Conference Paper
The Impact of Garden-to-Building Conversion on Residential Property Price
No.
ERF32AC_167
Publisher
ERF
Date
May, 2026
Topic
D. Microeconomics
Urban land-use regulations often balance environmental preservation with economic development, yet empirical evidence on their spillover effects remains limited, particularly in developing contexts. Since 2004, Tehran’s municipal council has regulated construction on private gardens through two key policies: the Tower-Garden Act (2004–2017) and the House-Garden Act (2019–present). While officially intended to preserve urban greenery and generate municipal revenues, these regulations often accelerated garden destruction and dense construction. Using a difference-in-differences framework applied to granular property transaction data from 2010 to 2019, linked with garden permit records at the 5-digit postal zone level, we find that garden destruction and redevelopment significantly capitalize into higher adjacent property prices. A one-hectare increase in destroyed garden area over a three-year horizon raises neighboring property values by approximately 2.9%, with long-term effects up to 4.7%. After controlling for local amenities and time trends, the effect attenuates to 1.4% but remains positive and statistically significant. Heterogeneity analyses reveal stronger positive effects in lower-income neighborhoods and for smaller gardens, suggesting that private gardens may function more as disamenities (e.g., due to neglect and insecurity) than amenities in certain contexts. These findings highlight the unintended consequences of permissive land-use policies in rapidly urbanizing cities, where economic incentives for redevelopment often outweigh environmental goals. Our study contributes novel evidence on private green space externalities, informing urban policy debates in land-scarce environments.