Assessment of the suitability of automated valuation models in commercial real estate valuation

2012 ◽  
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Real Estate Valuation ◽  
Automated Valuation

Capitalisation rates for commercial real estate investment decisions

2015 ◽  
Vol 33 (3) ◽  
pp. 242-255 ◽  
Author(s):  
John McDonald
Keyword(s):  
Real Estate ◽  
Commercial Real Estate ◽  
Office Buildings ◽  
Office Building ◽  
Vacancy Rate ◽  
Recent Past ◽  
Content Type ◽  
Empirical Results ◽  
Real Estate Valuation ◽  
Capitalization Rate

Purpose – The purpose of this paper is to present a basic model of commercial real estate valuation in which the capitalization rate is the critical variable, and to present empirical results for a study of office building capitalization rates. Design/methodology/approach – The model is derived from standard economic and financial theories. The empirical study uses data from the sale of office buildings in 37 downtown markets for 2012. The empirical results are related to concepts of asset market efficiency. Findings – The empirical results show that capitalization rates depend on features of the office buildings, vacancy rate, and recent change in the office building market as captured by the vacancy rate. In other words, investors are using variables implied by standard economic and financial theory and basic economic data from the recent past to determine the capitalization rate. Practical implications – The empirical results show how investors determine capitalization rates for office buildings, so potential investors can gauge the state of a property market. Originality/value – The paper shows that changes in capitalization rates are predictable; investors use past data to adjust their capitalization rates. Furthermore, if an investor does not agree that current trends will continue, then the investment decision should be determined accordingly. For example, if an investor thinks that the future will not be as robust as the recent past, then other investors will bid more than the investor thinks is reasonable. However, if the investor sees a future that is brighter than the recent past, it is time to buy.

scholarly journals ANALYSIS OF INSTALLATION OF MARKET VALUE OF LAND INDUSTRY OF INDUSTRIAL PRODUCTION

2018 ◽  
pp. 88-93
Author(s):  
A.Yu. Palamar ◽  
Ya.V. Osipenko
Keyword(s):  
Real Estate ◽  
Social Life ◽  
Residential Buildings ◽  
Technical Condition ◽  
Commercial Real Estate ◽  
Theory And Practice ◽  
Practical Application ◽  
Distribution Method ◽  
The Real Estate ◽  
Real Estate Valuation

Purpose: 1) to study the concept of wear in the theory of valuation of real estate; 2) analyze the main types of wear and methods of their assessment; 3) to analyze the requirements for the procedure for determining the technical condition of residential buildings when planning and designing repairs; 4) analysis of the reconstruction and technical inventory of the commercial real estate object; 5) in the given example, determine the accumulated depreciation of the real estate by the method of partitioning. Methodology. Many different methods of estimating the value of real estate have been developed, which shows the importance of this task. However, the practical application of existing techniques is problematic. Most of them follow the international practice of evaluation without taking into account the specifics of legislation and the existing conditions of the economic, urban, political and social life of Ukraine. Findings. Thus, the development of the theoretical foundations of real estate valuation, the improvement of its methods, and the implementation of applied research seem rather relevant and practically significant for land management of settlements. Originality consists in the following: the analysis of the best and most efficient use of the land plot; the calculation of the value of the object of valuation by three independent methods of valuation has been made, namely: the method of taking losses into land improvements; income distribution method; the method of comparing the prices of sales of real estate. Practical value. To date, the situation of the domestic assessment school should be considered as being in the period of formation. A large number of modern methodological developments are based on the theory and practice of assessing foreign developments. Many different methods of estimating the value of real estate have been developed, which shows the importance of this task. However, the practical application of existing techniques is problematic. Most of them follow the international practice of evaluation without taking into account the specifics of legislation and the existing conditions of the economic, urban, political and social life of Ukraine. Keywords: estimation, real estate, tax, rent, foreign experience, land market, land payments

scholarly journals Added value of sites suitable for sustainable office development

2021 ◽  
Vol 13 (2) ◽  
pp. 2465-2471
Author(s):  
Josef Kupec
Keyword(s):  
Real Estate ◽  
Free Market ◽  
Market Value ◽  
Commercial Real Estate ◽  
Added Value ◽  
The Real Estate ◽  
Real Estate Valuation ◽  
Valuation Methodology ◽  
The Impact ◽  
Office Development

Abstract Valuations of real estate are widely used for various purposes and it relied always upon the financial and other markets. Valuation methodology is based on the operation of the free market economy and the real estate properties. The issue of certified properties is relatively new in the field of real estate valuation and is not sufficiently explored. Certified buildings are preferred by major corporate tenants with international field of activity who often have ethical rules for sustainable development. Therefore, certified properties are attractive to international commercial real estate investors who have higher purchasing power and are willing to pay a higher purchase price. Sustainable property certification is an element affecting the market value of the property. The purpose of this presented research is to quantify the impact of property certification on the value of office properties in Prague and subsequently to determine the impact of sustainability certificates on the market value of the land by using basic valuation techniques. The outcome of the project could be used by real estate valuation experts as a guideline to consider the future project certification and its impact on the land market value.

scholarly journals The Value of Design in Real Estate Asset Pricing

Buildings ◽  
2020 ◽  
Vol 10 (10) ◽  
pp. 178
Author(s):  
Helena Hang Rong ◽  
Juncheng Yang ◽  
Minkoo Kang ◽  
Andrea Chegut
Keyword(s):  
Real Estate ◽  
Building Design ◽  
Commercial Real Estate ◽  
Price Variation ◽  
Architectural Form ◽  
Price Performance ◽  
Real Estate Valuation ◽  
Form Features ◽  
Real Estate Assets ◽  
Transaction Price

Does design contribute to real estate value? Practicing architects require evidence to justify both functional and aesthetic building needs within the financial ecosystem. Some buildings that become real estate assets are valued using models that consider some proxies for understanding value, but these features are abstract and may misidentify the sub-optimal differentiation that design brings. The lack of feedback between real estate valuation and building design often leads to poor design and economic outcomes. To address this miscommunication, we investigate the transaction price performance of four external architectural form features—diagonality, curvature, setbacks and podiums. Whilst controlling for drivers that are known to explain transaction price variation, we find that diagonality and podiums have a positive pricing differential of 12.4 and 9.7% more than rectilinear control buildings, respectively. Buildings with setbacks have a negative pricing differential of 10%. Furthermore, these results are also consistent for rental valuation. Results suggest that there is a significant economic impact of some architectural form interventions that differentiate commercial buildings and contribute to the role of form in design, planning and commercial real estate.

scholarly journals Automated Valuation Methods through the Cost Approach in a BIM and GIS Integration Framework for Smart City Appraisals

2020 ◽  
Vol 12 (18) ◽  
pp. 7546 ◽  
Author(s):  
Natale Arcuri ◽  
Manuela De Ruggiero ◽  
Francesca Salvo ◽  
Raffaele Zinno
Keyword(s):  
Real Estate ◽  
Information And Communication Technologies ◽  
Valuation Methods ◽  
Information Models ◽  
Real Estate Valuation ◽  
Interesting Possibility ◽  
Building Information ◽  
The One ◽  
Definition Of ◽  
Automated Valuation

The principle behind sustainable city movements is represented by the idea of “good living”, which is the possibility of having solutions and services that allow citizens to live in an easy, simple, and enjoyable way. Policies for urban quality play a central role in the slow cities manifesto, often suggesting the use of Information and Communication Technologies (ITC) in the development of interactive services for citizens. Among these, an interesting possibility is to offer citizens digital real estate consultancy services through the implementation of automated evaluation methods. An automated appraisal action—which is already complex in itself owing to the need to collect data in a consistent, standardized, but also differentiated way so as to require the adoption of real estate due diligence—collides on the operational level with the concrete difficulty of acquiring necessary data, much more so since the reference market is dark, atypical, and viscous. These operational difficulties are deepened by the epistemological nature of the appraisal discipline itself, which bases its methodology on the forecast postulate, recalling the need to objectify as much as possible the evaluation from the perspective of an intersubjective sharing argument. These circumstances have led, on the one hand, to the definition of internationally accepted uniform evaluation rules (IVS, 2017) and, on the other, to the testing of automated valuation methods aimed at returning computer-based appraisals (AVM). Starting from the awareness that real estate valuation refers essentially to information and georeferences, this paper aims to demonstrate how real estate appraisal analysis can be further improved through information technology (IT), directing real estate valuation towards objectivity in compliance with international valuation standards. Particularly, the paper intends to show the potential of combining geographic information systems (GISs) and building information models (BIMs) in automated valuation methods through the depreciated reproduction cost. The paper also proposes a BIM-GIS semi-automatic prototype based on the depreciated reconstruction cost through an experimentation in Rende (Italy).

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