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Table 1. Various Imp ac ts of Urban Conservat ion

Impacts

Tang ible/

Intangible Values

Direct Indirect

Economic • Create jobs – contractor, labour, tourist guide, hawkers,

etc.• Increa se p roperty va lue• Increase rental increases

• Boost tourism• Ince ntives from go vernment

• Increase p ersonal/a ggrega te o f incom e/ GDP

•

Increa se ta x• Decrease d evelopment co st• Decrease fund for basic infrastructure

• Sprea d b enefits over neighbo urhood (e .g. property

value increase)

Soc io-cultural • Consolidate/create sense of community

• Conserve know ledg e and skill• Raise awa reness of history c ont inuity• Raise a pp reciation of he ritag e b uildings

• Increa se p op ulation

• More d iverse c omm unity

Physical/man-madeenvironment

•

Imp rove/ upg rade infrastructure• New ima ge afte r revitalized , refurbish and ma intenanc e

• Efficient use of the city spaces• Existing housing/commercial stocks (no need to build

new)

•

Less po llution (pe de strian oriented de velopm ent)• Less urba n spraw l

• Deter future p ote ntial investment return• Not flexible for incorporation of mod ern infrastruct ure

Politics • Stric t po lic y build ing co des and p lanning p ermission

deter modern development• Provide incentives/levy

• More regenerations• Less development in historic urban areas

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Nor'Aini Yusof et al.

From Table 2, we c an c onc lude tha t there is no

standard method to determine the actual value of

heritage property as a tool to measure the impact of

conservation. As such, the selection of a suitable method

for measuring the impact of conservation in Georgetown

must also consider the objectives of the study and the

types of d ata tha t a re a va ilab le. This paper presents on

analysis of property transaction data and price trends as

one m ethod to unde rstand such imp ac ts.

RESEARCH METHODOLOGY

We developed an all-encompassing model to evaluate

the effects of variables on the values of heritage

prop erties. Our stud y a rea is the inner c ity o f Ge orge tow n,shown in Figure 1. We used a combination of qualitative

and quantitative research methods, to analyse the

patterns and trends of property transactions and values

over time which will lead into determining the impact of

c onservation on real esta te m arket. In orde r to ana lyse the

pa tterns and t rend s of p rop erty transac tion and va lues, we

c ollec ted trend da ta for a p eriod of 30 years from the yea r

1960 to 2004. These a re the data tha t were a va ilab le a t the

time of analysis. Furthermore the data cover theintroduction of conservation policies and also the rent

co ntrol act.

The original grid layout of

G eo r e to wn

The original grid layout of

Georgetown

Georgetown 1

Georgetown 2

Figure 1. Stud y a rea – The inner city o f Ge orge tow n

We c ollec ted two m a in type s of d a ta for this ana lysis.

First, data on policy implementation was gathered from

Malaysian laws, government publications such as structureplans, and the Bank Nega ra annua l rep orts. The polic ies

collected include conservation-related acts and the

government development policies, strategies and

Georgetown 3

50/ PENERBITUNIVERSITI SAINS MALAYSIA

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Urban Conservation as a Develop ment Strateg y

guidelines from 1960 to 2004. In addition, we also collected

information on socio-economic, political and cultural

changes for the same time fram e. Sec ond , da ta o n

property transactions were collected in digital form from

the Pena ng Sta te Valuation a nd Prop erty Servic es

Department (Jabatan Penilaian dan Perkhidmatan Harta,

JPPH). The files c onta in some 35,000 rec ord s of p rop erty

transactions on Penang Island which were assessed by

JPPH Penang from 1998 to 2005 for the Inland Revenue

Board (IRB) to facilitate collection of property taxes. Data

prior to 1998 were obtained from the Annual Property

Market Reports published by the same department.

Records of transactions between developers and first

buyers and of transactions that were exempted from

sta mp duty are not include d in this da ta set.

The raw da ta from JPPH Pena ng wa s sub jec ted to

extensive checking and management by this research

team to create a data set suitable for this study. Problems

encountered include inaccuracy of data, missing or

incomplete data and typographical errors but this

c om prised only a ve ry sma ll portion of the d a ta .

We have analysed the count of transactions and

transaction values according to the types of properties.Descriptive statistical analysis using frequencies, average,

highest a nd low est va lues we re used to analyse the trends.

The results we re then fed into time line c ha rts to identify

prop erty and polic y trend s in the stud y area .

IMPACT OF POLICIES ON REAL ESTATE MARKET

Despite of the numerous problems encountered with the

data, we found it to be the most reliable and after

c onsiderab le c lea ning , it rem a in the mo st com p lete source

on the rea l esta te ma rket in George tow n. We therefore

used it to analyse the heritage property market for our

study area. We assumed that these data provide a

reasonable representation of the impact of designating

structures as heritage buildings once such a designation is

in plac e.

Figure 2 shows the count of transactions of heritage

prop erties within the stud y a rea (1974–2004). We ha ve a lso

c harted c onservation relate d po lic ies and ma jor eco nomic

changes onto the figure. Major conservation related

policies a re like The Co ntrol of Rent Ac t 1966, 21st C entury

Pena ng Strateg ic Plan and t he d esigna tion of five

c onservation zone s in Ge orge tow n.


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Figure 2. Coun t o f Transac tions of Herita ge Prop erties within the Stud y Area (1974–2004)

0

10

20

30

40

50

60

70

1 9 7 4

1 9 8 0

1 9 8 1

1 9 8 2

1 9 8 3

1 9 8 4

1 9 8 5

1 9 8 6

1 9 8 7

1 9 8 8

1 9 8 9

1 9 9 0

1 9 9 1

1 9 9 2

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

Year

Count

HERITAGE OFFICE HERITAGE HOUSE HERITAGE SHOP HERITAGE SHOPHOUSE

Designation of 5

Conservation Zones (1987)

21st Century

Penang Strategic

Plan (1991)

Rep ea l & A bo lishment

of Rent C ontrol Act

(1997 and 1999)

The Pena ng

Preserva tion a nd

Heritage Policy

(1996)

Source : Depa rtment of Va luation and Property Service s

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the average price at RM4,000 per m 2 tha t yea r. This

increased was coincided with the Penang Preservation

and Herita ge Policy which w as formula ted in 1996. The

formulation of the policy may have encouraged investors

Minimum

Maximum

Average

0

1000

2000

3000

4000

5000

6000

7000

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Year

P r i c e ( R M / m 2 / U n i t )

Figure 3. The Pric es of Two -storey Pre-war Shophouses in the Stud y A rea with Vac ant PossesionSource : Com puted from Prop erty Ma rket Repo rt 1980–2002, DVPS


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0

500

1000

1500

2000

25003000

35004000

4500

5000

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Year

P r i c e ( R M / m 2

/ U n i t )

Pric e (RM/ m2) Pre-wa r Shophouse Pric e (RM/ m2) Post-war Shophouse

Figure 4. The Pric es Betwe en Two -storey Pre-wa r and Two -storey Post-war Shophouse in G eo rgetown

Source : Com pu ted from Prope rty Market Repo rt 1980–2002, DVPS

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pre-wa r shop houses wa s ma intained until 1996. Due to the

limited quantity of the pre-war shophouses, the buyers

shifted their interest to the post-war shophouses (ibid.,

1996).


In 1997, the prices of pre-war shophouses in the

c entral b usiness d istric t o f Geo rge tow n increa sed ove r the

prospect of securing vacant possession within two years'time d ue to the rep ea l of the Rent C ontrol Act 1966. The

price ranged from RM750,000 to RM850,000 for units with

va c ant p ossesion in the George tow n (ibid., 1997).

Between 1998 to 2001, the performance of property

ma rket wa s a ffec ted by ec ono mic c risis. The reta il prope rty

market lacked the luster of the 1997 performance. In

addition, the price of pre-war units was lower than post-war units because of the oversupply of pre-war units as a

result of the repeal of the Rent Control Act in 2000.

Ac c ording to the Prop erty Market Rep ort (2001), the p ric es

of pre-war shophouses dropped by up to 10% in

Georgetown due to the substantial supply of these units

be ing d ec ontrolled following the rep ea l of the Rent Co ntrol

Act. Many of these shops were still vacant after being

vacated by the previous statutory tenants.

Afte r 2001, the p rice of p re-wa r shophouses increa sed

higher than post-war. Interestingly, the prices of pre-war

shophouses show an upward trend. Pre-war shophouses

were said to be attracting small specialize businesses such

as professional firms, travel agency, money changes, etc.

mo ving into the c ity c ent re. This is in c ontrast with the p ric e

trend of p ost-war shop s, which saw a noticea b le fall. The

interest and competition from the large supply of pre-warshops in central business district are said to be the main

rea sons for the d ow nwa rd trend. Further evidenc e from the

Property Market Report (2002) shows that the transaction

volume for post-war shophouses in Georgetown has

dropp ed , com pa red to the p revious years.

Contrary pop ular be lief that the Rent Co ntrol Act had

badly affected the property market in Georgetown, theanalysis above suggest that pre-war shophouses enjoyed

active transactions. After the act was introduced , the

transactions count and the price of pre-war shophouses

continued to rise, especially from 1988 to 1997. After the

repeal, despite of the over supply, the prices of pre-war

shophouses were still on the rise.

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CONCLUSION

Our findings concur with the researches conducted in

various parts of the world which found a positive relation

be twee n c onservation p olic y and prope rty value. Two

observations can be made from this study. First, even

though there was fluctuation in the transactions count and

the price of the pre-war shophouses, the market was ableto sustain its previous high price and enjoyed an upward

trend . Sec ond , there w as no c lea r evidenc e tha t the

market for pre-war shophouses was affected by the Rent

Co ntrol Ac t. The o verall trend of p ric es for the p ost-wa r and

the pre-war shophouses was almost the same with 10%

variations in both upward and downward observed for

c ertain yea rs.

This stud y indica tes tha t urba n c onserva tion ha s a

potential to be a viable real estate development strategy

because even with conservation policies in place, the

dem and for old b uild ings in the c onservation zone s has not

d iminished . This c an be see n by rela tively high transa c tions

c ount a nd high p ric e of herita ge p rop erties. Suc h ac tivity

augurs well for the real estate market and may eventually

contribute to the success of the efforts being made to

revitalize the inner c ity of G eo rge tow n.

ACKNOWLEDGEMENTS

We would like to thank the National Property Research

Coordinator (NAPREC) and National Institute of Valuation

(INSPEN) fo r fund ing this research, the Penang Sta te

Valua tion a nd Property Services Dep artment (JPPH

Pena ng), the Dep artme nt of Tow n Planning and Valuation

of Municipal Council of Penang Island, MPPP for their helpand feedback to the authors, and Mr. Leslie, J.F. for his

insightful comments.

Parts of this paper was first presented at the

Interna tiona l Rea l Esta te Research Symposium (IRERS) –

Meeting New Challengers in the Changing Real Estate

Environm ent a t the PWTC, Kua la Lump ur, Malaysia, 11–13

Ap ril 2006.

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