Investment Leverage for Adaptive Reuse of Cultural Heritage

Abstract

This article tracks the design of a panoptic toolkit of complementary financial (grant and endowment, tax, debt and equity) and non-financial (regulation, real estate, risk mitigation and performance, capacity building, impact metric and digital network) instruments, designed to leverage capital investment and engender collaborative partnerships, to encourage investment capital to flow to cultural heritage adaptive reuse activities. Cultural heritage activities encompass adaptive reuse and energy retrofit of built heritage structures, protecting natural eco-systems and enabling local community enterprise activities. These activities embody circular economy dimensions, that stimulate social, cultural, environmental and economic regeneration, within the global value chain. Many cultural heritage investments entail long-term time horizons, requiring patient investment strategies. Consideration of the financial landscape, with regard to capital investment leverage is as much about understanding the motivations of participants to engage in the capital markets, as about innovations in financial instruments to safeguard cultural heritage values. Individual financial instruments, within the toolkit, such as debt and equity tools, are not new and some have a long association within traditional capital markets. What is new, is a framework for the engagement of blended complementary instruments, pooled within diverse multidisciplinary collaborative social enterprise fund structures, to achieve intentional and measurable impact investment returns. Risk adjusted investment return metrics include the analysis of socio-cultural and environmental impact returns in unison with market based financial returns, including below market returns in some instances. A case study of a revolving social impact fund is provided to give a practical example of combined complementary hybrid financial instruments within a collaborative funding structure. The ultimate choice and design of blended and pooled hybrid tool combinations and hybrid fund structures will change from building to building, and community to community, but must always prioritize the need to protect people and ecosystems in parallel with saving vulnerable cultural heritage resources. The selection of tailored hybrid financial instruments, to enhance circular economy transitionary ambitions, must remain flexible within a long-term collaborative investment strategy. The key change in mindset, central to cultural heritage financial toolkit development, is the enablement of capital leverage investment strategies that prioritize people and the ecosystem over pure profit motivation.

The Innovative Response of Cultural and Creative Industries to Major European Societal Challenges: Toward a Knowledge and Competence Base

“…One implication of this is that integrated conservation of cultural heritage has its application in management of changes [52]. In parallel, the interest in the economics of conservation has increased using cost-benefit analyses with the main focus on investigating conditions for investments in conserving heritage [53][54][55][56][57] to study heritage-led sustainable development based on adaptive reuse and the relation between cultural heritage, creativity and innovation [58][59][60] and the strategic role of cultural heritage in the circular economy [7,[61][62][63][64][65].…”

“…In times of climate change, the United Nations' Sustainability Goals and the European Green Deal, more research is also needed to clarify the links between the CCI and sustainability and to deeper the understanding of the role of adaptive reuse of cultural heritage in circular economy and to develop new governance and business models as well as regional and local strategies for this [7,[61][62][63][64][65].…”

Sustainable Conservation and Reuse of Historical City Center Applied Study on Jeddah—Saudi Arabia

“…Economic returns can be defined as the society-wide gains from the project compared to the situation that would prevail if the project were not undertaken [20]. There are many methods by which the economic value of heritage buildings is evaluated, for example, by values of direct use, values of indirect use, and values unrelated to use [21], and through these methods, the returns of heritage preservation projects and then the investment risks of these projects can be calculated [22].…”

An Integrated SWOT-PESTLE-AHP Model Assessing Sustainability in Adaptive Reuse Projects

“…Creating space for economic, social and cultural activities makes different parts of the cities more attractive to visitors [130,131]. These three activities combined, boost the property market, which will enable initial capital investment returns in terms of increase in rent or commercial value [132,133]. Hence the value of the redeveloped building-in addition to the surrounding buildings-will increase, lengthening the buildings economic sustainability while reducing maintenance costs [134,135].…”