House Price Performance in Previous Olympic Host Cities

The regeneration effects from hosting an Olympic games has generally had a positive impact on house prices. Barcelona was the best performing host city with prices rising by 131% versus an 83% increase in Spanish house prices in the five years leading up to the 1992 Olympics.

Hosting an Olympics is usually associated not only with an increase in sporting facilities but also an upgrade of transport and cultural/leisure facilities. Barcelona, Athens and Sydney all saw a significant upgrading of their urban infrastructure and this city rejuvenation is likely to encourage higher house prices.

Areas close to the Olympic complex usually see the largest increase in house prices as they benefit from improved facilities and better transport links. This was clearly evident in the main area of development for the Sydney Olympics, Homebush Bay, a former industrial site 20 minutes from the centre of Sydney. House prices in the adjacent suburb, Homebush, rose 70% in the five years in the run-up to the Olympics, compared to a 50% increase in Sydney house prices.

The Manchester Commonwealth Games prompted redevelopment and rejuvenation of central Manchester and provided a spur to house prices in the area. In the five years leading up to the 2002 Commonwealth Games, house prices in central Manchester rose by 102% versus a 52% rise in prices in the North West and an 83% increase in prices across the UK.

Here is a recent link that shows an increase in home values with Olympic announcements in London:

House prices in East End rise after Olympic win

Meanwhile, Atlanta experienced a growth of 1.3 million new residents following the Games, which created the need for $1.8 billion of new hotels, office buildings, high-rise residential buildings and entertainment venues which were developed between 1996 and 2006.

And Atlanta is no exception. Barcelona, touted as the most successful recent games, saw a 240 percent increase in new house prices prior to the Olympics. And in Sydney between 1994 to 2005, the boom in new apartments and rapid increase of house prices contributed to the growing tendency for people to leave the city (in fact, the Reserve Bank warned that Sydney had become too expensive in August 2005).

It will certainly be interesting to see how Beijing's real estate market will fare after the 2008 Olympic Games. It's already predicted that the new supply in the city's high-end residential and retail markets will most likely triple in the upcoming years. And the average real estate sales price currently is estimated at 24,010 yuan ($3,500) per square meter, compared with 15,838 yuan at the end of 2006.

Money magazine recently named Atlanta as one of the "top six places to buy a home these days." Not bad for being in the midst of a record-breaking downturn that's affecting real estate markets nationwide.

Is there a correlation between Atlanta's strengthened real estate market following the 1996 Olympic Games and the fact that they're fighting through the real estate downturn better than most large cities?

Sources: Halifax and Skyline Views

-Dave Straub, @properties 773.255.3180

(@properties December 2008 Newsletter)