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This book documents the state of the art and the emerging operational perspectives in the field of the appraisal discipline. It covers a wide range of topics, including energy efficiency, environmental sustainability, socio-economic evaluation of regional and urban transformations, real estate and facility management, risk management. It also discusses the potential role of appraisal in minimising unexpected consequences; the role of evaluators in urban development projects as well as the contribution of several methodologies with respect to the overall planning and design processes; the need to manage the complexity of the current decision contexts, while at the same time promoting efficient and effective evaluation processes; improving the quality of discussion and communication of the outcomes of evaluation processes; as well as the appropriateness of current regulation and policy regimes (EU, national, regional etc.). It comprises a selection of the best papers presented at the SIEV 2015 conference "Appraisal: Current Issues and Problems", which was held in Bari, Italy, in July 2015, and brought together architects, engineers, urban planners, decision-makers and government representatives.



The True Value. On Understanding Something

This contribution focuses on some issues of the evaluation discipline that, because of their generality, concern the practice of the value judgment. The value judgment, as it coordinates evidences, inferences and decisions, deals with epistemological, logical and ethical matters; therefore it connects knowledge with responsibility—personal and social—upon the allocation of the real rights and the transformation of the city and the territory which depend on the result of the evaluation. The value judgment mainly connects a factual realm with a value realm. The connection between these two spheres bases on argumentations concerning: the description of the characteristics of the economic goods involved, the definition of a causal relationship between these characteristics and their market appreciation, expressed by price; the placement of the good inside this relationship according to the described characteristics. This contribution discusses the elements of truth of this model, that in certain cases is very weak in epistemological and in logical terms as well, trying to stress the difference between “science of the valuations” and “estimation”, therefore between a science of the interpretation of the values and a technique of simple observation and elicitations of occurrences by means of statistics procedures independent from the observer. In this sense it tries to compare some aspects of the theory of truth to the main elements of the theory of value we generally apply, but not always with full awareness. The contribution constitutes the initial part of a more extensive research. It analyzes some aspects of the relation between truth and value and highlights, on the grounds of the articulations of the problem of the trueness and the nature of the evaluative statement, some relevant operative issues of the discipline.
Salvatore Giuffrida

Appraisal of Manufacturing Buildings Through the Depreciated Replacement Cost Approach

It is well-known that the persisting crisis of the real estate market, in the wake of the large-scale financial and economic crisis starting from the year 2008, is leading to diminishing property values. An earlier and more pronounced effect lies in the lower number of transactions resulting in the scarcity of sales that characterizes several sub-markets, including the one concerning the manufacturing buildings. Within the real-estate appraisal discipline, the aforementioned framework entails growing difficulties—if not even the inability—to find an appropriate number of so-called comparables, to implement the market-value estimation process. This condition involves the need to identify alternative estimation procedures. Some specific features of manufacturing buildings pave the way to the adoption of the Depreciated Replacement Cost method. Indeed, due to the evolution of the construction techniques, the old factory buildings are frequently classed as ‘out of production’. Meanwhile, the poor market conditions make them prone to be treated as out of the market. The depreciated replacement cost procedure has been debated occasionally within the literature, both national and international. Nonetheless, its application still deserves further research due to the fact that it entails several relevant issues. This study focuses on three of them. The first concerns the estimation of the useful life and the residual life of the buildings characterized by heterogeneous structures, finishes, and installations, due to their realization or replacement during different time periods. The second topic refers to the distinction between land value and improvement value. Finally, the third issue relates to the relationships among the results of the estimation procedure, the real-estate appraisal discipline as a whole, and the accounting principles, on which companies’ balance sheets rely.
Sergio Copiello, Valentina Cosmi, Stefano Stanghellini

Do Real Estate Cycles Exist and, if so, Are They Predictable?

A straightforward answer to the question comes from Lee’s paper entitled “Real Estate Cycles: They Exist… and Are Predictable” (2011). However, this essay intends to be critical, thus it investigates the various schools of thought on property cycles aiming at determining if they exist and, in the case of positive evidence, if they are predictable. The paper is divided into five sections: the introduction, a general definition of cycles, an analysis of the two opposite academic views on cycle existence, an overview on real estate forecasts, including techniques, evaluation of methods and challenges, and a final section where the findings are summarized and a conclusion is drawn.
Francesca Leccis

The Mass Appraisal Tool: Application of a Pluri-Parametric Model for the Appraisal of Real Properties

Over the past few years, mass appraisals have been the center of attention within the national and international real-estate valuation context. The reason for this growing interest is mainly due to the increasing relevance of real estate within the global economy and the need for assessment tools that can support asset management and enhancement strategies at a decision-making level. Many owners have expressed a need for such valuation tools: lending institutions, real estate funds, insurance companies, and managers of public assets (municipalities, etc.). Because of those new valuation needs and the difficulty involved in applying existing models, a new appraisal model is proposed here; a pluri-parametric one that would allow rapid assessment of a large real-estate portfolio in various real-estate market segments. The model was tested on three large real-estate portfolios: TQP property assets (Pension benefits of the staff of Bank of Italy): the Bank of Italy’s district in L’Aquila (Italy); and a portion of Piedmont’s ASL/ASO’s assets.
Leopoldo Sdino, Ferruccio Zorzi, Paolo Rosasco, Sara Magoni

New Bottom-Up Approaches to Enhance Public Real/Estate Property

The economic enhancement of public real/estate property has become a central theme in Italy. In recent years, public policies have been focusing on the supply-side of the real estate market, assuming that investors and developers could handle the value creation process of the abandoned and underused public real/estate property. More recently, with the decline of the investors’ demand to develop public real-estate assets, new approaches to property-value creation have emerged. These new processes are focused on the demand side, through self-organized grass-roots participation using the assets for profit and not-for-profit purposes. The aim of the paper is to pinpoint some crucial conditions for these bottom-up processes to be effective through the analysis of fifteen bottom-up experiences in Italy. Five conditions emerged to reliably predict a fruitful outcome of bottom-up value-creation processes of abandoned or underused public assets.
Alessia Mangialardo, Ezio Micelli

Curricular Damage Estimation

In qualifying the items of recoverable damages due to the unfair exclusion of a company from a tender, the so-called curricular damage, or rather the injury suffered because of a non-enrichment of the corporate curriculum, usually appraised in equitable terms, is generally recognized as a percentage of the economic offer made. The aim of the study is to offer a methodological contribution for the curricular damage estimation enabling overcoming the equitable approach. The curricular value of a company is a goodwill rate. It falls under the so-called intangible assets. It expresses the assets of the references acquired and is directly related to its skill level, ascertained by the certification of the certifying body S.O.A. (Società Organismo Attestazione). The real interest in acquiring certification categories has given rise to a true—though improper—market of qualification requirements with the exchange of the SOA certification through the transfer of the ownership of the business branch. This is because they make possible accessing more active market segments, or rather increasing the classification level held, in order to increase chances of awarding a contract. The analysis of the sales offers has enabled appraising the most likely exchange value of a business branch provided with a certification and hence tackling, in a more rigorous way, the subject of the curricular damage estimation, or rather the goodwill variation the company would achieve through the attainment of a higher classification, or rather the failed loss of the classification held. The estimation rationale identifies as complementarity the economic aspect to consider the curricular damage. It is methodologically quantifiable as the difference between the curricular value held by the company at the submission of bid in relation to category and classification of certification held, and the curricular value the company could attain thanks to the increase in the business turnover deriving from carrying out the tender, by acquiring a higher classification than the one held, or rather a failed decrease of the current classification. The amount of the curricular damage appraised with this approach is meaningfully lower than the one usually equitably acknowledged by administrative jurisprudence, that does not take into account the capital alteration caused by the non-awarding of the said contract.
Marco Clemente Basile

Valorising in the Absence of Public Resources and Weak Markets: The Case of “Ivrea, the 20th Century Industrial City”

The extensive architectural heritage of Italy often finds itself in conditions of severe deprivation and neglect or inactivity. Moreover, such heritage is often located in contexts characterized by the absence of public resources and the presence of weak markets. Their valorisation is linked to the possibilities of re-use. The identification of new locations is often treated in a minimalist manner: contrasting with public use to that of private individuals and contradicting the criteria identified by the economy to define the public or private nature of the assets. In many cases, the approach to re-use is critical and incomplete due to the lack of an in-depth analysis of the economic and financial feasibility of the interventions. This paper reviews the traditional approaches regarding the enhancement of public and private properties, taking into account the theories regarding the value and economic evaluation tools. From this point of view, the case study—“Ivrea, the 20th century Industrial City”, nominated in the UNESCO Tentative List—is emblematic. The authors intend to support the Public Administration of Ivrea in the concrete actions of valorisation of heritage, including the revision of the Management Plan already presented. Its valorization potential departs from the imbalance between supply and demand issues of spaces. In conclusion, this paper succeeds in reporting on the strategic importance of when cultural heritage, both immaterial and material, should be used, regardless of the state of its use and conservation. Attention is focused on IT capabilities with respect to their ability to reconnect the individual assets to systems and involve new audiences.
Cristina Coscia, Rocco Curto

Technical and Economic Evaluation of a Building Recovery by Public-Private Partnership in Rome (Italy)

The purpose of this article is to present the assessment procedure developed and operatively applied to verify the technical, regulatory, and financial conditions for implementing an intervention for the regeneration of a public buildings through a public/private/partnership operation. The proposed procedure aims to represent a methodological approach to support a public administration in: (i) defining the compatibility and sustainability of repurposing public buildings; (ii) proposing actual sustainable projects for private financing; (iii) assessing the soundness of the potential offers by private parties. Operatively speaking, the procedure was applied to the possibility of transforming a school (owned by the Province of Rome), located in Rome’s Testaccio neighborhood.
Maria Rosaria Guarini, Claudia Buccarini, Fabrizio Battisti

A Strategic Environmental Assessment of a Possible Direct Road Connection Between Veneto Region and Central Europe

This paper deals with the general issue of the economic evaluation of territorial transformations and is part of an applicative land valuation, whose objective is to evaluate the social and economic impact of the transformations on a population and on the territory where it lives. These considerations are contextualized in a territory, especially in the Belluno province, in which debates have been going on for decades about the opportunity to realize a major road system for improving connections with Northern Europe. The province of Belluno is the largest area in the Veneto region (Italy), but at the same time it is also the least populated. Its territory is predominantly mountainous and, as a consequence, road connections are not easy because of an infrastructural deficit as regards transport and mobility. This research is about transport, through the application of strategic environmental assessment models in which much importance is given to the existing relationship between territorial economy and road infrastructures, focusing attention on:
  • the issue of accessibility;
  • the valid road options;
  • the national and international scenarios;
  • the theory and literature pertinent to the evaluation.
Giovanni Campeol, Nicola Masotto

Appraisal and Evaluation in the Production of Works for the Transformation of the Contemporary City

The article develops a series of reflections on a specific theme which, regarding the economic evaluation of the territorial transformation, remains, especially in Italy, particularly critical: the production of the territorial works and services, with specific reference to the public works (the new urban facilities). The subject, involving the Appraisal and Evaluation disciplines, allows us to highlight their fundamental contribution both at the operative/professional level as well as at the formative one. In order to develop the reflections, a comparison between two emblematic cases seem to be particularly effective: the Euskalduna Conference Centre in Bilbao (1999) and the new Conference Center, in Rome (2016). The other Italian events of the unfinished works, the issue of the executive phases in the design process and the fragmentation of the responsibilities, in addition to the continuing absence of a culture of the “project management”, allow to underline the important role that the Appraisal and Evaluation disciplines are called upon to play in the production of works for the transformation of the contemporary city, also in the perspective of the new Italian Procurement Code.
Fabiana Forte

Market Prices and Property Taxation in Italian Real Estate: A Turin Case Study

The aim of the paper is to address the issue of social inequity in Italy due to property taxation. The European Union has declared the fact that cadastral values used to define property taxation in Italy do not reflect market prices. In this paper, we analyze the discrepancies between cadastral values and listing prices. Furthermore, we find empirical coefficients to apply to current cadastral values to reduce the spread between current cadastral values and market prices. The procedure used is very simple and could easily be applied by local public administrations in order to correct the inequity produced by the current property taxation system within the same city and among various cities.
Rocco Curto, Elena Fregonara, Patrizia Semeraro

An Integrated Model for Ex-ante Evaluation of Flood Damage to Residential Building

The paper presents a new integrated model for the ex-ante evaluation of flood Expected Annual Damage (EAD) with specific reference to the direct damage to residential buildings. Starting from the analysis of an existing flood-damage model developed in other contexts, we propose an integrated evaluation model based on the definition of an analytic “stage damage curve” for different typology of residential buildings. The model is based on the integration of hydraulic model, combined with an ex-ante damage evaluation model, as a decision-support tool for sustainable risk management. Finally, combining hazard and vulnerability levels by using a GIS-based toolbox, the EAD to an urban area is obtained. The proposed model is then tested in a residential urban area of the municipality of Olbia in Italy, which was damaged by the extraordinary flood on November 2013. The comparison, between the ex-post assessed damage and the ex-ante evaluation based on the application of the model, enables to verify high reliability of the results obtained.
Marco Mancini, Gabriele Lombardi, Sergio Mattia, Alessandra Oppio, Francesca Torrieri

A Few Considerations on the Comparison Method in Appraisal

The paper has a theoretical and methodological content and is focused on the comparative method as Appraisal rational. Even though many scholars have strong prejudices against comparison as a research strategy and hold that it should be substituted by a “more scientific” statistical one, the paper holds that to increase the scientific content of appraisals does not require to change the method of inquiry but to replace the “impressionistic” comparison with “scientific” comparison. Consequently, the paper presents some relevant achievements in comparison theory and illustrates the connected concepts of similarity and classification. Finally, the paper recognizes that even though “scientific” comparisons” are methodologically feasible, at the operational level they are not yet available, this exhorts the appraisers’ community to a deep and thoughtful reflection and further researches.
Marta Berni

Forms and Functions of the Real Estate Market of Palermo (Italy). Science and Knowledge in the Cluster Analysis Approach

The analysis of the housing market of a city requires suitable approaches and tools, such as data mining models, to represent its complexity which derives on many elements, e.g. the type of capital asset-house is a common good and an investment good as well, the heterogeneity of the urban areas—each of them has own historical and representative values and different urban functions—and the variability of building quality. The housing market of the most densely populated area of Palermo (Italy), corresponding to ten districts, is analyzed to verify the degree of its inner homogeneity and the relations between the quality of the characteristics and the price of the properties. Five hundred sets of housing data have been collected and elaborated by cluster analysis with the aim of describing the structure of the housing market in each district and developing operational tools for the implementation of urban policies and public-private investments.
Grazia Napoli, Salvatore Giuffrida, Alberto Valenti

Gaps and Overlaps of Urban Housing Sub-market: Hard Clustering and Fuzzy Clustering Approaches

It has long been argued that the housing market is spatially subdivided within an urban area. The argument has important implications for explaining how the housing market works and describing the distinctiveness of each housing submarkets, having determined, a priori, its segmentation. The most commonly used method for identifying housing submarkets is based on cluster analysis, although hedonic analysis has been extensively used. The hedonic analysis is used to derive dimensionality of the housing market by estimating what attributes are significant factors influencing housing price. Those attributes or variables can then be used for cluster analysis. The paper proposes an analysis of the real estate market in San Cristoforo, Catania, trying to integrate two different clustering analysis approaches to defining its possible submarkets articulation. The first one is a hard clustering approach using the K-means method and hypothesizing different numbers of clusters. The second one can be considered a verification of the previous results: a fuzzy algorithm is applied to obtain the fuzzy set membership degree of each data point to housing submarkets defined within the examined urban area. The comparison between the results coming from the two different approaches suggests some reflections about the use of these powerful techniques for integrating the knowledge of the complex and multi-layered real estate markets in the urban recovery policies.
Laura Gabrielli, Salvatore Giuffrida, Maria Rosa Trovato

Buildings Energy Performance and Real Estate Market Value: An Application of the Spatial Auto Regressive (SAR) Model

This work explores the role of the buildings energy performance in defining the real estate market value, taking in consideration the presence of spatial autocorrelation. At this regard, it is necessary to put in evidence that a great heterogeneity exists on the Italian territory with reference to buildings energy performance; for this reason, being able to identify a class of most performing estimation models, suitable to separate the spatial effects from the influence of the building components—including the energy rating—on the value, seems to be an interesting goal. In particular, this work illustrates an experiment based on the Spatial Auto Regressive (SAR) model implemented on a sample of residential units located in the city of Turin and represents a first step of a more wide research program.
Marta Bottero, Marina Bravi, Giulio Mondini, Antonio Talarico

The Value of Intellectual Capital in Shipping Companies

Currently, the competitiveness, wealth, and growth of an enterprise mainly depend on its intangible resources and, especially, on its intellectual assets. The relevance attributed to intangibles assets is accompanied by their indisputable operational criticality. This paper highlights the central role played by intangibles in a new company’s business perspective and the inadequacy of traditional financial instruments for the measurement and representation of intangibles related to the intellectual capital of a company. Also, it reports on an application of “Intangible Asset Monitor” method to a shipping company that operates in the maritime transport sector. This method evaluates the importance and contribution of intellectual capital, divided in its three macro-components (human capital, structural capital, and relational capital), compared to the assets of the company using three families of indicators that monitor the growth, efficiency, and stability of intellectual capital.
Vincenzo Del Giudice, Pierfrancesco De Paola

Appraisal Analysis of Social Costs of Road Accidents

The road accident is certainly one of the most dramatic events in the existence of an individual, with important consequences to the personal and subjective perspectives, which are difficult to be quantified and surely not negligible, but also to the collective perspective, in terms of financial commitments that in different ways weigh on the whole society, for an event which only involved a restricted number of citizens. The quantification of the economic loss presents complex characteristics linked to the number of subjects and objects potentially involved in the accident, to be translated into the definition of a multiple function of the loss that connects the dependent variable (the loss) with the set of independent variables ascribable to different cost voices linked to road accidents—loss of the productive ability, human costs, sanitary costs, administrative costs, legal costs, and material damage to third parties’ properties. The valuation of the aforementioned costs supposes practical and methodological questions; the practical problem concerns data availability, the methodological question concerns the tools. The problem can be solved within an evaluative perspective, after having defined the valuation’s standards and the valuation’s procedures, identifying them among the ones recognized by the International Valuation Standards (IVS). This work proposes to address the problem of the social costs of road accidents in evaluative terms, defining first standards and procedures of valuation, with particular reference to social costs from road accident related to human costs, both patrimonial and non-patrimonial ones.
Francesca Salvo, Manuela De Ruggiero, Valentina Farace

The Definition of Fair Divisional Projects in Bankruptcy and Inheritance Disputes

In this research a model to support the definition of efficient and fair divisional projects in considerably complex bankruptcy procedures and inheritance disputes has been developed. The model is based on the principle that is generally pursued in defining shares to be assigned for inheritance divisions, according to which the assignment of the deceased’s assets must minimize the monetary compensations that result from the difference between the heirs’ legal right shares and the portions to be assigned to them. The application of the proposed model demonstrates its validity, implemented by user-friendly software. The work must be attributed in equal part to the two authors.
Francesco Tajani, Pierluigi Morano

Compensation for Land/Property Owners Hosting a Wind Farm. The Italian Case

This paper deals with the problem of estimating the compensation for the expropriation or easement of land to be used as a wind farm and the infrastructure essential for its activity. Bear in mind that the construction of a wind farm requires the acquisition (through expropriation, or amicable agreement of the surface rights) of at least the land that must be transformed for the realization of the windmill support, while other land could be encumbered with easements. Areas identified by the ground projection of the blades are, in fact, affected by overflight easements, and all transport infrastructures linked to the wind farm generate easements (underground conduits or power lines). The issue involves many aspects and takes place in a changing regulatory framework. The case law, in relation to the frequency of cases (expropriation is certainly much more frequent than easements), has developed a well-established approach that makes specific reference to the expropriation of the entire property and not merely of the right of fruition. If one pays attention to urban planning, there is a profound difference between the two cases. In the case of easement, unlike expropriation, the procedure does not require a change in the urban destination of land. A land intended for agricultural use remains as such even if it houses a plant for the production of alternative energy. This, without a thorough analysis of the principles that underlie the decisions of the judges, could also lead to profound inequality in terms of compensation payments. The issue is therefore considered by trying to transfer those principles already established with regard to the expropriation of property, even in the case of easements, where in both cases the beneficiary is a private individual, who by virtue of the possession of land, reaps a profit.
Benedetto Manganelli

Infrastructure Development and Territorial Vulnerability. The Role of Composite Indicators for Addressing Siting Decisions

Composite indicators have been analyzed by several scholars, especially with the aim of defining standardization and aggregation rules consistent to the multidimensional theoretical framework underlying these kind of measures and adequate to the difficulty of comparing data of different nature. Starting from a broadly shared methodology, set up by OECD in 2008, the paper proposes a Composite Indicator of Territorial Vulnerability based on environmental, social and economic criteria. A special attention has been paid to the methodological approach more than to the results, with a focus on uncertainty and sensitivity analysis. The latter one has been developed by the use of the SimLab (http://​ipsc.​jrc.​ec.​europa.​eu), which has allowed to estimate the probability distribution function of the composite indicator and to point out the field of variation of its variables. Lombardy Region has been selected as a pilot case study since it is one of the Italian regions with the highest infrastructural development. The results show that the Composite Indicator of Territorial Vulnerability applied to municipalities in the Lombardy Region has a limited variation range, and thus low uncertainty. Furthermore, the synthetic measure of territorial vulnerability seems to be a promising decision aid tool in the field of regional infrastructural development policies.
Alessandra Oppio, Stefano Corsi, Francesca Torrieri, Sergio Mattia

Valuing the Impact of Social Housing Renovation Programs: An Application of the Social Return on Investment (SROI)

Urban regeneration operations refer to complex processes where it is necessary to provide the Decision Makers with integrated evaluation tools, able to consider the multiplicity of objectives and values and to include the opinions and the needs of the different stakeholders involved. In this context, the paper aims at investigating the methodology of Social Return On Investment (SROI), that is a very recent and innovative framework for measuring and accounting for the complex value related to an investment, including social, environmental and economic costs and benefits. Starting from a real—world problem, the paper describes the application of the SROI method for supporting the process related to the requalification of a social housing district located in Rovereto (Italy).
Marta Bottero, Gustavo Ambrosini, Guido Callegari

Designing Adaptive Reuse Strategies for Cultural Heritage with Choice Experiments

The introduction of the sustainable development concept in the field of cultural heritage preservation has led relevant changes to traditional interventions on historical buildings and areas. Although the idea of reusing cultural heritage is not new, the emerging concept of adaptive reuse stresses even more the importance of a holistic approach for addressing successful interventions. Selecting among the potential uses the one that could ensure the preservation of physical characters as well as intangible values, fueling economic development, is a challenging policy and design issue. In this context, this paper proposes the use of Choice Experiments to support the design of adaptive reuse strategies for three mostly unused castles in Northern Italy characterized by different states of conservation, accessibility and surrounding territorial context.
Alessandra Oppio, Marta Bottero, Valentina Ferretti

Decision Support Methods for Public-Private Partnerships: An Application to the Territorial Context of the Apulia Region (Italy)

In this paper, a methodology to support decisions of Public Administrations in the defining of planning parameters of urban regeneration initiatives to be implemented with the involvement of private investors is applied. The decision support method proposed borrows the logic of the Break-Even Analysis. The model is applied to an urban area located in a city of the Apulia Region (Italy), which has been promoting urban redevelopment policies, as well as investing significant public funding. The results highlight the simplicity and flexibility of the model, the phases of which are easily implementable in any territorial context. The work must be attributed in equal parts to the authors.
Pierluigi Morano, Francesco Tajani
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