Hosting the Olympics: a win for the housing market?
On Saturday the International Olympic Committee will elect the host city for the 2020 Olympic Games.
With an influx of investment in the run up to the Games, you would expect host cities to benefit and for housing prices to soar.
Sadly, this is not always the case.
Amy Baker, assistant editor at The Overseas Guides Company, says: “The 1976 Montreal Olympics actually lost money and left Canadian taxpayers with a hefty bill which they didn’t manage to pay off until 2006.”
Historically, it is the smaller, less-developed cities like Barcelona and Athens that have been seen to benefit the most from hosting the event, whereas in developed cities like Sydney and Atlanta – the after-effects aren’t always quite so glaringly obvious.
Baker adds: “The 1992 Barcelona Olympics have long been held up as an example of how to do things right. The event led to complete regeneration of the city’s waterfront which in turn encouraged tourism to the city, significant investment and placed the Catalonian city on the same level on the world stage as more prominent Spanish cities.”
In Barcelona, properties were built on previously unused wasteland, the city underwent major regeneration and the city saw the arrival of the high speed train (AVE) which provided the long-awaited, and much-needed efficient connection to the capital, Madrid.
In the five years prior to the Games, Barcelona saw a huge increase of 130% in property prices.
“This could in some part be due to the huge improvements being made to the city, but then again the rest of the world was also experiencing a property boom and prices were on the rise in general,” Baker says.
This increase in property prices was also seen in the run up to later Olympic Games including Atlanta (1996), Sydney (2000) and Athens (2004) where house prices rose by more than the national average in the five years running up to the Games.
In Sydney house prices increased by 50% between 1996-2000 but this has since been attributed to general market influences rather than the Games.
However, in Athens the rising property prices in the Messogia area of the city were attributed to the fact that a new airport was being built to cope with the influx of people who would be descending upon the small city.
Baker continues: “It is this improvement in infrastructure which is often credited with the increased property prices. For example, when a city is still developing, the sudden surge in investment capital means that these locations can improve those things that have long discouraged people from visiting, investing in or moving to the area. As transport, services, amenities and reputation all improve – it’s no surprise that people express interest and prices are put up accordingly.
“When we look at London, as we have seen elsewhere – there was an increase in property prices of 26% in the five years following the announcement that London would play host. In turn, surrounding areas that perhaps previously had negative reputations were now seen as desirable. Investment flooded into the area – the Olympic Park itself, Westfield Stratford City and improved transport links.”
There were increases in prices of 6% between November 2009-2010 in East London areas Forest Gate, Homerton and Leytonstone and of 5% in Clapton and Dalston.
Trendy Shoreditch saw property prices increase by a whopping 50% in the same period but it is impossible to tell whether this was a direct effect of the Olympic Games or whether it was a knock-on result of being close to the affluent areas of The City and Canary Wharf as well as the area attracting young, creative businesses which helped it to gain in popularity in general.
Baker adds: “Although the Olympics undoubtedly has some impact on property prices, other factors like inflation and general market trends can play a significant part too.”