# RECORD 828367334a6cb48f8254ab88d9172664e3afd7a2 # TITLE: WORLD HERITAGE DESIGNATION AND PROPERTY: THE IMPACT OF PRESERVATION ON THE PRICE OF HISTORIC ASSETS # YEAR: 2022.0 VENUE: International Journal of Strategic Property Management DOI: 10.3846/ijspm.2022.18156 # AUTHORS: Eyal Salinger; D. Shefer; Nir Mualam # PAGES: 13 CANDIDATE TABLE PAGES (1-based): [6, 7, 8, 9] # ABSTRACT: The restrictions and requirements imposed by historic preservation regulations bring about many changes to the rights of property owners. They might impose additional costs, most notably by prohibiting the demolition of designated buildings and thus decreasing property-development opportunities. The objective of this study is to examine what happens following world heritage designations; specifically, if and how such designations impact the property values of historic buildings. Using the hedonic price method, we measure the value of the option to demolish and rebuild that is denied to owners of designated buildings. We also measure the value of preservation regulations, expressed in the prices of apartments in designated buildings. The study area is the “White City” of Tel Aviv, which UNESCO designated as a world heritage site. The findings suggest that the market price of a designated building is on average 12.5% lower than its theoretical value if the building was not subject to historic preservation regulations. Moreover, a premium of approximately 14% was found in the price of apartment units in designated buildings if the building underwent preservation. These findings could have a direct impact on public policies designed to promote the preservation of historical buildings in world heritage sites. ===== PAGE 1 (score 8, numeric-paren 1, table-words 0, var-words 7) ===== Copyright © 2022 The Author(s). Published by Vilnius Gediminas Technical University This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unre- stricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Introduction When a site is designated as World Heritage by UNESCO (The United Nations Educational, Scientific and Cultur- al Organization), the designation can result in multiple benefits such as attracting investment opportunities, in- creasing tourism, and the regeneration of the surround- ing urban environment. Alongside these benefits, this sought-after status also imposes certain responsibilities. Public officials at the local, regional and national levels of government must enact laws and adopt policies that make it possible to protect registered World Heritage properties according to the World Heritage Convention, also known as the Convention for the Protection of the World Cultural and Natural Heritage (World Heritage Committee, 1972). In turn, these policy changes in local regulation may spur other changes in the city, resulting in conflicts and uncertainty. One such change that may be expected is the effect on the rights and privileges of property owners who suddenly find themselves bound by regulations and re- strictions. This paper examines these issues by looking at the changes brought about by UNESCO’s designation of Tel Aviv’s “White City” as a World Heritage site. To do this, we examine the market value of heritage properties in a district earmarked by UNESCO as World Heritage. Market value is defined as the price at which both buyers and sellers are willing to do business (Ap- praisal Institute, 1992). This price is assumed to reflect the most profitable use of the property – its highest and best use. From the perspective of owners, there are several feasible routes to handle heritage properties. For exam- ple, a non-designated building – i.e., a property not se- lected for preservation – can be renovated, expanded, or demolished, and in the latter case, a new building can be constructed in its place. While preservationists and World Heritage enthusiasts look at a variety of social and com- munity values in pursuing heritage protection, property owners may adopt a different perspective. In particular, they may look to maximize their property’s value in ac- cordance with the principle of the highest present value yield. In such cases, demolition would be considered when the expected value gained from future streams of revenues would equal or be greater than the net revenue derived from simply renovating or expanding (Amin & Capozza, 1993; Brueckner, 1980). International Journal of Strategic Property Management ISSN: 1648-715X / eISSN: 1648-9179 2022 Volume 26 Issue 5: 397–409 https://doi.org/10.3846/ijspm.2022.18156 *Corresponding author. E-mail: nirm@technion.ac.il WORLD HERITAGE DESIGNATION AND PROPERTY: THE IMPACT OF PRESERVATION ON THE PRICE OF HISTORIC ASSETS Eyal SALINGER   , Daniel SHEFER, Nir MUALAM   * Faculty of Architecture and Town Planning, Technion – Israel Institute of Technology, Haifa, Israel Received 12 April 2022; accepted 21 November 2022 Abstract. The restrictions and requirements imposed by historic preservation regulations bring about many changes to the rights of property owners. They might impose additional costs, most notably by prohibiting the demolition of designated buildings and thus decreasing property-development opportunities. The objective of this study is to examine what happens following world heritage designations; specifically, if and how such designations impact the property values of historic buildings. Using the hedonic price method, we measure the value of the option to demolish and rebuild that is denied to owners of designated buildings. We also measure the value of preservation regulations, expressed in the prices of apart- ments in designated buildings. The study area is the “White City” of Tel Aviv, which UNESCO designated as a world herit- age site. The findings suggest that the market price of a designated building is on average 12.5% lower than its theoretical value if the building was not subject to historic preservation regulations. Moreover, a premium of approximately 14% was found in the price of apartment units in designated buildings if the building underwent preservation. These findings could have a direct impact on public policies designed to promote the preservation of historical buildings in world heritage sites. Keywords: heritage, cultural property, valuation, property value, market price, historic preservation, UNESCO. ===== PAGE 6 (score 17, numeric-paren 0, table-words 3, var-words 8) ===== 402 E. Salinger et al. World heritage designation and property: the impact of preservation on the price... were designated prior to their sale. All observations for non-designated/designated buildings are for buildings that were not renovated/not preserved prior to the transaction. In addition, we created a database for apartment transac- tions which contains information about 237 sales, 91 of which are in designated buildings that were earmarked for protection prior to the sale. Our sample is unique, as to the best of our knowledge there have been few if any studies investigating the price impact of WH and ensuing preservation policies on des- ignated buildings still endowed with development rights. Moreover, based on data from a real estate-appraiser prac- tice, adjustments were made for the transaction price of buildings in cases involving a building sold with statutory tenants’ rights and in cases in which a building permit was already issued for (additional) construction prior to the transaction. In the first instance, the expected cost of evacuating the statutory tenants, based on comparable transactions, was added to the transaction price. In the second scenario, the cost of obtaining a permit, in terms of both money and time saved, was taken into considera- tion when determining transaction price. Therefore, the sale price represents a building free of statutory tenants that was granted permission for additional construction. Tables 1 and 2 below define the main variables that were tested in the hedonic price method. Table 1. Main variables included in the hedonic price method – building transactions Variables Description Mean Std. Dev. Dependent variable Ln_BUILD_PRICE Ln nominal selling price of the building, in New Israeli Shekels (NIS) 16.17 0.59 Independent variables Variables controlling for location characteristics LOCATION_PEDESTRIAN_STREET A dummy variable that equals to 1 if the building is exposed to positive externalities: e.g., located on a pedestrian street 0.24 0.43 LOCATION_MAIN_ROAD A dummy variable that equals to 1 if the building is exposed to negative externalities: e.g., located on a main transportation artery 0.21 0.41 BUFFER_DESIGNATED A dummy variable that equals to 1 if there are more than 25 designated buildings located within 100 meters of the sold property 0.20 0.40 Variables controlling for structural characteristics FACADE A dummy variable that equals to 1 if the building has a wide façade or if it is a corner building 0.51 0.50 Ln_PARCEL_AREA Ln parcel area in sq. m. 6.30 0.43 YEAR_BUILT Year of construction 1949 23.5 UNITS Number of apartments in the building 9.21 5.67 BUILD_ATTACHED A dummy variable that equals to 1 if the building has a joint wall with an adjacent building 0.08 0.27 BUILD_PARKING A dummy variable that equals to 1 if parking, or the possibility of parking, is currently available within the building’s plot 0.44 0.50 Variables controlling for planning regulations that apply to the plot Ln_BUILD_%_USED Ln development rights used, calculated as the total gross built-up area divided by the plot area, multiplied by 100 (equals 0 if the highest and best use of a non-designated building is to demolish and rebuild) 3.97 1.97 NOT_FOR_DEMOLITION A dummy variable that equals to 1 for all designated buildings and for non-designated buildings if the highest and best use of non- designated buildings is not to demolish the building 0.81 0.39 DESIGNATED A dummy variable that equals to 1 if the building is designated for preservation (all types of designations) 0.56 0.50 DESIGNATED_DETAILED A dummy variable that equals to 1 if the building is designated for preservation according to a detailed statutory plan which sets very specific provisions and limitations 0.175 0.38 DESIGNATED_LOCAL_SEVERE A dummy variable that equals to 1 if the regulation pertaining to a designated historic building sets “severe” (grade 1) management restrictions- thus curtailing the ability of owners to use, alter, or add to an existing building 0.175 0.38 DESIGNATED_LOCAL_REGULAR A dummy variable that equals to 1 if the historic building is designated for “ordinary” more flexible (grade 2) preservation according to existing regulation. That is, it is not subject to severe restrictions on property 0.21 0.41 DESIGNATED_INTERNATIONAL A dummy variable that equals to 1 if the building is designated as historic and was built in the early International Style 0.27 0.44 DESIGNATED_ECLECTIC A dummy variable that equals to 1 if the building is designated as historic and was built in the eclectic Style 0.27 0.44 ===== PAGE 7 (score 19, numeric-paren 0, table-words 3, var-words 9) ===== International Journal of Strategic Property Management, 2022, 26(5): 397–409 403 Variables Description Mean Std. Dev. Ln_PARCEL_AREA_DESIGNATED An interaction variable of the variable Ln_PARCEL_AREA with the variable DESIGNATED 3.58 3.24 Ln_BUILD_%_USED_DESIGNATED An interaction variable of the variable Ln_BUILD_%_USED with the variable DESIGNATED 2.66 2.42 Variables controlling for time TRANSACTION_YEAR A dummy variable that equals to 1 for the year the building was sold (except for the year 1998) UNEMPLOYMENT Unemployment rate in Tel Aviv, sorted by year 6.67 1.37 End of Table 1 Table 2. Main variables included in the hedonic price method – apartment transactions Variables Description Mean Std. Dev. Dependent variable Ln_APT_PRICE Ln nominal selling price of the apartment, in New Israeli Shekels (NIS) 13.95 0.38 Independent variables Variables controlling for location characteristics LOCATION_PEDESTRIAN_ STREET A dummy variable that equals to 1 if the property sold enjoys positive externalities: e.g., located on a pedestrian street 0.22 0.42 LOCATION_MAIN_ROAD A dummy variable equals to 1 if the property sold is exposed to negative externalities: e.g., located on a main transportation artery 0.04 0.19 BUFFER_DESIGNATED A dummy variable that equals to 1 if there are more than 25 designated buildings located within 100 meters of the sold property 0.14 0.34 GARDEN A dummy variable that equals to 1 if the property sold is within 150 meters of a public garden 0.46 0.50 Variables controlling for structural characteristics Ln_TOTAL_APT_AREA Ln total apartment area, in sq. m. 4.27 0.32 FLOOR Floor on which the apartment is located 3.02 1.19 PARKING A dummy variable that equals to 1 if there is a parking spot within the building’s plot 0.19 0.39 ELEVATOR1 A dummy variable that equals to 1 if there is an elevator in the building when the apartment sold is on the second floor or higher 0.44 0.50 YEAR_BUILT Year of construction 1956 22.74 Ln_UNITS_PER_DUNAM Ln number of apartments per dunam 3.13 2.67 APT_RENOVATED A dummy variable that equals to 1 if the apartment sold had been renovated 0.20 0.40 BUILD_PRESERVED For designated buildings, a dummy variable that equals to 1 if the building was preserved before the transaction 0.063 0.24 BUILD_RENOVATED For non-designated buildings, a dummy variable that equals to 1 if the building was renovated before the transaction 0.17 0.38 Variables controlling for planning regulations that apply to the plot DESIGNATED A dummy variable that equals 1 if the building is designated for preservation (all types of designations) 0.38 0.49 DESIGNATED_DETAILED A dummy variable that equals 1 if the building is designated for preservation according to a detailed statutory plan which sets very specific provisions and limitations 0.16 0.37 DESIGNATED_LOCAL_SEVERE A dummy variable that equals to 1 if the regulation pertaining to a designated historic building sets “severe” management restrictions (grade 1 buildings)- thus curtailing the ability of owners to use, alter, or add to an existing building 0.05 0.22 DESIGNATED_LOCAL_REGULAR A dummy variable that equals to 1 if the historic building is designated for “regular” preservation according to existing regulation. That is, it is not subject to severe restrictions on property 0.17 0.37 Variables controlling for time TRANSACTION_YEAR A dummy variable for each of the years sampled (excluding 1998) UNEMPLOYMENT Rate of unemployment in Tel Aviv 7.24 1.39 ===== PAGE 8 (score 86, numeric-paren 46, table-words 13, var-words 4) ===== 404 E. Salinger et al. World heritage designation and property: the impact of preservation on the price... 5. Findings The results of our analysis are presented in Tables 3 and 4. Table 3 shows that the independent variables that were expected to have an impact on transactions have indeed had the expected negative or positive impact on pricing. Model 1 depicts a simple comparison of the price of desig- nated and non-designated buildings in UNESCO’s White City. As can be seen from the results, DESIGNATED vari- able is not significant at the 10% level. A plausible reason for this is that designated buildings vary immensely in regard to the level of instituted preservation. While some are granted a range of developer incentives by the Preser- vation Plan, others are left with fewer incentives in order to ensure their preservation. Put differently, incentives for designated buildings differ according to the main charac- teristics of the building, which determine the value of the building and the highest and best use as if the building was not designated. Thus, in Model  2 and Model  3 we replace the DESIGNATED variables with two main characteristics: parcel area and built-up area (i.e., development rights already used by the building’s owners). In Model  2 all variables are significant at the 10% level. The signs of the interaction variables, positive for ln_BUILD_%_USED_ DESIGNATED and negative for ln_PARCEL_AREA_ DESIGNATED, imply a stronger impact of built-up area for designated buildings and a weaker impact of parcel area for designated buildings compared to non-designated properties. The variable controlling for development rights equals zero for non-designated buildings that can be de- molished. The same variable has a value attached to it in cases of designated buildings that cannot be demolished, or in cases of non-historic properties whose best use is to keep them intact (the average ln value being approxi- mately 5). Thus, we added a dummy variable in Model 1 and Model 2 that equals to 1 for (a) designated buildings Table 3. Estimated coefficients for building transactions Building type Model 1 Model 2 Model 3 Model 4 Model 5 All All All Non-designated Non-designated Coefficient (t-value) Coefficient (t-value) Coefficient (t-value) Coefficient (t-value) Coefficient (t-value) Independent variables CONSTANT 12.703 (27.09)*** 11.850 (18.74)*** 11.023 (20.69)*** 11.738 (17.99)*** 11.366 (19.30)*** Ln_PARCEL_AREA 0.761 (9.70)*** 0.913 (8.74)*** 1.014 (11.49)*** 0.881 (8.22)*** 0.901 (9.13)*** Ln_BUILD_%_USED 0.572 (5.82)*** 0.351 (2.13)** 0.273 (1.28) UNEMPLOYMENT –0.203 (–8.80)*** –0.211 (–9.88)*** –0.196 (–9.06)*** –0.176 (–5.32)*** –0.152 (–5.25)*** LOCATION_PEDESTRIAN_STREET 0.350 (4.59)*** 0.367 (5.11)*** 0.383 (5.15)*** 0.417 (2.46)** 0.359 (2.25)** LOCATION_MAIN_ROAD –0.111 (–1.55) –0.120 (–1.71)* –0.079 (–0.87) FAÇADE 0.147 (2.40)** 0.164 (2.77)*** 0.195 (3.24)*** 0.252 (2.79)** 0.283 (3.39)*** YEAR_2009 0.551 (3.94)*** 0.512 (3.86)*** 0.524 (3.72)*** 0.561 (3.49)*** 0.566 (3.52)*** Ln_PARCEL_AREA_DESIGNATED –0.230 (–1.81)* –0.440 (–6.34)*** Ln_BUILD_%_USED_DESIGNATED 0.292 (1.87)* 0.537 (5.98)*** NOT_FOR_DEMOLITION –3.00 (–5.79)*** –1.904 (–2.28)** –1.489 (–1.35) DESIGNATED 0.074 (0.88) DESIGNATED_LOCAL_REGULAR –0.093 (–1.05) BUFFER_DESIGNATED 0.029 (0.39) Number of observations 63 63 63 28 28 F= 35.93 41.96 51.52 24.84 37.71 Adjusted R Square 0.861 0.869 0.851 0.876 0.872 Note: * ρ < 0.1; ** ρ < 0.05; *** ρ < 0.01. ===== PAGE 9 (score 99, numeric-paren 60, table-words 10, var-words 6) ===== International Journal of Strategic Property Management, 2022, 26(5): 397–409 405 and for (b) cases in which the highest and best use of a non-designated building is to keep the existing building (NOT_FOR_DEMOLITION). The variable has a negative sign, correcting for the non-continuous distribution of the variable controlling for development rights. Model 3 uses the stepwise method and refers to the variables ln_PARCEL_AREA and ln_PARCEL_AREA_ DESIGNATED. The results suggest that the impact of the parcel area (in ln) is more pronounced for non-designated buildings than for designated buildings. A change of 1% in the parcel area (Ln_PARCEL_AREA) affects the price for non-designated buildings by 1.014%, implying a high de- mand for a limited supply of large plots in the White City of Tel Aviv. As for designated buildings, where demolition is prohibited, and hence property development opportuni- ties are restricted, an interaction variable of the parcel area with designated buildings (ln_PARCEL_AREA_DESIG- NATED) is included with a negative sign, mitigating the impact of the parcel area. According to Model 3, for des- ignated buildings, a change of 1% in the parcel area affects the price by 0.574% (1.014 – 0.440 = 0.574). Moreover, the variable controlling for development rights (BUILD_%_ USED_DESIGNATED) has a significant positive sign only for designated buildings. A change of 1% in the utilized development rights affects the price of designated build- ings by 0.537%. Table 4. Estimated coefficients for apartment transactions Building type Model 6 Model 7 Model 8 Model 9 All All Non-designated Non-designated Coefficient (t-value) Coefficient (t-value) Coefficient (t-value) Coefficient (t-value) Independent variables CONSTANT 11.026 (56.41)*** 11.014 (56.37)*** 11.145 (42.88)*** 11.062 (43.19)*** Ln_TOTAL_APT_AREA 0.702 (22.84)*** 0.700 (22.79)*** 0.708 (16.37)*** 0.721 (17.07)*** PARKING 0.116 (4.43)*** 0.126 (5.01)*** 0.123 (4.43)*** 0.128 (4.67)*** ELEVATOR1 0.07 (2.93)*** 0.085 (3.98)*** 0.044 (1.48) 0.056 (2.01)** FLOOR 0.023 (2.93)*** 0.023 (2.92)*** 0.021 (2.26)** 0.019 (2.04)** Ln_UNITS_PER_DUNAM –0.112 (–3.16)*** –0.109 (–3.08)*** –0.154 (–3.46)*** –0.140 (–3.16)*** DESIGNATED –0.025 (–1.15) BUILD_PRESERVED 0.129 (3.14)*** 0.105 (2.80)*** BUILD_RENOVATED 0.022 (0.80) 0.033 (1.15) LOCATION_PEDESTRIAN_STREET 0.08 (3.65)*** 0.075 (3.46)*** 0.074 (2.53)** 0.066 (2.27)** LOCATION_MAIN_ROAD –0.182 (–4.01)*** –0.190 (–4.23)*** –0.213 (–2.25)** –0.212 (–2.24)** BUFFER_DESIGNATED 0.061 (2.27)** 0.057 (2.12)** 0.073 (1.62) YEAR_2001 –0.192 (–5.18)*** –0.199 (–5.41)*** –0.204 (–4.21)*** –0.196 (–4.07)*** YEAR_2006 0.164 (5.52)*** 0.164 (5.54)*** 0.195 (4.84)*** 0.191 (4.78)*** YEAR_2007 0.277 (9.67)*** 0.273 (9.69)*** 0.302 (7.55)*** 0.297 (7.52)*** YEAR_2008 0.389 (14.09)*** 0.393 (14.29)*** 0.371 (11.03)*** 0.362 (10.94)*** YEAR_2009 0.474 (13.20)*** 0.490 (17.88)*** 0.478 (13.10)*** 0.474 (13.20)*** Number of observations 237 237 146 146 F= 121.43 138.52 89.43 102.85 Adjusted R Square 0.891 0.891 0.895 0.894 Note: * ρ < 0.1; ** ρ < 0.05; *** ρ < 0.01. ===== PAGE 10 (score 16, numeric-paren 1, table-words 2, var-words 11) ===== 406 E. Salinger et al. World heritage designation and property: the impact of preservation on the price... the sale of the apartment (BUILD_PRESERVED). Thus, there was a major investment in preserving the building which is much higher compared to a lower investment for the renovation of non-designated buildings prior to the sale of the apartment (BUILD_RENOVATED).3 This re- sult can be explained by the fact that buyers of apartments usually do not have the resources to preserve the building in its entirety; they often will appreciate preservation if the building had already been preserved. An interesting result from Model 6 is that the variable controlling for the physical condition of non-designated buildings (BUILD_RENOVATED) is not significant at the 10% level. This variable was omitted in Model 7 (the step- wise method), implying that the value of an apartment unit in a non-designated building is not explained by the physical condition of the building (whether renovated or not). Two factors may explain this result: first, 39 of 40 non-designated buildings in the sample that were reno- vated have an elevator; and second, 23 out of 40 build- ings offer parking space. Both variables were included in the model with a significant positive impact. These results suggest that the increase in value expressed by these two variables together (23.5% in Model 7) may also reflect the contribution of the renovation to the price of the building. In addition, Model 7 illustrates that the positive ex- ternalities that preservation generates increases the prices of apartments in the urban environment by 6% (BUFF- ER_DESIGNATED). This implies that apartment buyers in the White City generally appreciate locations within a given conservation area, where preservation gener- ates positive externalities (spillover effect). Thus, World Heritage sites may generate a premium on apartments in already preserved buildings as well as on apartments lo- cated near an ensemble of heritage assets. World Heritage could then have a cumulative effect which depends on a concentration of heritage properties in one location. As more buildings are preserved, property values in the ur- ban environment are expected to increase by more than 6%. However, it should be noted that the BUFFER_DES- IGNATED variable was not significant at the 10% level in Model 1 for transactions (sales) of entire buildings. This can imply the existence of separate markets for those who buy entire buildings (i.e., real estate developers) and those purchasing a single apartment. The interpretation of other variables included in Mod- el 7 suggest that a change of 1% in the total apartment area (TOTAL_APT_AREA) affects the price by 0.7%. For example, for an apartment sold in the White City for NIS 2,000,000, if the total area of the apartment increases by 1% (say from 100 sq. m. to 101 sq. m.), then the price of the apartment will amount to NIS 2,014,000. This is in line 3 In Model 6, the premium is calculated as the difference between the coefficient of the two variables (0.129 – 0.022 = 0.107). It is similar to the coefficient of BUILD_PRESERVED in Model 7 (0.105). See also Halvorsen and Palmquist (1980) for the inter- pretation of dummy variables in semi logarithmic equations. In order to calculate the value of the option to demol- ish and rebuild we applied Model 4 and Model 5 only for non-designated buildings. In Model 4 the variable control- ling for development rights (Ln_BUILD_%_USED) was not significant at the 10% level. This variable was omitted in Model 5 (the stepwise method), implying that the value of a building is not explained by its physical attributes. One possible explanation of this result is that all buildings in the sample were in poor/deteriorating physical condi- tion when sold. Moreover, in 40% of cases the highest and best use for the property was to demolish the building and build a new structure, or to remain indifferent about the option of demolition. Thus, the physical component attribute in these cases equals to zero2. We made an out-of-sample prediction where the impact of preservation regulations on property value is calculated as the difference between the actual sale price of the building and its value if it were not earmarked for preservation. This calculation is performed by placing the attributes of the historic building (the independent vari- able values) in Model 5 (non-designated buildings). When the actual sale price is lower than the estimated value of the building if it were not designated for preservation, then there is a decrease in the value of the property owing to the lack of the option to demolish and rebuild. Results suggest that in about 70% of the buildings sampled, the property value calculated in Model 5 is higher than the actual sale price. This implies a decrease in value owing to the lack of the option to demolish and rebuild. The aver- age difference in natural log (Ln) for all 35 buildings sam- pled is 0.21. However, when extreme results of differences (between the actual sale price of the building and the es- timated value if it were not designated) are omitted, the average difference is 0.12, implying a decrease of 12.5% from the actual price of designated buildings because of the lack of the option to demolish and rebuild. For buildings for which no decrease in value was found, the average plot area is 605 sq. m., and the average development rights used (in %) is 164%. For buildings for which a decrease in value was found owing to the lack of option to demolish and rebuild, the average parcel area was higher, 701 square meters, and the development rights used were lower, only 114%. This implies that the lack of the option to demolish and rebuild is most pronounced for designated buildings with a large plot area and limited development rights. As for the results for apartment transactions (see Ta- ble 4), the independent variables that were expected to have an impact on transactions have indeed had the ex- pected negative or positive impact on pricing. Results of Model 6 suggest that, by itself, designation of heritage properties (expressed by the DESIGNATED variable) was not significant at the 10% level. Nevertheless, a premium of 11% on the price of apartments was found in designated buildings, but only if the building was preserved prior to 2 The evaluation was based on real estate appraisers’ practice.