Manuela De Ruggiero

This study concerns the analytical formulation and relative implications of bottom value (BV) and mortgage lending value (MLV) regarding properties where the existing building provides an income during its useful life, leaving thereafter only the land value. The bottom value is equal to the overall property’s market value minus all incomes not collected by the end of the building’s economic life. Furthermore, it considers the income rates for land and buildings differently according to the investment type, while the mortgage lending value considers, instead, a unique rate. The mortgage lending value assessment is conducted under restrictive assumptions on long-term aspects, future marketability, and local market conditions. For the first time, mathematical and appraisal models have been applied to determine the mortgage lending value and the bottom value in particular cases, such as that mentioned above and considered in the present study (existing buildings providing income during their useful life). Some of the indexes introduced in the paper are completely original with respect to the current reference literature.

From the perspective of building health monitoring and property management, this research proposes some parametric measures of the capitalization rate, in order to define a range of significant values to be used in a cash flow analysis intended for monetary evaluation in partial building damage assessment. If criteria and methods for appraising partial damage to buildings are widely shared in the scientific and professional communities, the identification of the most appropriate capitalization rate is rather more controversial, and certainly more complex. The proposed approach borrows the logical principles of cash flow analysis based on the yield capitalization approach, considering both recovery costs and loss of incomes when building partial damage occurs. The procedure is a differential valuation that considers a situation before and a situation after the damage, basing on the cost approach and the income approach. In particular, two distinct conditions are considered: the case of recovery interventions and that of improvement.

The age of the Italian building heritage has prompted the Government to implement regulatory measures aimed at mitigating the seismic risk, encouraging anti-seismic interventions on residential buildings through specific tax benefits. This work intends to analyze the economic convenience associated with these building transformations from an appraisal perspective, proposing an analysis methodology aimed at evaluating the increase in market value of the transformed properties, and at identifying the most convenient among the various feasible interventions. The application to a case study allows highlighting the net economic benefits in the owners’ portfolios able to compensate the logistical inconveniences associated with this type of intervention, soliciting a greater awareness of seismic risk, and favoring private initiative at a widespread level.

Cultural, environmental and religious resources are a repository of values participating in the process of recognizing the environmental semantic roots. The presence and use of these resources transform an anonymous place into a place of art, contemplation, meeting and cultural exchange; they contribute to psychological well-being, to the realization of social equity and to the economic development by attracting new investments and strengthening existing ones. Ecclesiastical goods represent a conspicuous part, in terms of quantity and quality, of the historical and artistic heritage. Religious heritage is also an economic asset, having the characteristics of utility, usability and limited availability that distinguish economic assets (increasingly rare) from non-economic and natural ones. The ecclesiastical cultural heritage, given its widespread distribution, is certainly a testimony, like other cultural heritage, of history, civilization and culture of a country, but at the same time also of people religiosity as used for liturgical or devotionals purposes. Given the particular nature of these assets, the valuation approach aimed at their appraisal is also particular and targeted. This contribution aims to increase knowledge about the evaluation of ecclesiastical cultural heritage, for which at present there is still a few attention, due to its marked atypical nature, uniqueness and complexity.

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).

Purpose: In this research a model for the rationalization of the assessment in a rent to buy contract has been proposed, in order to contextualize the economic amounts involved in the negotiation according to the specific market risk of the area where the property is located. The paper aims to discuss this issue.Design/methodology/approach: The model borrows the logical principles of operational research, in order to take into account the convenience constraints of the parties involved (seller and buyer) and to determine the minimum amount of the additional annual rent to be charged as down payment on the final sale price, compensating the investment risk. The procedure proposed for the risk assessment combines the discrete modeling of real option analysis and the exponentially weighted moving average method, in order to weigh appropriately the data available for the specific area in the analysis.Findings: Considering the limit conditions of variability of the property market value at the time provided for the notarial deed, the proposed model returns two values (minimum and maximum) for a fixed contract duration and for a specific market area for the annual additional rent, which define the reference range to ensure the compliance with the convenience constraints of the parties involved.Practical implications: In order to test the reliability of the developed methodology, the model has been implemented to the 24 “microzones” defined by the Italian Revenue Agency for the city of Bari (Southern Italy). The results obtained were then georeferenced, in order to create thematic maps of convenience for the subjects interested in the rent to buy formula. The developed maps define a useful support to be consulted in the negotiation phase between the seller and the buyer, allowing both to verify the investment conveniences within the limits of their disposable incomes and their needs.Originality/value: The tabulated values of the down-payment amounts and the related thematic maps constitute a valid support for both the parties in the initial negotiation phase of the contractual conditions: in fact, if comparable data for the assessment of the market value and the market rent at the time of the stipulation of the contract are ordinarily available, the increase in the rent, to be charged as the annual down payment on the final purchase price, is generally entrusted to the contractual capabilities of the subjects involved, since there is no market reference that can direct an appropriate assessment.

Purpose: The purpose of this paper is to develop an innovative model that can be included within the market approach methods for property valuations. The algorithm takes into account the frequent high level of dissimilarity of the comparables selected for the assessment, thus providing for the use of appropriate similarity and reliability coefficients capable of weighing the data of the comparison sample with respect to the different degrees of similarity and reliability. Design/methodology/approach: The proposed model borrows the operative logics of the goal programming techniques, in order to identify the solution, the market value of the subject property and the implicit prices of the different influencing factors, since they are more reliable from the mathematical and empirical points of view. Findings: The model has been applied to two case studies, relating to samples of residential properties located in the city of Naples (Southern Italy). The results obtained have outlined the high valuation performance of the developed appraisal model, capable of overcoming the applicability limits of classical market approach methods as well as providing solutions that are highly consistent with the expected empirical phenomena. Practical implications: The research takes into account the growing need of both professionals and end users (banks, courts, public and private Entities, etc.) for valuation models that are easily repeatable and sufficiently objective. They are required in order to allow for the rapid verification of the elaborations carried out as well as to check the valuer’s appreciation of the contribution of the influencing factors in the market price formation. The outputs of the two applications developed have highlighted the ability of the proposed model to satisfy these market requests. Originality/value: The proposed model can be easily implemented through a simple calculation program, with the mathematical structure elaborated allowing to overcome some application limits of the classical market approach methods. Furthermore, the introduction in the algorithm of appropriate similarity and reliability coefficients, capable of suitably weighting the data of the comparison sample, allows to widen the spatial horizon for the identification of the comparables as well as select properties characterized by a high level of dissimilarity. This makes it possible to apply the model in territorial contexts characterized by markets that are not excessively dynamic.