Do urban tourism hotspots affect Berlin housing rents?

Abstract

Purpose This study aims to analyze whether urban tourism affects Berlin housing rents. Urban tourism is of considerable economic importance for many urban destinations and has developed very strongly over the past few years. The prevailing view is that urban tourism triggers side-effects, which affect the urban housing markets through a lack of supply and increasing rents. Berlin represents Germany’s largest rental market and is particularly affected by growing urban tourism and increasing rents. Design/methodology/approach The paper considers whether urban tourism hotspots affect Berlin’s housing rents, using two hedonic regression approaches, namely, conventional ordinary least squares (OLS) and generalized additive models (GAM). The regression models incorporate housing characteristics as well as several distance-based measures. The research considers tourist attractions, restaurants, hotels and holiday flats as constituents of tourism hotspots and is based on a spatial analysis using geographic information systems (GIS). Findings The results can be regarded as a preliminary indication that rents are, indeed, affected by urban tourism. Rents seem to be positively correlated with the touristic attractiveness of a particular location, even if it is very difficult to accurately measure the real quantity of the respective effects of the urban tourism amenities, as the various models show. GAM outperforms the results of OLS and seems to be more appropriate for spatial analysis of rents across a city. Originality/value To the best of the authors’ knowledge, the paper provides the first empirical analysis of the effects of urban tourism hotspots on the Berlin housing market.