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Urbanism Evaluation of urban regeneration areas using target groupanalysis [...] • T. Kauko

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EVALUATION OF URBAN REGENERATION AREAS USINGTARGET GROUP ANALYSIS: AN UPDATE OF THE

SITUATION IN BUDAPEST DISTRICTS IX AND VIII

Tom KAUKOPhD, School of the Built Environment, Oxford Brookes University, Gipsy

lane, Oxford, OX3 0BP, UK, e-mail: [email protected];[email protected]

Abstract. This paper continues prior work with the aim of evaluating thesuccess of urban regeneration areas based on changes in property priceswhen compared with changes in quality. The main idea is to distinguishbetween cases where price is affected, either negatively or positively, by agovernment intervention in a situation when the price trend is confirmed tobe caused by scarcity (or abundance), quality improvement (reduction) orsomething more oriented towards changes in the relevant institutionalcircumstances. The evidence comprises price and neighbourhood qualitychanges in residential areas undergoing urban regeneration, based ontarget vs. comparative group analysis and site visits in downtownBudapest (Hungary). The findings add detail to the corresponding resultsfrom the prior study where price developments rather neatly could berelated to either scarcity or quality upgrade. However, the present studyonly partially shows same results. As the data and methods are the same,the reasons have to be related to a change in urban and neighbourhoodchange processes taking place in the area of study. Another issue is that theprice development in this study has covered an economic downturn inproperty prices caused by the global financial crisis, which generatesfurther research questions.

Key words: Budapest, comparable group, target group, urban regeneration.

1. IntroductionA recent study by RICS (2016) highlightsthe importance of sustainability (i.e. thegreen agenda, sense of community andlong term marketability prospects) for theviability of new residentialdevelopments. Intuitively, place makingand property value are concepts withnatural feedback relationship: improvingthe place quality generates marketattractiveness and vice versa, increased

demand triggers the improvement ofvarious amenities associated with thelocation. While the urban land economicsliterature on place quality dates back to atleast 1970s, recently RICS has taken thisrelationship on board in their evaluationof development practice. Their evidencefrom five case studies carried out insouth-eastern parts of England points tothe importance of master-planning andphasing; social and commercial

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infrastructure; good design of locationand space; green infrastructure andlandscaping; and to fill the obligations ofproviding affordable housing andfollowing construction standards. This isconsidered best practice of creatingsustainable real estate locations withprospects of deriving commercial valuefrom selling residential property. Thus itis anticipated that the market prices asuccessful scheme at a premium. Whilethis is likely to work more often for lowpriced areas than for their high pricedcounterparts, when it does work for thelatter, the premiums generated tend to behigh. Here is obviously a variation acrossthe locations studied as well as withineach location across the range of propertytypes provided.

The present study deals with evidencefrom Budapest (Hungary). While theHungarian circumstances of planningand real estate are significantlydifferent from their Englishcounterparts, some general notionsabout sustainability are mature forexamination here too. Supplyled/driven markets such as theresidential parks being developed inHungary since the late 1990s areallegedly very unsustainable in alldimensions and do not take intoconsideration local variations in tastesof consumers (see Kauko, 2012, 2013).Instead they are based on a global ideaapplied in western circumstances,without any sensitivity to particularurban contexts. This is in fact muchrelated to an old idea of J. K. Galbraithwho already in 1958 (in his book TheAffluent Society) argued that producers,when big enough corporations, havepower to manipulate our consumptiontastes in such a way that the market infact is being shaped by suppliers ratherthan demanders (see Galbraith, 1998).

In this study the aim is to tie twoacademic research traditions together: (1)examination of government interventionin the built environment, notably landuse regulation, and (2) property pricedevelopment in a given area during agiven time-period. Using this kind ofresearch approach enables distinguishingbetween cases where price is affected,either negatively or positively, by aplanning related measure in a situationwhen the price trend is confirmed to becaused by scarcity (or abundance),quality improvement (reduction) orsomething more oriented towardschanges in the relevant institutionalcircumstances (see Kauko, 2003, 2008,2009, 2015). In this vein a number ofrelated research traditions can be notedsuch as the US based tradition ofequilibrium urban and land economics,UK based tradition of descriptive analysisof price trajectories observed vis-à-visland use constraints (and opportunitiesafforded by the particular placecharacteristics as shown in the RICSreport quoted above), or other traditionsuch as particular analyses carried out incountries with traditionally strong landpolicy such as Netherlands, Finland orHong Kong. The study also presentsempirical material on prices andneighbourhood quality changes inresidential areas undergoing urbanregeneration, and this is based on targetvs. comparative group analysis and sitevisits in downtown Budapest (Hungary).These results are also compared withthose of a prior study by the same author– documented in Kauko (2009, 2015).

The paper is structured as follows. First abackdrop of recent urban propertydevelopment projects in Budapest ispresented with particular reference todistricts IX and VIII (the first threesections after this introduction). After


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that the empirical analysis is documented(the next four sections). Lastly someconclusions are made.

2. BackgroundWe begin with a general background ofthe context of the study. After that wemove to the specifically housing relatedbackground of Budapest.

2.1. BackgroundIn Budapest, arguable three types ofproblems with development, governanceand planning are manifest: (1) economic:how to find jobs for the youngergeneration: (2) socio-physical: presence ofbeggars and derelict and dirty streetscape;(3) the traffic system – in particular, busesand trains need to be modernized [1].Three particular cases stand out:A. The Metro: Arguably, the new metro-line it is too short (10 stations only); andthe distances between the stations are tooshort; it would have been more efficient toimprove the existing transportationsystem. (This was the former MayorGabor Demszki’s flagship project.)B. Gated communities in the inner city: Arecently emerged inner city propertydevelopment category known as lakoparksare not luxurious enough for the affluentstrata; but too expensive for theworking/lower-middle class households;these are too small for families; alsodebatable, whether consierges/janitors arenecessary to employ.C. Duna City: A long time ago plannedmega-project c. 1km south of the citycentre is still in impasse situation.

Currently two new larger scale projectsare being implemented – both compriserenovation of 19th Century cultural andrecreational sites based on publicinvestments. (1) State Government, EUand local consortiums have invested in therefurbishment of Várkert (Castle Gardens,

Government Decree 2011) and (2)redevelopment of a corner site ofVárosliget (City Park, 2015-2018). Theformer is a renovated old park on a hillwith view over Danube, with a coveredold market hall at the bottom of it (directlyby the riverfront, see figure 1). The latter isdifferent in the sense that the site hithertohas been part of the City Park, but now,plans are in place for the building of amuseum quarter.

Fig. 1. Photo of Várkert.

From a more general point of view, insituations with resource scarcity, such as inBudapest, such projects have the tendencyto lead to land use conflicts betweenfinancial-economic, environmental-ecologic and social-cultural uses. Shouldthe site be left open or built? And if it isbuilt, then what kind of buildings toconstruct? It can be observed that bothprojects are oriented around traditionalcultural values (grand historic architectureand urban aesthetics) mixed with economicones (i.e. tourism revenue obtained frommuseums and exhibitions) [2].

2.2. Residential developments in BudapestRecent times have witnessed greatturmoil in the development of housingmarkets and residential developmentprojects in the capital cities of CentralEastern Europe (CEE). This state ofaffairs has also proven fruitful ground


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for many a research endeavour [3]. Thepresent contribution is a continuationof a prior study documented in Kauko(2015); it is about price and qualitychanges in areas undergoing urbanregeneration, based on the analysis oftarget vs. comparative cases and sitevisits in downtown Budapest. Whenreflecting about the possible presenceof sustainability features the pattern ismosaic-like in so far as sharp contrastsare identifiable between adjacent sites.The general observation here is thatstandard larger new residentialdevelopments made in Budapestaround 2003-2007 (in districts IX andXIII in particular, figures 2-5 over) arenot innovative in any ways. Twoobservations can be made:1. These are marketed for the ‘new’ urbanmiddle class.2. Security systems together with well-maintained communal areas and energyefficiency compared to the old stock (wherethese are really bad) make these popularamong younger professional householdswho appreciate such characteristics.

It is to note that, unlike the prior study(Kauko, 2009), this study does not lookat the older housing developments –only at those new built and refurbishedafter 2002-03 (including conversions).

2.3. Supply (i.e. building volume) increase inBudapest

It is to note that, unlike the prior study(Kauko, 2009), this study does not lookat the older housing developments –only at those new built and refurbishedafter 2002-03 (including conversions).

Horváth and Révész (2014) note that “thetime lag during various real estateprocesses is a consequence of numerousfactors” such as the rigidity of theparticipant organizations and managers

who are able to affect the time fornegotiations and the constructionprocess. During the time it takes to raisethe buildings it is likely that thesurrounding environment has changed, ifnot physically, at least in social andeconomic terms. One of the issues at thecore of any debate on urban renewaltherefore concerns the fit with the rest ofthe neighbourhood? The issue tospeculate about is as to whether anycooperation with the municipality tookplace during the planning orimplementation stages.

The renewal of the middle part of districtIX is a good case in point. Figure 4 showsfour types of refurbished blocks in thisdisctrict. All except for the photo in thebottom right corner (which is a privateproject in an adjacent block) represent theoutcome of the urban renewal project ofmid district IX. It was carried outpiecemeal as a public private partnershipfrom the late 90s onwards. This project isoften (but not always) evaluated favourlyin terms of various sustainability goalsand along different dimensions (SeeKauko, 2009; 2015).

From Figure 6 we can identify thefollowing trends and tendenciesregarding the annual increase in thehousing stock:· The percentage increase in district IX

is higher than in the city as a whole,except for 1995, 1998 and 1999.

· The increase in district VIII is belowboth district IX and the city levels1995-2003; and 2005-2007; for 2004 and2008, in turn, this figure (increase inVIII) is higher than for the city onaverage, but lower than thecorresponding district IX figure.

· 2009-2011 district VIII shows thehighest stock increase of the threefigures (the ‘Corvin effect’, see below).


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· Thus, the annual increase is higher indistrict IX than in district VIII, exceptfor the last three years.

· District IX experienced exceptionallyhigh increase in 2001-2008, due to therenewal project.

· District VIII experienced a high increasein 2008-2011, due to the development ofthe Corvin Promenade (Fig 5).

· In district VIII stock increases wereminor (and by implicationinsufficient) for most of the period(1995-2003 and 2005-07), which led tobacklog in the total stock and to sharpprice increases until the end of theperiod. This is the rationale for thefirst hypothesis (H1), and followswhat in Kauko (2003) is referred to asa market effect.

· The opposite is true for district IX: Thefact that the housing stock in districtIX increased steadily for so manyyears had a moderating market effecton price increases for the total stock inthat district. This is the rationale forthe second hypothesis (H2).

Fig. 2. District IX main renewal locations.

New housing in VIII in 2009 ostensibly –despite the global financial crisis –commands a quality premium. This is areasonable assumption based ontheoretical and empirical literature, andthe rationale for the third hypothesis(H3). This also follows what in Kauko(2003) is referred to as an amenity effect.

Fig. 3. District VIII main renewal locations.(Upper circle: Magdolna Quarters; lower circle:

Corvin Promenade.)

Fig. 4. Photos of district IX renewal project.

Fig. 5. Photo of Corvin Project.

2.4. The Research designAfter this analysis of housing output thefocus is turned to price developments.Figure7 shows that prices forcondominiums are higher than the pricesof panels for all years in this city. Fig 7 isnext compared to corresponding figuresfor the target and comparable areas in


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districts VIII and IX (hereafter: VIII andIX) for a seven year period 2003-2009.

Fig. 6. Percentage increase in the housing stock interms of the number of new dwellings in Budapest(Source: Own computations based on KSH data.)

Fig. 7. Prices for three types of dwellings and alldwellings in Budapest 1997-2009. (Source: My own

computations based on KSH data.)

The key to the analysis to follow using amethod based on institutional analysis,target vs. comparable groups andtriangulation (see Fig 8). The data toanalyse comprises some statistics, expertinterviews, detailed street-level inspectionduring site visits and project documents.The objective is twofold: the mostly privateactivity of real estate development and itspartly public counterpart, urbanregeneration. The method employs theinstitutional approach in the mould offollowing up on Kauko (2009). Institutionalanalysis is well-placed to ascertainelements of change when data is ofinsufficient quality (e.g. limitedidentifications as in this study) or quantityfor statistical modelling, or if there arereasons to prefer a method aimed at

capturing more spatial and historical detailthan what statistics allow; in other words,various legal, policy-oriented, behaviouraland socio-cultural nuances that affect themarket and physical development of theseareas. As for the renewal projects, whileboth can be categorised as Public-PrivatePartnership (PPP) in inner city areas, theydiffer in a number of ways: notably, after afairly balanced PPP starting point, theproject in district VIII has become mainlyprivate, whereas it in district IX hasbecome mainly public; in district VIII theoriginal aims were mostly aboutstrengthening the social and communityaspects, whereas they in district IX wereabout increasing the diversity and densityso as to generate favourable environmentaland economic conditions.

Fig. 8. The set up and design of the study.

3. Empirical evidence

3.1. Target group analysis of urban renewalareas in districts VIII and IX

The starting point is to compare thefindings of this study with those ofKauko (2009), where the period 1997-2002was covered; and also to compare withthe citywide average price trend (Figure7). What is expected of a similar analysisfor the seven year period 2003-2009?

The findings in Kauko (2009) indicatedthat, during 1997-2002 an ‘artificial’ price


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increase was found in VIII, whereas thecorresponding price increase in theneighbouring IX was more based onquality improvement (i.e. amenity effect).Price increases in VIII were in any casefaster than in IX. The new question toanswer concerns the period 2003-09: isthere still an ‘artificial’ price premium inVIII, or the fact that the developmentproject thereafter went smoothly (i.e. theCorvin effect already noted) has led to anequalising price effect in VIII comparedto IX? And how to isolate the effect of thefinancial crisis [4] on property prices?

When we compare target andcomparable sales in four defined areasusing the notions of Kauko (2009):inside affected IX (let us call this areaA), outside affected IX (B), insideaffected VIII (C), and outside affectedVIII (D), we might be able to identify,once again, a steeper price increase (ordue to the market downturn a lesserprice decrease) in VIII than in IX.However, if the opposite is the case: theprice increase is steeper (or declinelesser) in IX than in VIII, it might bedue to an aforementioned ‘artificial’element building up in IX instead.According to this line ofconceptualization this smoother pricetrajectory in VIII is due to avoidance ofcost-generating conflicts and having thenature of niche market in terms ofspecific economic PPP resemblancecompared to IX, where the privateinvestors sold all of their shares to thedistrict when the crisis kicked in.Obviously also quality change increasesand decreases prices. (This demand sidedeffect is, in fact, the likeliest explanation.)When we compare the two areas, the issuebecomes that of whether environmental orsocial amenities matter more. Thus, priceincreases can be seen as favourable orunfavourable economic development.

Different possible explanations for theprice differences between VIII and XImight be identifiable:· If the prices in VIII exceed the prices

in IX, then social (and possiblycultural) factors are more importantthan the environment [5]. Or theCorvin Promenade project (in districtVIII, Figure 5) is less affected by crisisthan other projects.

· If the prices in IX exceed the prices inVIII, then still environmental factorshave a scarcity premium. Or, asspeculated above, bottlenecks andconflicts have generated ‘artificial’price increase in IX, compared to thesmoothness of the price developmentin VIII. (Thus a reversal of the situationbetween the two districts in relation tothe analysis of price changes.)

Data from the period 1997-2002 used inthe prior study showed that prices in therenewal area of district IX wereconsistently higher than the prices intheir district VIII counterpart. When weconsider new data, in 2003-09 it may bethat the price levels in VIII have alreadybecome higher than the price levels in IX.It may also be that price increases are stillsteeper (or price decreases moremoderate) in VIII than in IX. Thisrelationship would be due to the new andongoing Corvin Promenade projectwhich is less affected by the crisis than itsIX project counterpart (see Kauko, 2015).

3.2. Hypotheses in relation to price changes inthe target and comparable areas

Like general market theory predicts, inBudapest VIII and IX prices increase inrelation to supply shortages. As alreadystated in the present study, we focus onthe new supply (including conversions)rather than the old stock. Thusbottlenecks caused by lack ofcollaboration [6], or monopoly pricing in


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the development process generates anartificial value element that isunsustainable by definition [7]. Let usnow reiterate the hypothesis alreadybrought up in the preceding discussion.

If we record homebuilding in year t0, itaffects prices lagged in t0+1.In VIII: not much supply (i.e. volume)increases occurred before 2007; also not inrelation to Budapest average.

· Hypothesis H1: sharp price increase2003-2008 in the area of district VIIIaffected by renewal (market effect:reduction in supply drives prices up).

In IX: steady supply increase occurred until2008; also related to Budapest average.

· Hypothesis H2: only moderate priceincrease (i.e. without speculativebubbles) 2003-2009 in the area ofdistrict IX affected by renewal. Alreadythe prior study confirms suchdevelopment during the period 1997-2002 (see Kauko, 2009). (Market effect:increase in supply drives prices down).

Lastly observe that according to thehypothesis H3 (B in Kauko, 2003) newdwellings in inner Budapest are of muchbetter quality than the existing stock,which brings a sharp price increase, inVIII in particular. If this is the case, thenprices increase in the area of district VIII,and this increase is affected by renewal2009 [8]. (Amenity effect: improvedquality drives prices up).

3.3. The data for this studyData comprise sets of target groups andcomparable groups 2003-09 (seven yearperiod); this is the same method based ontarget vs. control groups (i.e. quasi-controlled experiment) as in the prioranalysis with 1997-2002 data (see Kauko,2009). The relevant variables representweighted averages: street level mean

transaction prices weighted by thenumber of sales for each street.

To explain the research design, only thecases situated inside the boundaries of themiddle parts of districts VIII and IX (i.e. thezones delimited by the Grand Boulevardand five other major traffic arteries) areselected as ‘target cases’, as in Kauko(2009). Nearby situated cases in bothdistricts are ‘comparable cases’. For thetarget vs. comparative sales analysis, onlyclearly identifiable locations are selected,not for example homes situated alongboundary roads or those facing the Rakpart(waterfront promenade). Those streets thatgo through both target and comparableareas are labelled based on where themajority of the street is located [9].

3.4. The analysisThe analysis of target cases andcomparable cases in both districts is shownin table 1 for condominiums and in table 2for panel housing. When comparing themean price figures we see that district IXtarget area remains higher than thecitywide mean for all years, for both typesof buildings. (This price difference staysaround 14% for condominiums.) We alsosee that prices in district VIII target arearemain lower than the citywide mean forall years, for condominium types ofbuildings. (This price difference hoversaround 25%.) For panel cases in districtVIII the corresponding situation variesbetween years: for years 2003 and 2005target area prices are above the citywidemean; for the last three years cheaper thanthe mean. (With district VIII panel cases weobviously cannot generalise a trend due tothe small dataset available.)

When examining the price trajectory ofcondominiums, in district IX the target areais higher priced than the comparables forthe first three years (2003-05); the opposite


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is true for the corresponding case in districtVIII. This is logical as the quality of thehousing stock and micro-locations have adirect connection to the price relationsbetween the two districts and on the twotypes of areas within the districts. This isexactly the same result as in the previousanalysis (so 1997-2002 data, see Kauko,2009).

For 2006 the relation between mean prices(i.e. target price level being on higher thancomparable price level) stays the same indistrict IX, but in district VIII thisrelationship changes: targets catch up (andeven become a bit more expensive than)the comparables. This reversal in the trendin VIII may already be due to speculationabout the Corvin development (even if notan actual Corvin effect yet as this projectwas not completed yet). So the scarcitybased and possibly speculative (or‘artificial’) price effect of district VIIIidentifiable in the prior study shows upagain (H1).

For 2007, in district IX the price level of thecomparables catches up with thecorresponding price level of the targetgroups (and even exceeds it a bit). This isostensibly a knock-on effect from the targetarea; in principle it can also be due to aspeculative effect of the new, somewhathigher level condominiums being underconstruction at Vaskapu utca and otherlocations of the comparable area justoutside Mester utca. (In Figure 4 anexample of this case is shown in the bottomright corner photo). In fact, this is the firsttime the abovementioned ‘artificial’ effectpresent in district VIII in the prior analysiswould be identifiable also on the district IXside. This is however unlikely due to thesmall size of the developments around theaforementioned Vaskapu utca. On theother hand, in district VIII the speculativeeffect of the previous year still continues

(i.e. price levels of target and comparablecases are roughly of equal magnitudes).

Table 1. Price development of target andcomparable cases in districts IX and VIII for

condominiums 2003 – 2009 (1000 HUF)

Year IXTarget

IXCompa-rables

VIIItar-get

VIIICompa-rables

City-widemean

2003 246 210 162 170 2152004 280 232 200 206 2402005 291 239 208 220 2442006 289 242 219 216 2462007 295 298 228 229 2642008 334 307 245 229 2802009 303 272 202 229 267

Table 2. Price development of target andcomparable cases in districts IX and VIII for panel

housing 2003 – 2009 (1000 HUF)

Year IXTarget

IXCompa-rables

VIIItar-get

VIIICompa-rables

City-widemean

2003 - 119 165 152 1562004 - - - - 1822005 246 - 190 - 1812006 - - - - 1782007 - - 115 - 1972008 - 254 203 - 2102009 330 - 165 - 191

For 2008 the situation in district IXnormalises itself again in the sense thatprices in the target area are again muchhigher than their comparable counterparts,so only the effect of quality improvementis identifiable from this data. In districtVIII the prices of the target cases are, forthe first time in this time series,considerably higher than the prices of thecomparables. It is likely (if not obvious)that the real Corvin effect is already seen inthis sharp increase in the price levels ofboth district target areas, especially whencompared to the correspondingcomparables in both districts.

For 2009, the last year, the relationshipsresemble the starting level: target areasbeing more expensive than the


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comparables in the case of district IX andthe comparables being the moreexpensive one of the two categories indistrict VIII. Here the impact of theglobal housing market downturn isalready visible for both district IX areasand the target area of district VIII. Forsome reason – possibly delayed projects –this change is not identifiable from thedistrict VIII comparables data.

Alongside the analysis of targets vs.comparables we also note that both areasin district IX are higher priced than theirdistrict VIII counterparts for all years.

Moving to the corresponding analysis ofpanel housing cases is more difficult dueto the paucity of data. Most years notenough transactions were registered.Table 2 shows a more inconsistent picturewith panel housing than Table 1 doeswith the condominiums. The generaltendencies are still the same: district IXbeing more expensive than district VIII,and the target area in district IX is pricierthan the comparable area of that district.The likely knock-on effects of both theCorvin project and the rehabilitation ofdistrict IX on the panel housing nearbyare also identifiable from the last twoyears of the period. It needs to be notedthat panel buildings were not actual partof the renewal projects themselves;however, as they often are adjacent orsituated nearby they might be influenceddue to general landscaping of thevicinity, improved commercial servicesand raised social standing of thecomposition of inhabitants. And in thisway the actual renewal projects maycapitalize in prices of condominiums thatnever where part of these projects.

3.5. The analysisIn sum, the following trajectories for theperiod 2003-09 can now be identified:

· In the target area of district IX, thequality increase leads to subsequentmoderate price increase, in similarvein as in the earlier analysis based onthe period 1998-02 (see Kauko 2009).The renewal of the target area wasmostly finished by 2009; what thequality exactly is varies by block, butin general the area has a small townfeeling streetscape with good accessfor pedestrians and modernapartments.

· Immediately outside this area indistrict IX a knock-on effect can beseen insofar as the price level of theVaskapu utca development is likely tobe influenced by the bigger projects ofthe target area. A speculative effectrelated to the Vaskapu project ishowever unlikely as this is a relativelysmall project. And this price increasewas only for two years (2007-08).

· Not much real quality basedimprovement can be detected indistrict VIII and any price increase islargely of the speculative type – just aswith the 1998-2002 analysis. Here is anexception however: the Corvindevelopment, being of enormousdimensions and partly finishedalready in 2009, is likely to haveinfluenced the price levels positively –in fact, such an effect was recorded for2008.

· It is also to observe that the effect ofthe global downturn on prices wasmuch stronger than the correspondingmicro effects for year 2009. (And noexternality effect of CorvinPromenade was identifiable either.)

For the panel data the situation issomewhat different than theCondominiums, but here the reliability isrestricted to the low data count.Nevertheless, no fundamental differencein price trajectory betweencondominiums and panel cases could be


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identified even if the latter only benefitedfrom knock-on effects of renewal ratherthan being subject of renewal itself.

4. ConclusionsFollowing the footsteps of a prior study,this study set out to examine the fate ofBudapest district IX and VIII propertydevelopments. For this purpose,empirical analysis of property prices,dwelling and neighbourhood quality,housing stock increases and urbanrenewal measures was carried out. Withrespect to the hypotheses formulated wecan conclude the following:H1: In district VIII sharp price increasesthroughout the period. This we can verify(apart from 2009, the last year)H2: In district IX: any moderate priceincreases throughout the period. This wecan verify only to a limited extent.H3: New housing in district VIII in 2009is more expensive than previous years.This we cannot verify.

These results have added some detail to thecorresponding results from the prior studywhere price developments rather neatlyfollowed the paths of H1 and H2. We mayask: why is the present study only showingpartially same results? As the data andmethods are the same, the reasons have tobe related to urban and neighbourhoodchange processes taking place here.

What perhaps is more interesting is thatthe price development in this study hascovered an economic downturn inproperty prices caused by the globalfinancial crisis, which in turn allows us todevelop further arguments, researchquestions and hypotheses. The obvioussuggestion would be to extend theanalysis to larger data sets and moresophisticated methods, with particularattention to the spatial extent of variousexternality effects, both inside and outside

these areas. Another research directionwould be to compare these results withanother city, as was done in the priorstudy by Kauko (2009), where Budapestwas compared with Amsterdam.

5. Final notes[1].It is to note that these problems are

not caused by the current State orMetropolitan governments, but bytheir respective predecessors whostepped down in 2010 (in both cases:state and metropolitan regimes).

[2].At the time of writing (May 2016) theCastle Gardens project is alreadycompleted, whereas the City Parkproject is not yet commenced. Formore information, please see therespective websites of Várkert Bazár(2016) and Liget Budapest (2016).

[3].First there was the 1990s “EasternEuropean miserablist literature” (cf.Ladányi, 1993; Hegedüs et al., 1994;Kovács, 1998), where any attempts tolook for local strengths and positivefactors were largely ignored in the faceof a defeatist critique towardsinstitutional evolution and physicalreality. However, more recently,contributions with a more constructiveapproach have emerged (see e.g. Egedyand Kovács, 2010; Kauko, 2012, 2013,2014; 2015; Motcanu-Dumitrescu, 2015).

[4].That is the aftermath of the USsubprime failures and credit crunch of2007-08.

[5].This is in itself not an unusual state ofaffairs in Budapest, but more so forthe old stock (see Kauko, 2014).

[6].Among others, collaboration betweenactors is considered one particularprecondition for achieving a trulysustainable built environment andurban development (see Manzi et al.,2010; Colantonio and Dixon, 2011).The theory thus suggestscollaboration between investors,


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contractors and regulators – andideally also residents, as this wouldcomprise a valid criterion for judgingwhether a given urban propertydevelopment is sustainable in bothprocess and outcome terms.

[7].This fits the case with artificial pricebubble in Kauko (2003), see alsod’Amato and Kauko (2008).

[8]. It is also likely that Corvin Promenade,as it is situated at the edge of district VIIIadjacent to district IX, has externalityeffects observable in district IX.

[9].So Liliom utca, Angyal utca, Tompautca and Baross utca all belong to thetarget areas using this logic.

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Received: 7 September 2016 • Revised: 29 September 2016 • Accepted: 30 September 2016

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