Daniel Shefer and Eyal Salinger
The restrictions and requirements of conservation impose additional costs on private owners; hence, our research hypothesis is that the probability of conserving a building designated for conservation is lower than that of renovating a building not designated for conservation. We test for this hypothesis using the binary Choice Logistic model. Moreover, the restriction prohibiting demolition of buildings designated for conservation decreases property development opportunities, because the option to demolish and rebuild is denied. The research hypothesis in this case is that the theoretical value of buildings designated for conservation, with “no option to demolish and rebuild”, is lower than their actual market price. We test for this hypothesis using the Hedonic Price model and Difference-in-Difference method. The study area is the “White City” of Tel Aviv, which UNESCO inscribed as a world heritage site in July 2003.
Empirical results confirm that the probability of conserving a building designated for conservation is lower than that of renovating a building not designated for conservation; the extent of this probability depends on the characteristics of the building, and it is on average 25% lower. Such attributes that were found to decrease the probability of conserving are: the existence of protected tenants in the building, closed balconies in the frontage of the building (required to be open), and greater number of owners of the building. With regard to the lack of an option to rebuild, we found that the market value of a building designated for conservation but lacking the rebuilding option theoretically decreased by 12.5% on average.