The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal

We estimate the cultural heritage amenity impact on the residential real estate market of Lisbon, Portugal, paying particular attention to heterogeneity of types and capturing spatial dependencies through a spatial error model. Our heritage amenities include conservation areas, listed historic buildings, and designated heritage which includes churches, palaces, historic buildings and lithic structures. We construct gridded spatial fixed effects which mitigate biases from the modifiable areal unit problem, and further employ a geographic regression discontinuity ensuring the robustness of results. The analysis is complemented with spatial interactions and mixed geographically weighted regressions (MGWR) to explore spatial heterogeneity of impacts. Conservation areas yield 4.1% premiums with spillover benefits of 3.3%, while proximity to designated heritage has a positive price elasticity of 0.0075. This impact is equivalent to an additional designated heritage within 100 m. Ten additional listed buildings within 500 m on the other hand yield 0.5% premiums. We find spatial variation in heritage amenity impacts with MGWR and spatial interactions highlighting common patterns whereby positive price impacts are strongest for the closest properties, and the biggest for landmark amenities. We compare these two manners to evaluate spatial non-stationarity of impacts and highlight the benefits of high-level GIS techniques which are commonly lacking in hedonic studies with urban spatial data. •Study of the external effects of different types of built heritage and its complementarities with other urban amenities.•First work for Lisbon that accounts for the modifiable areal unit problem and for spatial dependency and heterogeneity.•The analysis complements global hedonic estimations with a mixed geographically weighted regression model.•The analysis further employs a geographic regression discontinuity to test the robustness of results.•Built heritage has localized positive impacts on nearby dwelling prices suggesting benefits from their preservation.•The effects of heritage assets are highly dependent on type and relative neighborhood context.•The ensemble effect of a conservation area is compounded with the heterogeneity of heritage and environmental amenities.