Houses near airports: potential investment
Why is real estate more expensive or cheaper in one place than in another? Often the difference is due to the cost of transport: the cheaper logistics costs, the more expensive a square meter.
For example, the profitability of the plant near the highway is higher than far from it, since the delivery of materials and finished products is cheaper for its owner. Also, the store’s profit is higher if it is located in a residential area: customers often go shopping on the way home. The cost of such real estate is higher, since the price of commercial properties is determined on the basis of a forecast of future income.
The same situation is in the residential real estate market. Apartments near the city center or public transport are always more in demand and more expensive because their owners spend less time and money on the road than residents of the suburbs. For example, according to the British mortgage operator Nationwide, in London, housing within a radius of 500 meters from metro stations costs an average of £ 42,000 more than 1.5 km.
The closer, the more expensive (until a certain point)
In the context of housing prices, the airport has the same meaning for the city as the metro station is for a particular area. Often in locations with a large air hub, real estate is more expensive than in neighboring cities, where airplanes do not fly or fly less often. According to the Airports Council International, London Heathrow and Paris-Roissy-Charles de Gaulle are the busiest airports in Europe. At the same time, London and Paris are among the most expensive cities in terms of the cost of housing.
According to a study by Jeffrey Cohen and Cletus Cowlin, increasing the distance between Atlanta airport and the property by 10% reduces the cost of the latter by 1.5%. Data from another Cohen study showed that approaching Vancouver Airport by the same 10% increases the value of commercial real estate by 7.6%. However, the close proximity to the runways negatively affects the price due to noise: according to 14 different studies conducted from 2005 to 2016, each additional decibel reduces the price by 0.2–1.7%.
The more the more expensive
The increase in passenger traffic does not stimulate the growth of real estate prices by itself. It is rather a signal of positive changes that indirectly affect market demand: for example, we are talking about an increase in tourist flow, infrastructure development or economic growth in general.
According to Eurostat data for 2013–2016, six out of ten countries where the number of passengers increased the most are among the top ten countries with the highest real estate price growth rate. A vivid example is Iceland, which is in the lead in both lists: here in three years passenger traffic doubled, and property value – one and a half times.
New projects – potential for investors
The opening of a new airport or the modernization of an old one is a sure sign that the local government expects an increase in the number of tourists. Tourists are a source of demand for short-term rent, and the growth of demand, in turn, stimulates price increases per square meter. Therefore, information on future infrastructure projects can help the investor to make the right decision when choosing the location of the object.
The new Istanbul International Airport (İstanbul Yeni Havalimanı) will open in the European part of the city in October 2018. The Turkish newspaper Daily Sabah calls it the largest infrastructure project in the world, valued at 10.5 billion euros. The airport will serve 150 airlines and take 90 million passengers a year – so much in the aggregate took two existing airports in Istanbul in 2017. Air traffic in Turkey is developing rapidly: in 15 years, the number of airports has increased from 26 to 55, and the number of passengers from 34.5 million to 180 million.
The Central Communications Port (Centralny Port Komunikacyjny, CPK), potentially the largest infrastructure project in Central and Eastern Europe, will be implemented 40 km from Warsaw by 2035. The first phase of the project includes the construction of an international airport that will serve 45 million passengers a year — it is planned to be launched in 2027. The second stage is the creation of a high-speed railway, which will shorten the way from Warsaw to the airport to 15 minutes, and from other cities of Poland to 2–2.5 hours. It is believed that the project will help the development of the neighboring city of Lodz and lead to its gradual unification with Warsaw.
Kastelli (Kastelli International Airport) – a new airport in Crete, which will replace the existing Nikos Kazantzakis, built in 1937. Construction of the Castelli will be completed in 2023. According to the plan, the new airport will receive 9 million people a year, while Nikos Kazantzakis (the second largest airport after Athens) is designed for 6 million passengers. According to the Greek Reporter, in Crete, the number of air passengers in 2017 increased more than in the rest of Greece: by 10.8% to 7.5 million people.