**1. Introduction**

To meet the sustainability agenda of urbanisation in the process of smart and sustainable urban development, there has been a certain consensus that, compared with new buildings, the protection and transformation of old buildings have been generally accepted, due to either social effects or environmental benefits [1]. In terms of the environment, renovating building materials of old buildings can reduce the pressure on energy consumption. By recycling existing materials, which can reduce carbon emissions, the impact on climate change can be reduced [1,2]. On the other hand, from a social perspective, old building protection projects can maintain social continuity and protect buildings that have been in disrepair for a long time [3].

However, given the insufficient awareness about the protection of historical buildings and facing a shortage of urban land, in numerous densely populated countries and regions, particularly in the fast-growing East Asia regions, historical buildings are demolished to meet various development needs. This practice is pervasive in many cities that are in the initial stage of economic development. For example, after the Second World War, Japan's large-scale urbanisation development resulted in the arbitrary destruction and demolition of many ancient buildings [4]. In the 1950s, the ancient walls of Beijing were demolished on a large scale [5]. Moreover, at the beginning of this century, Lee Tung Street in Hong Kong was demolished and rebuilt by the government as a pedestrian shopping street without any distinctive local style [6]. The continuous growth of modern cities is gradually compressing

**Citation:** Guo, N.; Chan, E.H.W.; Yung, E.H.K. Alternative Governance Model for Historical Building Conservation in China: From Property Rights Perspective. *Sustainability* **2021**, *13*, 203. https://doi.org/10.3390/su13010203

Received: 6 November 2020 Accepted: 24 December 2020 Published: 28 December 2020

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the space of historical buildings. As such buildings are demolished, a city's features and its people's sense of identity in terms of culture are disappearing. Historical buildings are under many threats in many historic cities, including rapid urbanisation, an increasing housing demand, and socio-cultural and climate changes [7,8]. From the perspective of sustainable development, the adaptive reuse of historical buildings can play a decisive role not only in terms of heritage conservation, but also as an urban strategy capable of contributing to environmental protection and generating new economic, cultural, and social values [9,10].

In recent years, an increasing number of successful adaptive reuse projects have given the government confidence, and policy makers are also trying to apply this method more to protect historical buildings and blocks [11]. However, there are numerous cases of obstacles caused by unknown ownership and property rights, which seriously hinder the construction of smart and sustainable urban development. Specifically, unclear property rights can neither deter the destruction of important historical buildings nor effectively protect existing ones [12]. On the one hand, the government experiences difficulties paying high amounts of money for repairs. On the other hand, the excessive use of such historically valuable buildings with existing conditions may devastate numerous households. The government has encouraged the public to participate in adaptive reuse projects, which is an important measure for achieving sustainable urban development [13], but chaotic property rights, particularly as a legacy of transition from state-ownership property in China, seriously hinder the transformation of these buildings by developers. Incidents such as demolitions and violence against demolitions have occurred owing to mistrust among the government, residents, and developers [14,15]. Meanwhile, residents who do not cooperate in demolitions waste time and increase the cost of reconstruction projects [16,17]. Property rights issues hinder the renovation of old buildings, making sustainable urban development difficult to pursue. Such problems are particularly serious in developing countries such as China, which has transformed from a centrally planned to a market economy. Ancient buildings with rich historical and artistic value have become a sweet burden in the urbanisation of a city.

This study selected the most representative case, namely, the Pingjiang Historic Block in China, as the research test bed. An on-site field investigation was conducted in this district. A total of 63 historical buildings have been, are being, or are about to be transformed in this area. By examining these historical buildings, this study analyses the influence of the complex property rights structure on the protection and redevelopment of historical buildings. The problems in this test bed case are typical of numerous other historic cities in China and worldwide. Based on the Coase Theorem, the authors combined the reality and difficulties of historical building protection to establish an operational governance model founded on property rights. Therefore, the findings can provide a feasible operational model that can solve the primary problem in sustainable urban development and be applied to similar historical buildings in China and other countries during the smart and sustainable urban development process. The result may provide policy makers with measures to solve urbanisation challenges, such as the inadequacy of urban conservation management and sustainable development policies, dilemma in balancing public and private rights, the lack of resources amongst decision makers, and persistent conflict and competition between heritage conservation needs and developers' interests [7].
