ECONOMICS UNIQUENESS

xxiv ■ OVERVIEW
periphery, especially for innovative, knowledge-intensive fi rms whose employees
look for vibrant and unique places to live in.
Evidence shows that there is a correlation between projects aiming at
regenerating historic city cores and underutilized land and a city’s ability to
attract talent and business investment. A number of cities in developed and
developing countries have already successfully leveraged their historic cores
and underutilized land creating powerful talent hubs, attracting world leaders
in knowledge industries and foreign direct investment, while at the same time
becoming hotspots for local business development. A number of successful stories
about cities that leveraged their historic cores and underutilized land for job
creation are presented throughout the book.
Does Heritage Investment Have Distributional Effects?
Yes, real estate values can increase signifi cantly. With adequate policy
measures, such investment can also distribute wealth.
Country-level data show that heritage designation, with its accompanying
regulatory framework, creates a market-assigned value premium for heritage
assets, in particular for housing and retails. Increase in real estate values
in neighborhoods designated as heritage has positive impacts on local governments,
allowing them to mobilize property-based tax revenues to deliver better
services. However, increase in real estate values also has distributional impacts
on lower-income households, who have limited capacity to pay increased rents,
increased house prices, and higher property taxes, causing their displacement
and leading to gentrifi cation.
Attracting investment to historic city cores, heritage assets, and underutilized
land in central locations raises the issue of how to distribute the capital
gains between the local community (lower- and higher-income groups) and
outside investors. Standard urban projects emphasize the importance of clear
property rights, at the household level, as a prerequisite to attract investment.
Because transactions are on a voluntary basis, clear property rights ensure that
local residents are adequately compensated if they decide to transfer their properties.
But if this process results in displacement, it can jeopardize the mix of
higher and lower-income groups that made the historic city core livable, undermining
its sense of place and uniqueness. Th ese distributional issues should be
taken into account at a very early stage of project preparation. Proper measures
can minimize the negative eff ects of gentrifi cation, including securing tenure
and facilitating access to housing fi nance for lower-income residents. Other
alternative property arrangements can be considered, including a shareholders
approach in which long-term residents can have a collective stake in the project.