The Value of School Renovations: Effects on Real Estate Prices in Berlin

While the influence of school quality and proximity on property values—commonly known as the 'School District Effect'—is well-documented, the economic impacts of targeted in- vestments in school renovations have remained largely unexplored. This gap is particularly significant as it challenges the assumptions underlying Net Present Value calculations made by investors. Two hypotheses emerge: either renovation effects are unanticipated and there- fore irrelevant to current property values, or they are anticipated and already reflected in prices. This dynamic is particularly relevant in the context of Berlin’s =C5.5 billion School Construction Offensive, Europe’s largest initiative of its kind, which provides a unique op- portunity to examine these effects, including the varied externalities generated by different school types. For instance, primary schools may increase traffic and noise but attract families seeking proximity, while secondary or vocational schools may shape neighborhoods differ- ently based on their reputation and demographics. The research employs hedonic pricing models, spatial regression, and difference-in-differences analysis to test these hypotheses and isolate the causal impacts of school renovations on property values and neighborhood dynamics. By evaluating variations across school types, income levels, and socioeconomic contexts, the study aims to identify measurable increases in property values, with stronger effects near higher-quality schools and diminishing impacts with distance. This research addresses an overlooked dimension of school-related urban economics, offering actionable strategies to optimize public investments while advancing equity and fostering sustainable urban development.