Does Commercial Investment Drive Neighborhood Upgrading? Event Study Evidence from London

Does the arrival of restaurants and cafes drive neighborhood house price appreciation, or does it merely follow rising demand? We first develop a multi-dimensional Gentrification Index (GI) combining education, income, retail amenity, green space, and transport indicators at quarterly resolution across 4,835 London neighbourhoods to characterise the structural landscape of neighbourhood change. We then exploit the staggered timing of 21,189 restaurant and cafe openings---identified through Energy Performance Certificate records---in an event study design. Our preferred specification, TWFE augmented with LSOA-specific linear trends, passes the parallel trends test (F = 1.04, p = 0.384) and identifies a substantial treatment effect: house prices rise monotonically after commercial entry, reaching +4.1% at four years post-treatment (p < 0.01). The effect is gradual and cumulative, consistent with amenity capitalisation building as restaurant and cafe clusters attract residential demand. A Crossrail infrastructure difference-in-differences corroborates the finding through an independent channel. Commercial clustering is not merely a symptom of neighborhood change but an active driver of house price dynamics.