1# RECORD 1d57857811e3f735e7c7dfe3dfb0c766f1aba8682# TITLE: Adaptive Reuse of Religious Heritage and Its Impact on House Prices3# YEAR: 2020.0 VENUE: Journal of real estate finance and economics DOI: 10.1007/s11146-020-09798-x4# AUTHORS: Caixia Liu; Xiaolong Liu5# PAGES: 22 CANDIDATE TABLE PAGES (1-based): [13, 14, 15, 17, 19]6# ABSTRACT: Due to social demographic change and secularization, religious heritage sites in Europe are on the verge of losing their original functions. While the adaptive reuse seems to be a proactive strategy to preserve the historical and cultural value embedded in religious heritage sites, little is known concerning its external impact. This paper aims to fill this gap by investigating the external effect of reusing religious heritage on surrounding house prices. Employing both the parametric and non-parametric difference-in-differences hedonic model on a sample of 42 projects of reusing religious heritage and a rich dataset of housing transactions in the Netherlands, we find significant positive externality of reusing religious heritage on local house prices. The external effects are heterogeneous across differentiated project size and monumental status. Larger religious heritage reuse projects and those listed as national monuments exert greater influence on surrounding house prices.789===== PAGE 1 (score 5, numeric-paren 0, table-words 0, var-words 5) =====1011Adaptive Reuse of Religious Heritage and Its Impact12on House Prices13Caixia Liu1 & Xiaolong Liu214Accepted: 28 September 2020 /15# The Author(s) 202016Abstract17Due to social demographic change and secularization, religious heritage sites in Europe18are on the verge of losing their original functions. While the adaptive reuse seems to be19a proactive strategy to preserve the historical and cultural value embedded in religious20heritage sites, little is known concerning its external impact. This paper aims to fill this21gap by investigating the external effect of reusing religious heritage on surrounding22house prices. Employing both the parametric and non-parametric difference-in-23differences hedonic model on a sample of 42 projects of reusing religious heritage24and a rich dataset of housing transactions in the Netherlands, we find significant25positive externality of reusing religious heritage on local house prices. The external26effects are heterogeneous across differentiated project size and monumental status.27Larger religious heritage reuse projects and those listed as national monuments exert28greater influence on surrounding house prices.29Keywords Religious heritage . Adaptive reuse . Urban revitalization . House prices30JEL-Classification C21 . D62 . D84 . O22 . R3131Introduction32Religious heritage constitutes an important element that shapes the urban historical and33cultural landscape in Western European countries. Over the last few decades, due to34https://doi.org/10.1007/s11146-020-09798-x35* Xiaolong Liu36xiaolong.liu@rug.nl37Caixia Liu38cx0619.liu@gmail.com39140College of Economics, Jinan University, Guangzhou 510632, China41242Real Estate Center, Department of Economic Geography, Faculty of Spatial Sciences, University43of Groningen, Groningen 9747AD, The Netherlands44Published online: 12 October 202045J Real Estate Finan Econ (2022) 64:71–92464748===== PAGE 13 (score 26, numeric-paren 0, table-words 3, var-words 16) =====4950heritage reuse projects with size over 5000 square meters as a subsample. Column (3)51and (4) report the average treatment effect of large scale religious heritage reuse52projects. The coefficient presented in Column (3) indicates that religious heritage reuse53projects with size over 5000 square meters lead to an increase in local house prices by547.15%, which is larger than the average treatment effect estimated using all religious55heritage reuse projects as shown in column (1). Similar finding is reported after56controlling for housing and neighborhood characteristics in Column (4). The results57Table 2 Descriptive Statistics of Full Sample58Mean59S.D.60Panel A: Housing characteristics61Transaction price (€)62221,776.9763144,487.264Lift (yes = 1)650.11660.3167Size (m2)68102.076942.770Number of rooms713.87721.4873Parking (yes = 1)740.2750.476Garden (yes = 1)770.47780.579Balcony (yes = 1)800.4810.4982Roofterrace (yes = 1)830.1840.385Building year <1945 (yes = 1)860.5870.588Building year 1945–1959 (yes = 1)890.1900.391Building year 1960–1970 (yes = 1)920.13930.3494Building year 1971–1980 (yes = 1)950.06960.2597Building year 1981–1990 (yes = 1)980.06990.25100Building year 1991–2000 (yes = 1)1010.081020.28103Building year >2000 (yes = 1)1040.061050.23106Housing type-Apartment (yes = 1)1070.571080.5109Housing type-Semi-detached house (yes = 1)1100.321110.47112Housing type-Corner house (yes = 1)1130.081140.27115Housing type-Detached house (yes = 1)1160.031170.18118Observations119342,439120Panel B: Neighborhood characteristics121Population density (per km2)1229536.011236362.37124Average household size1251.991260.49127Proportion of immigrants (%)12823.3412915.79130Population aged 0–14 (%)13113.551324.98133Population aged 15–24 (%)13415.021356.92136Population aged 25–44 (%)13735.871388.86139Population aged 45–64 (%)14022.441415.26142Population aged 65 and over (%)14313.121447.38145Number of neighbourhoods146162314783148Adaptive Reuse of Religious Heritage and Its Impact on House Prices149150151===== PAGE 14 (score 22, numeric-paren 12, table-words 3, var-words 3) =====152153imply that large scale religious heritage reuse projects bring more positive impact on154local house prices than that of reuse projects with relatively smaller size.155Next to the scale difference among reuse projects, these projects also vary in terms156of their designated monumental status. In the Netherlands, historical buildings, includ-157ing religious heritage sites, are listed with various monumental status, such as national158monument, provincial monument, municipal monument or no monumental status at all,159based on their cultural and historical values. It is perceivable that religious heritage sites160designated with national monument status may bring reputation effects such that they161Table 3 Parametric Difference-in-Differences Estimates162Full sample163Project size≥5000m2164National monuments165DV: lnp166(1)167(2)168(3)169(4)170(5)171(6)172treat × post1730.0399***1740.0217***1750.0715***1760.0338***1770.0459***1780.0228***179(0.002)180(0.001)181(0.007)182(0.003)183(0.004)184(0.002)185Housing characteristics186no187yes188no189yes190no191yes192Neighborhood characteristics193no194yes195no196yes197no198yes199Year fixed effects200yes201yes202yes203yes204yes205yes206Neighborhood fixed effects207yes208yes209yes210yes211yes212yes213Observations214342,439215342,43921664,33721764,337218159,980219159,980220Adjusted R22210.5852220.8662230.5442240.8722250.5882260.866227Note: *** , ** , * denotes the significance of coefficients at 1%, 5% and 10% respectively. The dependent228variable is the natural log of house transaction price. Robust standard errors are reported in parentheses229Fig. 4 Average Price Impact of 42 Religious Heritage Reuse Projects23084231C. Liu, X. Liu232233234===== PAGE 15 (score 36, numeric-paren 31, table-words 1, var-words 0) =====235236Table 4 Non-parametric Difference-in-Differences Estimates: Full Sample237Distance (km)2380.12390.22400.32410.42420.52430.6244Price impact2450.0348** (0.0224)2460.0346** (0.0178)2470.0345** (0.0160)2480.0324** (0.0155)2490.0316** (0.0158)2500.0312** (0.0162)251Distance (km)2520.72530.82540.92551.02561.12571.2258Price impact2590.0318** (0.0161)2600.0332* (0.0173)2610.0349* (0.0173)2620.0359* (0.0210)2630.0353 (0.0192)2640.0334* (0.0175)265Distance (km)2661.32671.42681.52691.62701.72711.8272Price impact2730.0321* (0.0191)2740.0310* (0.0162)2750.0295 (0.0179)2760.0270 (0.0164)2770.0217 (0.0145)2780.0119 (0.0128)279Note: *** , ** , * denotes the significance of coefficients at 1%, 5% and 10% respectively. Bootstrapped standard errors are reported in brackets28085281Adaptive Reuse of Religious Heritage and Its Impact on House Prices282283284===== PAGE 16 (score 6, numeric-paren 0, table-words 1, var-words 4) =====285286are more attractive to local residents, and there is a higher chance for them to be287qualified for financial support aiming at maintenance and renovation than those without288such a distinguished status (Koster and Rouwendal 2017). Therefore, it seems plausible289that such reputation effects would be reflected in the estimated treatment effect so that290projects of reusing religious heritage sites with national monumental status would291impose greater positive externality on local housing market than that of other projects.292To check if this is the case, we re-estimate the model using only those sites listed as293national monuments and results are displayed in Column (5) and (6). Comparing the294coefficient estimates of the treatment variable shown in Column (5) and (6) with their295respective counterparts listed in Column (1) and (2) that are estimated using the full296sample, it appears that the average treatment effect is indeed larger for projects of297reusing religious heritage listed as national monuments.298Non-parametric Difference-in-Differences Estimates299The parametric difference-in-differences specification offers a rather straightforward300way to measure the average treatment effect of reusing religious heritage sites, how-301ever, it fails to make distinction of treatment effect variation along both the spatial and302temporal dimensions. In contrast, with the non-parametric difference-in-differences303specification, we are able to recover the gradient of treatment effect of reusing religious304heritage sites across space and time. Fig. 4 is the wireframe mesh plot which illustrates305the average treatment effect of 42 religious heritage reuse projects over space and time.306The mesh grid color is determined by the value of house price in natural log, and307proportional to surface height. As shown in Fig. 4, the house price surface before the308commencement of religious heritage reuse projects is quite flat, which validates that309Fig. 5 Price Impact of Religious Heritage Reuse with Project Size larger than 5000 Square Meters31086311C. Liu, X. Liu312313314===== PAGE 17 (score 28, numeric-paren 23, table-words 1, var-words 0) =====315316Table 5 Non-parametric Difference-in-Differences Estimates: Project Size≥5000m2317Distance (km)3180.13190.23200.33210.43220.53230.6324Price impact3250.1471*** (0.0195)3260.1435*** (0.0115)3270.1276*** (0.0256)3280.1122*** (0.0396)3290.1007** (0.0513)3300.0845 (0.0561)331Distance (km)3320.73330.83340.93351.03361.13371.2338Price impact3390.0683 (0.0564)3400.0566 (0.0531)3410.0505 (0.0482)3420.0510 (0.0448)3430.0526 (0.0426)3440.0522 (0.0412)345Distance (km)3461.33471.43481.53491.63501.73511.8352Price impact3530.0488 (0.0398)3540.0417 (0.0379)3550.0312 (0.0343)3560.0198 (0.0288)3570.0099 (0.0226)3580.0016 (0.0160)359Note: *** , ** , * denotes the significance of coefficients at 1%, 5% and 10% respectively. Bootstrapped standard errors are reported in brackets36087361Adaptive Reuse of Religious Heritage and Its Impact on House Prices362363364===== PAGE 18 (score 8, numeric-paren 0, table-words 2, var-words 4) =====365366house prices close to the religious heritage site and house prices slightly further away367from the site share similar trends before the treatment. After the religious heritage starts368the reuse process, the house price surface jumps up steeply, indicating that religious369heritage reuse indeed has positive impact on local house prices. 5 years after the start of370the projects, the religious heritage reuse triggers house price appreciation within its371close proximity, i.e. 0.1 km, by approximately 5.2%.372To illustrate the treatment effect of religious heritage reuse numerically, Table 4373summarizes those point estimates shown in Fig. 4 and the price impacts reported in374Table 4 are the average treatment effect estimated as the price difference between the375post-treatment years, i.e. 0 to 5 years, and pre-treatment years, i.e. -5 to −1 years, at376each 0.1-km distance to the religious heritage site. Between 0.1 and 0.7 km distance to377the religious heritage site, house price appreciation is 3.1 ~ 3.5% after the start of the378reuse project, and is statistically significant at the 5% level. Similar degree of price379appreciation is observed for houses located between 0.8 and 1.4 km distance to the380religious heritage site, but is only significant at the 10% level. For houses that are381located further than 1.4 km to the religious heritage site, the treatment effect becomes382smaller and statistically insignificant.383Next, we keep those religious heritage reuse projects with size more than 5000384square meters to investigate whether the treatment effect is heterogeneous based on the385project size. Fig. 5 presents the mesh plot of the price impacts of large-scale religious386heritage reuse projects. Similar to the non-parametric results using the full sample, the387house price surface remains low and flat up to the start of the religious heritage reuse388projects. When reuse projects are initiated, the house price surface is first elevated389sharply then flattens off gradually until year 5. For houses located 0.1 km away from390the religious heritage site, the price appreciation is about 20% after 5 years since the391start of reuse project.392Fig. 6 Price Impact of Reusing Religious Heritage Designated as National Monument39388394C. Liu, X. Liu395396397===== PAGE 19 (score 33, numeric-paren 28, table-words 1, var-words 0) =====398399Table 6 Non-parametric Difference-in-Differences Estimates: National Monuments400Distance (km)4010.14020.24030.34040.44050.54060.6407Price impact4080.0692** (0.0314)4090.0670** (0.0308)4100.0637** (0.0279)4110.0578** (0.0265)4120.0517** (0.0262)4130.0466* (0.0255)414Distance (km)4150.74160.84170.94181.04191.14201.2421Price impact4220.0438* (0.0246)4230.0427* (0.0235)4240.0426* (0.0227)4250.0415* (0.0222)4260.0387 (0.0215)4270.0344 (0.0242)428Distance (km)4291.34301.44311.54321.64331.74341.8435Price impact4360.0323 (0.0244)4370.0315 (0.0237)4380.0290 (0.0225)4390.0248 (0.0173)4400.0191 (0.0151)4410.0106 (0.0109)442Note: *** , ** , * denotes the significance of coefficients at 1%, 5% and 10% respectively. Bootstrapped standard errors are reported in brackets44389444Adaptive Reuse of Religious Heritage and Its Impact on House Prices445446447===== PAGE 20 (score 11, numeric-paren 0, table-words 4, var-words 3) =====448449Table 5 reports the average treatment effect of large-scale projects across space.450Overall, the house price appreciation triggered by these large religious heritage reuse451projects exhibits spatial decay which is more pronounced than that reported in Table 4,452and the treatment effect of these projects are much greater in comparison with the non-453parametric results using the full sample. Specifically, large projects contribute to house454price increase by 14.7% at the 0.1-km distance, which is statistically significant at the4551% level. From 0.2-km to 0.5-km distance to the religious heritage site, the extent of456house price appreciation drops gradually from 14% to 10% and remains statistically457significant at least at the 5% level. Beyond 0.6 km, the average treatment effect keeps458decreasing over space but becomes statistically insignificant.459Further, we restrict the non-parametric estimation using religious heritage sites460designated with national monument status. Fig. 6 demonstrates the treatment effect of461these religious heritage reuse projects over space and time. The house price surface462exhibits similar pattern to those shown in Figs. 4 and 5. At 0.1-km distance to the463religious heritage site listed as national monument, local house price appreciation is464approximately 7% after 5 years since the initiation of reuse project. Table 6 reports the465spatial distribution of the average treatment effect of reusing the religious heritage sites466with national monument status. Overall, the house price impact decreases with the467distance to the religious heritage site. Between 0.1-km and 0.5-km distance to the468religious heritage site, reusing religious heritage listed as national monument pushes up469local house prices by 5 ~ 7%, and the treatment effect is statistically significant at the4705% level. In terms of the magnitude, the price impacts are larger than those reported in471Table 4. From 0.6-km to 1-km distance to the religious heritage sites, the average472treatment effect drops gradually from 4.7% to 4.2% which is significant at the 10%473level. These religious heritage reuse projects do not seem to have significant impact on474house prices further than 1.1 km distance to the sites.475Conclusion476In this paper, we examine the external effect of reusing religious heritage on local house477prices. We begin with employing the standard parametric difference-in-differences478approach to estimate the average treatment effect of religious heritage reuse by479comparing house prices within an inner ring, i.e. treatment area, with house prices in480the outer ring, i.e. control area, before and after the treatment. We then resort to a novel481non-parametric difference-in-differences method to estimate the spatial and temporal482variation of the treatment effect of reusing religious heritage sites.483Using 42 completed reuse projects that spread across the Netherlands and span the484period from 1995 to 2017, findings from both the parametric and non-parametric485estimation reveal the presence of positive external effect of reusing religious heritage486sites on surrounding house prices. We further show that the project size and monument487status are the driving factors in determining the magnitude of observed positive488externality associated with reusing the religious heritage. Overall, these results indicate489that the adaptive reuse contributes to not only the historical and cultural preservation in490place but also the welfare of local communities in terms of housing price capitalization.491This study could be a useful reference towards better understanding of the welfare492implications of historic preservation and urban revitalization policies. To a certain49390494C. Liu, X. Liu495