Urban Conservation of George Town: Is it a Boon or Bane for the Heritage Property Market?

A lot of effort is spent on the application of heritage city status by the interested cities. Other than the recognition and preservation of culture and environment, a city interest is mainly that the inscription will bring economic returns and will be one of the main drivers of economic growth. The main expectation usually centred on increased tourism and its many spin-offs. However, does the designation of being a world heritage city only accord such a limited economic benefit? Studies from other countries have shown that properties in a heritage designated area have a higher value than properties outside the heritage area. Appreciating property value not only increases the personal asset wealth but also the city's wealth as a whole. The paper discusses this interesting trend and attempts to determine if the same is true for the world heritage city of George Town. In order to study the value of heritage properties, a measuring tool is needed and the hedonic regression method was found to be suitable as the attributes of heritage property can be taken apart and the effect of each attribute on the value of the property can be regressed from the calculation. Data used are actual transaction data from the Valuation Department.

In addition to the hedonic regression method, a second tool which is spatial autocorrelation analysis is used to determine the spatial influence on the transaction price of heritage properties. The analysis of transaction prices for properties in the heritage areas of George Town showed that attributes related to heritage or conservation is found to have a positive impact on property value in George Town. The spatial autocorrelation analysis returns a positive but weak spatial relationship between the data indicating that location has an impact on the property value but not as strong as it is widely believed. Other than property attributes and location, this paper also discusses the impact of heritage related development policies on property value. The study shows that the implementation of heritage conservation policies encourages the demand for heritage buildings while unclear policies confuse investors causing a reduction in the transaction of heritage properties. The findings in this paper indicates that "heritage" status have a positive impact on property value and being a niche market, the value and transactions are not easily influenced by the economic cycle. As such, property conservation could be utilised as a development strategy especially for a heritage city.

Keywords: Heritage properties, Hedonic regression analysis, property values, Heritage related policies, George Town

Ms. Sr Lim Yoke Mui
School of Housing, Building and Planning, University Sains Malaysia, Kuala Lumpur

Lim_Urban Conservation of George Town.pdf4.09 MB