The external effects of assessing privately and publicly-owned architectural heritage sites : empirical evidence from Hong Kong

Abstract

Architectural conservation has gained significant momentum worldwide since the establishment of the UNESCO and later, the international endorsement of the BURRA Charter. While the environmental, social and cultural impacts of architectural conservation have been widely discussed and evaluated, its economic impact is still under-researched, especially in high-density cities in Asia. This research is one of the first territory-wide studies on architectural conservation in Hong Kong. It studies the external effects of architectural heritage conservation on neighbouring residential property prices and examines how such effects differ between privately-owned heritage and publicly-owned heritage. By using Hedonic Pricing Model, the study uses a sample of over 40,000 transaction records of residential properties around fifty private and fifty public heritage sites, spanning from five years before to five years after the heritage grading, to estimate the external effects. Referencing to the Fourth Coase Theorem, which suggests government involvement can bring advantages in information and innovation, this research hypothesizes that publicly-owned heritage generates a larger positive external effect on surrounding properties. The result covers key empirical findings to show that publicly-owned heritage sites outperformed those of privately-owned by 3.54% in property prices. In addition, the study also provides evidence to support the hypotheses including the presence of a positive cluster effect on the neighbouring property prices -which is generated by the ensemble of heritage sites; as well as the hierarchy of grading system to external effects of heritage. The research findings benefit the disciplines in architecture, heritage conservation, urban planning and real estate by contributing both practical implications and academic knowledge for future conservation policies and management.