ECONOMICS UNIQUENESS

HERITAGE CONSERVATION AND PROPERTY VALUES ■ 125
the center, the city’s redevelopment strategy contained fi ve major elements
(Quatersan and Romis 2010):
• Keeping institutional functions in the center, including the seat of public
administration and the institutions devoted to education, religion, commerce,
and healthcare;
• Maintaining a mix of low, middle, and upper income residents living in the
city core;
• Promoting cultural tourism based on the abundant heritage resources;
• Attracting private capital from both investors and consumers; and
• Attracting participation of the public and private sectors and of civil society
early in the heritage conservation eff orts.
Th is strategy has resulted in substantial increases in property values. In 2010,
unrenovated property in the historic city core was selling for US$1,200 per square
meter. Th is is double what the property brought (at US$600 per square meter)
a decade earlier. By contrast, unrenovated property just outside the city center
could be purchased in 2010 for about US$430 per square meter.
Why Is the Marketplace Willing to Pay a Premium
for Heritage Properties?
Th e best hedonic pricing models will tell us that buyers in the marketplace
are willing to pay extra to buy a house in a protected heritage district. What
it does not tell us is why. Th ere are clearly a number of reasons, and the
motivation no doubt varies from one buyer to another. But in general it
is reasonable to assume the value premium is driven by four categories of
explanations: heritage, neighborhood characteristics, proximity, and public
policy. (See box 5.3.)
Th e category of heritage includes the quality of heritage buildings that is oft en
not found in newer construction; the aesthetic appeal and workmanship of heritage
structures; the prestige that is sometimes associated with living in a historic
district; and, for some people at least, a basic cultural commitment to preserving
the built heritage by living in it.
Neighborhood characteristics are almost always independent of the inventory
of housing and instead generate a monetary reward for features such as pedestrian
accessibility to services and amenities, mixed use, and urban character—all
three of which are generally absent from most newer neighborhoods.
Proximity characteristics refl ect that concept of “location, location, location”
discussed earlier, but especially location near specifi c amenities. Because most
cities throughout the world have grown outward from their core, historic residential
neighborhoods tend to be near historic city centers. When that center is