the average price of 1,193 pounds per square foot and is home to some of the richest people in the world.
  • An average studio apartment in downtown Dubai commands an average of nearly AED 1.5 million.
  • Some apartment categories near Central Park in New York City can command prices as high as $20 million to $24 million.

Great civilizations of the past have produced some of the most iconic structures and landmarks through the ages, and nations have historically anchored their national pride around monuments of significant size and remarkable architecture.

Fast forward into modern time, and it is clear that mankind has not lost its Midas touch for creating iconic structures of such grandeur that the rest of world looks in awe.

Presently, Dubai’s name is synonymous with creating marvelous buildings that have mesmerized people around the globe and have become icons in their own right. Keeping this in mind, it is widely believed that real estate located close to iconic structures is more valuable than properties in other areas.

So, do iconic structures actually contribute to appreciable gains in property value around the world in general and Dubai in particular? Let’s find out.

The icon effect explained globally

Investigation, as seen below, into the relationship between an iconic structure and appreciation in property value shows that real estate around renowned structures is more expensive than properties located in other areas of the same city.

Therefore, the decision to create architectural icon springs from the age-old knowledge that the economic value of nearby properties will be lifted to unprecedented levels.

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Before we move forward with this, let’s not forget that value appreciation in real estate adjacent to iconic structures is mainly dependent on the confidence of investors in their ability to reap long-term profits on their investment.

Preferred addresses

Housing market activity in the United Kingdom has surged during the first quarter of 2016, and properties located in the historic London City have also witnessed a similar trend.

A property in London has always been seen by investors as the safest place to park their wealth and keep it shielded from social and political changes in relatively unstable global property markets. This, in turn, has led to London properties gaining value over time.

One of the most expensive areas in London is Kensington W8, which commands some of the highest real estate prices anywhere in the world.

Consider this — according to Investopedia, land in this particular area comes with the average price of 1,193 pounds per square foot and is home to some of the richest people in the world.

The same stats showed that the median property price in this neighborhood comes with the price tag of 1.7 million pounds, while the highest price of a house here in Dubai touches the 30 million pounds mark.

Wondering why prices in this particular neighborhood are so high? Here’s why: It is located in the vicinity of iconic buildings such as Kensington Palace in Kensington Gardens, the Royal Albert Hall opposite the Albert Memorial in Hyde Park, the Natural History Museum, Science Museum, the Royal College of Music, Imperial College, London and other similar structures.

Similarly, New York’s Central Park is one of the most recognized landmarks in modern history and has been immortalized in movies, cartoons and art. So have been other places located in the park’s vicinity.

Therefore, it comes as no surprise that real estate assets around the park that offer unprecedented views of the green expanse are considered some of the priciest in New York. One example in particular is that of Time Warner Center that mostly caters to the living needs of the elites.

According to Cityrealty.com, some apartment categories here can command prices as high as $20 million (for 54AG apartment) to $24 million (for 70B apartment).

Apart from the Central Park, other important places present in the vicinity of Times Warner Center are the headquarters of the United Nations and Broadway. This is one more reason apartments in this area come with a big price tag.

Burj effect unrivaled

Coming back to Dubai, the Burj Khalifa in the emirate is one of the most prized Middle Eastern and global icons of modern age. Facilities available inside the building are luxurious to say the least.

But the effect are felt outside of it as well. Properties around the icon of Arab affluence are pricier than properties in other parts of the port city.

According to UAE real estate portal Bayut.com, the average studio apartment in Business Bay — an area with abundant views of Burj Khalifa — cost AED 1 million in Q1 2016, almost 29 percent more than average studio apartments in Dubai.

Similarly, an average studio apartment in downtown Dubai — the area where the tower is actually located — commands a hefty average price of close to AED 1.5 million, which at 90 percent more is almost double the price of an average studio unit in Dubai.

Another obvious advantage associated with creating iconic structures is that it strengthens the economy of the area as a whole. Growth trends in Dubai’s tourism, hospitality and retail (especially in downtown Dubai’s case), is a gold depiction of how icons add to the value of a property.

If you are still wondering whether properties located around iconic structures add to appreciable gains in property value, you have all the right examples above to ponder on.

In the context of Dubai, another architectural icon in the city is most likely to reinvigorate the realty sector, while also adding value to other sectors such as tourism and hospitality.

Khan Babrak Yousafzai is a journalist and a real estate analyst at Bayut.com. Follow Bayut on Twitter

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