Abstract
Real estate capital is in constant competition with other capital assets due to its different and complementary economic functions such as direct use, productive investment, and speculative investment. These features and the resulting opportunities cannot be easily deduced from direct observation of the real estate markets, so some further insights need to be carried out in order to highlight the relationship between prices, rents and performances. This study aims at providing a multifaceted perspective of a specific urban real estate market to overcome the difficulties arising from opacities and informative asymmetries that hinder the decision of investors, by facilitating the comparison of different options such as capital value, income and performance. Within the mass appraisal approach, the study proposes a methodology for the analysis of the cap rate, intended as the expression of profitability and liquidity of the urban real estate capital asset. The methodology is based on a detailed survey of a sample of the housing market data, collected within a structured database, supported by statistical and territorial analyses of the sample, in order to display the range of cap rates featuring each sub-market, and the related distributions. The methodology is applied to a case study of nearly 1000 properties distributed in a vast urban area of the municipality of Palermo, Italy. The consistency of the relationships between the three variables has been tested with reference to two hypotheses about the sub-market definition, which has been carried out by cluster and by neighbourhood.
Highlights
IntroductionAs great palimpsests and due to the complexity of the functions and attributes that characterise them, are the most suitable places for the development of forms of economic communication (wealth exchange) capable of generating surpluses
The extension and heterogeneity of the studied context requested a detailed survey based on a wide sample, highlighting significant relationships between characteristics and prices first, and cap wide sample, highlighting significant relationships between characteristics and prices first, and cap rates second
With reference to the case study, concerning 948 properties located in the main neighbourhoods of Palermo, the cap rates of the 500 properties for sale have been calculated following two approaches: of Palermo, the cap rates of the 500 properties for sale have been calculated following two approaches: the statistical one, via cluster analysis; and the territorial one by neighbourhood
Summary
As great palimpsests and due to the complexity of the functions and attributes that characterise them, are the most suitable places for the development of forms of economic communication (wealth exchange) capable of generating surpluses. This autopoietic ability—the ability to produce surplus by themselves—has as its flip side the possibility of overwhelming inequalities between central and marginal areas. The real estate industry is the cause and effect of such processes, and the representation of property market features reflects the way the economic surplus is distributed in the various forms of social capital or accumulated in the urban rent. Urban housing is one of the shapes of the urban rent stock value, including single properties as well as urban aggregates, which the public investments in the infrastructural, architectural, social
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