Abstract
The transaction price of a land property with commercial buildings depends on both its quantitative and qualitative attributes. Quantitative attributes include surface areas of plots of land and usable floor spaces of premises and buildings with various intended purposes, as well as values of rents. Qualitative attributes are represented by the global attributes of these properties.In the analysis of the land property market with commercial buildings, all pairs that relate a transaction price to individual attributes are considered. The market value prediction is based on multiple regression analysis for a two-dimensional random variable, represented by the price and the predetermined attribute. The final market value of the property being valued is calculated as the weighted average of the market values predicted for each attribute.This research paper presents the procedure for determining the market value of land with commercial buildings, which falls within the method of statistical analysis of the market. The derived formulas and substantively justified algorithms may be the basis for market analysis and estimation of the market value of such land. This procedure has been thoroughly verified using two practical numerical examples.
Highlights
The transaction price of a land property with commercial buildings depends on both its quantitative and qualitative attributes
The quantities occurring in this relationship are defined by formulas (1) to (2), which means that the linear regression model is defined by the average values and standard deviations in boundary distributions determined subject to the database of sold real estate, and taking into account the total correlation coefficient of the variable with respect to the variable C
The procedure presented for estimating market value of land developed with commercial buildings is based on the assumptions of statistical analysis of the market
Summary
Land properties developed with building structures intended for commercial purposes, services or production, will be referred to further in this paper as land with commercial buildings. The quantities occurring in this relationship are defined by formulas (1) to (2), which means that the linear regression model is defined by the average values and standard deviations in boundary distributions determined subject to the database of sold real estate, and taking into account the total correlation coefficient of the variable with respect to the variable C. Based on the regression line equation (11), it is possible to calculate the difference between the predicted value of a random variable and its average value (CPi − C), i.e.: CPi. Having taken into account formula (17) and the definition for the variance of the variable C, the expression (16) can be written in the following form:. Determination of weighting factors for specific attributes is an essential stage of the market analysis and forms the basis for the valuation of each real property
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