In recent years, street art has attracted the attention of governments because it plays an important role in preserving the cultural and social values of a city. Liang [1] claims that cities such as New York, Bristol, and Berlin allow artwork on the walls of public and private buildings. Street art is used to convey cultural information about the city to the public. George Town was officially recognized as one of the World Heritage Cities by UNESCO in 2008. As a result, the Penang state government also promoted street art projects between 2009 and 2012 to shape the city’s cultural identity. Therefore, street art is highlighted as one of the cultural elements that cannot be neglected in heritage cities. Street art and heritage city are comparable in terms of promoting tourism activities, especially in George Town. Street art is a form of cultural innovation in transforming public spaces for the purpose of urban regeneration. Since 2012, street art in George Town has been well received and has become an attraction for tourists who not only visit the city’s valuable historic buildings and cultural landscape.

Street art not only enhances the uniqueness of the landmarked city, but also ensures that customer traffic flows near the street art. As a result, prewar commercial buildings have become more visible from areas concentrated by street art. In theory, a visible property has a greater advantage in promoting business and results in higher sales revenue. Businesses that rely on visibility include restaurants, cafes, hotels, retail stores, etc. However, there is a lack of empirical studies to investigate how street art affects the price change of prewar commercial buildings. In the literature, most of the previous studies focus on the intangible value of street art to the city and society, for example, the social value or the cultural value. In addition to the intangible value of street art, it is also important to study the impact of street art on the price premium of prewar houses. The elements that contribute to the price change of prewar shophouses are important to the public and real estate professionals because they would influence decision-making in real estate valuation and investment. This study is critical to examining the economic value of street art before the current street art model in George Town can be applied to other historic cities. In addition to the cultural perspective of street art, it is also important to ensure that landlords’ interests are protected as the mural or sculpture is painted or installed on their properties. The landlord hopes that the street art will not negatively affect their property, especially the property value.

Public art is defined as permanent or temporary works of art outside conventional institutions such as museums and galleries [2]. Yan et al. [3] also mentioned that public art includes various forms, including sculptures, statues, architecture, installations, and murals. Street art is a subset of public art that includes graffiti and non-commercial murals to enhance community tourism [4].

However, street art could be called graffiti or guerrilla art if it is not approved by the government. Baumgarth and Wieker [5] claim that graffiti is perceived as vandalism in public places in Europe or the United States [6]. Graffiti vandalism is a crime in the United States, punishable by imprisonment, a fine, or community service [7]. Unlike graffiti, commissioned street art requires the consent of the property owner and local authorities. This type of street art usually remains untouched/unchanged and therefore has a positive effect on the cityscape. According to Tarihi, Kızılkan, and Ocakç [8], street art commissioned by local authorities has enhanced and enriched physical and social spaces. As the public appreciates street art as part of the community in the city, the aesthetic value is created and converted into economic value in the form of promoting tourism activities [9].

A historical town carries collective social experience and memory which recognizes the nature of different cultures and places. Past beliefs and values are the elements contributing to the uniqueness of the historical building. They express the particular culture and reflection of national identity. The social value provides spiritual and traditional linkages between the past and present, together with the essential community function that develops into an attachment [10].

Cercleux [11] conducted a study to investigate the impact of street art in making culture and heritage visible in cities. The results showed that street art in the context of a grey image of socialist blocks brings a promotion for tourism, especially for those places in the city centre. Compared to graffiti, street art allows a clearer and more meaningful message about culture, history, and heritage. TCC [12] also claimed that the city government promotes public art for cultural tourism to reactivate the low-rise Central Business District (CBD) with its heritage buildings. Williams [13] mentioned that UNESCO has started to consider street art as one of the cultural heritage objects that are evaluated under the value-based approach. In recent years, street art has gained more attention in the cultural landscape. This phenomenon may be related to the fact that the expectations of cultural heritage sites are changing from the past to the present generation [14]. According to other relevant studies [11,15,16,17,18], street art seems to harmonize well with heritage sites in promoting cultural identity.

In 2009, the Penang State Government initiated the “Marking George Town” project to make George Town a UNESCO World Heritage Site. This project aims to tell the history of the streets and the stories of the communities of George Town through the steel bar sculptures with a local voice. There were 52 steel rod sculptures deciphered and placed in each street to explain the history of past events in George Town. In addition, the mural is part of the street art projects in George Town. It was launched in 2012 under the theme “Mirrors George Town”. The six murals were designed by the famous artist Ernest Zacharevic. The murals not only have a high artistic value, but also convey some messages about the phenomenon or culture of a city. Before 2012, there were hardly any murals or sculptures and now they are a feature of George Town [19]. Some examples of steel bar sculptures and murals are shown in Figure 1 and Figure 2.

As Liang [1] claims, street art is part of George Town’s cultural landmark, and many tourists are interested in posing with the murals and uploading their photos to social media to prove that they were there. Tourists have also responded well to the street art, which adds appropriate meaning and local cultural flair to the area. However, according to Sadatiseyedmahalleh et al. [22], street art made of steel bars (sculptures) is far more practical compared to murals when it comes to maintaining its quality in the long run. The quality of murals deteriorates over time because they are exposed to a large volume of rainfall every year in George Town and are also frequently touched by the people who photograph them.

The natural environment or cultural heritage creates good feelings or experiences for the visualization of real estate buyers. There is also the possibility of improving psycho-logical well-being, artistic aspiration, and ecological literacy. As Spennemann [23] points out, cultural heritage also contributes to the mental health and well-being of individuals and the community as a whole. Although the value of amenities is intangible, it will be reflected in the price premium of goods such as real estate. Many previous studies examined the relationship between environmental amenities and real estate prices using a hedonic approach [24,25,26]. One of the studies conducted by Gibbon et al. [26] demonstrated the direct relationship between house prices and natural amenities such as rivers, national parks, and national trusts.

Corrigan and Egan [27] claimed that the value of aesthetic quality can be measured by house prices. For example, homebuyers are willing to pay a premium for a home near a water resource with high aesthetic quality. Ahlfeldt and Mastro [28] found that residential buildings designed by famous architects have a positive effect on real estate prices. For example, the houses located within 50 m of the buildings receive a premium of 8.5% compared to the houses located farther away. Fu et al. [29] also investigated the correlation between environmental features and house prices. The results showed that both green space and perception of the sky add a price premium of 0.2273% and 0.0899%, respectively. Wen, Zhang, and Zhang [30] came to a similar conclusion. Their study showed that the Qiantang River, its proximity to the lake, proximity to the mountains, and proximity to the river significantly promoted the prices of houses in the surrounding area.

Moro et al. [31] pointed out that the premium created by a historic building decreased from 20–24% to 13–15% for properties within a radius of 500 m to 2.5 km. This result is also confirmed by Wright and Eppink [32], who found that historic buildings have a higher value in areas with higher population density. Jayantha and Yung [33] studied the impact of the revitalization of historic sites. Their study found that it had a positive impact on retail properties. The price of retail real estate was inversely related to the distance from the historic site. Andersson, Kopsch, and Palm [34] claimed that homes near buildings with a high cultural value would sell at a 1% premium. Bade et al. [35] also found that for each cultural monument or landmark within 50 m, 100 m, and 200 m of a house, there was a price premium of 1.7%, 1.4%, and 0.5%, respectively.

Most previous studies have examined the effects of environmental, natural, cultural, and heritage reputation on real estate (housing) prices. Although many studies mention the importance of street art in a heritage setting in terms of promoting cultural identity, they lack clear evidence on how the amenity value of street art can translate into the price premium of prewar shophouses. For example, they focused on how street art can promote tourism and cultural identity without addressing the impact on property prices, especially in heritage sites such as George Town in Penang. As mentioned by Yang et al. [36], increasing tourist traffic is a positive signal for the increase in retail property prices. Therefore, a price premium for street art in prewar shophouses is a form of tangible value that can be measured for decision-making by policymakers and real estate professionals. Policymakers can decide whether to preserve street art in historic buildings based on monetary value. This hypothesis was formulated based on the previous literature. For example, the phenomenon of street art in the city of Turin showed a 25–30% increase in property value [37]. Homeowners in the UK would pay 5–30% more for a property that has artwork by the famous graffiti artist Bansky [38]. However, the percentage given is based only on a simple survey and calculation. Williams [13] points out that street art is becoming more popular and that UNESCO has considered it as part of the cultural heritage. It is one of the value-adding elements of cultural heritage by connecting people to places and promoting social cohesion. Therefore, real estate investors might pay a price premium to buy listed prewar shophouses with more street art in exchange for a location with a strong cultural image.