A federal appeals court in New York has upheld a $6.7 million (£5.2 million) award for nearly two dozen graffiti artists whose spray paintings at a once-famous site were destroyed to make room for high-rise luxury residences.

The 2nd US Circuit Court of Appeals concluded a judge was correct to award the damages against developers who destroyed the aerosol artwork in 2013.

The appeals court said the action violated the Visual Artists Rights Act of 1990, which protects art which has gained recognition.

The Long Island City, Queens, graffiti site known as 5Pointz was a tourist attraction that drew thousands of spectators daily and formed a backdrop to the 2013 movie, “Now You See Me”.

Many of the art works were temporary.

“In recent years, ‘street art,’ much of which is ‘temporary,’ has emerged as a major category of contemporary art,” the 2nd Circuit said in an opinion written by Circuit Judge Barrington D. Parker.

The decision noted that the street artist Banksy has appeared alongside former President Barack Obama and the late Apple Inc. founder Steve Jobs on Time magazine’s list of the world’s 100 most influential people.

“A Banksy painting at 5Pointz would have possessed recognised stature, even if it were temporary,” the appeals court said.

Marie Cecile Flageul, a curator who worked with the 21 artists who will share the award, said the money would be split amongst artists in the US, Australia, Japan, Brazil and Colombia.

She said the appeals ruling demonstrated how far graffiti has come from the 1970s when many artists used it to express their anger.

“Now, it’s a validated art form which is collected, acquired and showcased in museums and galleries around the world,” she said.

She said real estate entities in New York, Paris and London now look for ways to preserve graffiti art.

Since 2002, walls at the 5Pointz site had contained more than 10,000 works of art as some of the renderings were temporary and were eventually painted over with the permission of the artists.

In 2013, developers seeking to capitalise on the rebirth of a once crime-ridden neighbourhood destroyed the artwork after banning artists from the area and refusing to let them recover work that could be removed.

After artists sued, US District Judge Frederic Block in Brooklyn concluded that the art works reflected “striking technical and artistic mastery and vision worthy of display in prominent museums if not on the walls of 5Pointz”.

The judge made the award higher than it otherwise would have been after concluding the destruction of the art was wilful because the artists were not given the three months the law allows to salvage their artwork.

In a statement, lawyer Eric Baum said the artists were “thankful and humbled by today’s ruling”, which he called a “clear indication these Artists’ work is important and should be respected”.

A lawyer for the developers declined comment.