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Description:
Using the hedonic pricing approach, this paper investigates how contamination and environmental remediation of contaminated sites affects the value of nearby commercial and industrial real estate properties in Italy. In Italy, prices and other relevant information for the study of industrial and commercial real estate market are not easily and publicly available, limiting knowledge and understanding of market dynamics in urban areas, where contaminated properties are widespread and constitute a burden for prospective urban regeneration and economic development. This research, by collecting and analyzing real estate transactions in one of the most well known and large contaminated site in Italy, offers the first attempt to model and estimate the functioning of industrial and commercial real market, offering useful hints for planning purpose and policy design. We collected and analyzed the real estate market transactions realized in the last 12 years (1997-2008) in the National Priority List (NPL) site of Porto Marghera. The estimated coefficients of hedonic models are the implicit prices for each one of the considered characteristics or attributes. Therefore, results of our estimation provide evidence that environmental remediation does increase the sale price and that the effect of the distance from sites in which permanent safety measures are implemented has a positive effect on the price of nearby properties. Significant and positive effects on prices are also determined by the localization in a recent revitalized neighbourhood of Mestre and the economic trend of the area represented by the industrial cost construction investment rates. Finally, our model shows that larger properties are associated with higher property prices, the variable measuring lot size relates positively to property prices and is statistically significant.