Can the perception of the neighbourhood affect the real estate price?

October 17, 2018.

This year, October 4th, 2018, the New Link Conference was held again - the largest regional gathering of experts in the field of real estate, architecture, and urbanism. Among the leading world experts was Damjan Geber, Founder and Director of the Brigada, who presented the topic 'Can the perception of the neighborhood affect the real estate price?' which explained to the public interesting ways in which the changes in the spatial-social component of society are formed and which are ultimately crucial for shaping the perception of neighborhoods around the world.

Perception of the neighborhood affects an individual’s experience of the city zone in which the neighborhood is located, hence these perceptions form a specific set of expectations for spatial-social qualities of that zone. Such expectations include, for example, the following segments: price and quality of real estate, a coherence of the location and the rest of the city, a social life that is formed in the neighborhood, and profile of people who live in those neighborhoods. This way, the buyer does not only buy real estate but also chooses a lifestyle that takes place in these environments.

For decades there has been a trend of 'gentrification' of the districts in the world, viz the sociologically conditioned displacement of certain groups of people into some of the, by then, neglected parts of the city. Encouraged by inaccessible prices in desirable districts of large urban centres such as New York, Berlin or London, younger generations decide to solve housing issues in the marginal city zones.

Gradually, smaller business entities, creative and service industries, and then even bigger real estates followed. The leaders of the urban conquest of new territories came to much more affordable housing prices, eventually abandoning the habit of going to the 'centre' as the only zone of events and created its own 'micro centres' in its surroundings. Business and hospitality facilities that are key to forming a new scene in these districts, and they began to attract visitors from the former main city centre which, with the help of social networks, helped them built their own and unique sociological brand.

'Some of the world's worst neighborhoods, despite doubts, become the most wanted real estate areas in no time. While some neighborhoods with much bigger investments still cannot achieve that.' - says Damjan Geber, founder and director of the Brigada.

Damjan took Zagreb as an example and presented the potential possibilities of Trnje and Trešnjevka neighborhoods, precisely because of the specific combination of the social-urban structure. Social networks among the younger population accelerate the change of the image of a single neighborhood we can not influence, but there are also various organized steps that can help in making a positive change in creating the perception of the neighborhood, such as various festivals, events, public space investments, etc. Opportunely detection of urban areas which in the midst of gentrification or urban transformation can significantly affect the profitability of the real estate market. Even small details, which are often neglected in the real estate market analysis, may suggest major changes in urban migrations, and the proper reading of social online trends is one of the most efficient and cheapest tools in the process.

From the sphere of urbanism and real estate markets, very interesting lectures at the conference were held by Brian Meier - Corcoran Group, Bruce Goveia - Corcoran Group, Morten Kabell - Copenhagenize Design Co., Marko Dabrović - 3LHD, and Robert Pokrovac from Erste Real Estate. There were also interesting panel discussions on the benefits of developing a real estate market, and the prospects of the market at the local level.

More about the New Link Conference: