Hedonic price of the built-up area appraisal in the market comparison approach

Abstract

It is known that the buildings show a concrete dependence between their economic value and the area where they are located. The impact of the area on the formation of the value of the properties takes place through a series of factors which play a fundamental role on the degree of attractiveness of the properties themselves. With reference to an economically indivisible property, consisting of the built-up area and the building, the building component can generally be traced back to an industrial process and be considered free from the influence of the specific location; otherwise the part subject to the positional advantage is certainly the built-up area. The retractable advantage from a favorable position is only an effect of the urban rent characterizing the soils. The essay, through an excursus on the various theories related to rent, offers a review of the characteristics involved in defining the value of building land. The importance of the topic dealt with is connected to the fact that the study of the location impact on the value of the soils could make up for the endemic difficulty of the evaluation process connected to the lack of information typical of a rarefied and fragmented market such as the urban soil market. In fact, this contribution aims to propose an operational methodology to evaluate the marginal price of the built-up areas in the Market Comparison Approach (MCA) through the use of an index capable to express the incidence of the specific area on the property value. The idea was born from the observation that in consolidated urban fabrics, i.e. saturated fabrics in which there is no residual building potential, it is not easy to evaluate the value of the built-up areas. This is due to the shortage conditions of the building soils in these specific fabrics, since the value of the built-up areas must pass through the value of the building areas, as well as the opacity and fragmentation of the land market.