Does the establishment of Restricted Use Zone around an airport cause a decrease in property value?

The aviation market in Poland is currently in a phase of dynamic development. In recent years, significant increases have been observed in both the passenger traffic and the number of air operations. Furthermore, airport-related areas are constantly expanding. The need to integrate the airport spaces and the nearest situated buildings, the necessity for rational development of areas adjacent to airports, as well as the growing acoustic discomfort of residents were the main reasons for creating Restricted Use Zones (hereinafter referred to as ’RUZ’). According to the definition, RUZ are legally-separated areas which are negatively affected by nearby plants or facilities. RUZ around airports are determined when appropriate standards of the acoustic environment are not met, which means that the permissible noise level may be exceeded.

The effects of RUZ establishing

RUZ are established by resolution of the poviat or voivodship council, in accordance with the Act of 27 April 2007 on Environmental Protection Law. The provisions of the resolution concern restrictions on land use, the manner of using the RUZ, as well as technical requirements for existing and newly designed buildings. The regulations may be more or less restrictive depending on the strength of the airport’s influence on the environment. Most often it is forbidden to raise new buildings intended for occupation by elderly, children or sick people. Besides, it may not be possible to change the function of the building already raised. In addition, new buildings are required to have sound insulation for walls. The establishment of RUZ also results in the possibility of pursuing claims by owners of properties located within the zone. They either have the right to request the purchase of their property or they can demand compensation and improvement in acoustic comfort. The compensation may be granted for the restrictions on the land use and the extension of buildings or for a decrease in a property value. The relevant claim should be submitted within two years from entry into force of the resolution.

Interest in issues related to RUZ is growing especially among property owners, but also among the legal community and real estate market experts. Thousands of controversial compensation cases are still pending in the courts and airports have already lost millions to pay their dues. Unfortunately, Polish courts have not yet developed a consistent jurisprudence. Decisions of courts are based on opinions of expert appraisers. It even happens that experts’ positions on two premises located in the same multi-family building are different. Members of airport management agree with residents about the rightness of compensations for the inconveniences associated with the noise thanks to which it is possible to cover the costs of replacing windows and doors with soundproof ones. However, they do not recognize the fact that the establishment of RUZ resulted in a decrease in the property value. The remainder of this article will concentrate on this arguable issue.

Research on the influence of establishing RUZ on the property value

Analyses of the impact of establishing RUZ should be based on real property transaction prices which meets the requirements of representativeness. This is because transaction price is the best indicator on the real estate market. The research should cover the entire period of time from the entry into force of the regulations on RUZ. The first step should be to analyse the real estate market in the city and then in the district. Conclusions which are drawn only on the basis of data from the RUZ are incorrect. The decrease in property prices in the RUZ does not have to be associated with decline of their attractiveness, while similar trends are observed in the entire city or even the entire country. Therefore, the essence of the research must be to compare local real estate markets and also to consider all factors which could have an influence on the prices. The key step is comparing the number of sales and transaction prices from the RUZ with data from areas outside the RUZ. In addition, it is worth checking the relation between air traffic and average prices.

AMRON Centre analysts conducted a number of studies on the impact of establishing the RUZ on the value of residential premises and houses. It is proved that buyers wanted to purchase properties in RUZ after introducing the resolutions. The number of transactions in the RUZ in proportion to the total number of sales in the analysed city or district remained at a similar level or even increased. Moreover, the average prices of residential premises in the RUZ and in the non-RUZ were at a very similar level. The correlation coefficient of these two values ​​was high, which confirms that the location in the RUZ did not have a significant impact on the property value.

After the entry into force of the resolution on RUZ, prices in these two areas differed on average by only a few dozen zlotys per square meter. In some years, average transaction prices from RUZ were even slightly above these from outside RUZ. An important step was also to compare the number of passengers and air operations over the entire period considered. Major Polish airports are recording a systematic increase in air traffic. However, research has showed an improvement in acoustic conditions. In many cases, the number of residents exposed to excessive noise is falling because airport employees are working on reducing it. Systematic monitoring of the noise level is being conducted and the results of measurements are being sent to appropriate authorities of the environmental protection. Various types of operational improvements and changes are being implemented, i.e. reducing the number of flights above densely populated areas or the number of operations at night. The analyses have not showed a negative impact of the increase in air traffic on average prices. This is the last argument that the establishment of the RUZ have not caused a decrease in the property value. The conclusions drawn from the analyses carried out by the AMRON Centre are unambiguous, but it is worth emphasizing that this must be verified individually for each airport.

Summary

Remaining objective about airports and residents, a thesis should be made that the resolution on the RUZ has no impact on the property value. It is necessary to remember that Polish airports were established even several dozen years earlier than the regulations, so air traffic has been there for a long time. RUZ are developing rapidly and they are popular among potential buyers. No wonder that airports want to fight and appeal to the courts.

Ewelina Staruch
Junior Real Estate Market Analyst