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Buildings 2017, 7(4), 112; doi:10.3390/buildings7040112

Assessing the Impact of Urban Improvement on Housing Values: A Hedonic Pricing and Multi-Attribute Analysis Model for the Historic Centre of Venice

1
Department of Engineering and Architecture, University of Trieste, 34127 Trieste, Italy
2
Fondazione Eni Enrico Mattei, 30124 Venice, Italy
3
Department of Economics, Ca’ Foscari University, 30121 Venice, Italy
*
Author to whom correspondence should be addressed.
Received: 31 July 2017 / Revised: 22 November 2017 / Accepted: 23 November 2017 / Published: 30 November 2017
(This article belongs to the Special Issue Real Estate Economics, Management and Investments)
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Abstract

The Hedonic Pricing Method is one of the principal assessment methods for evaluating services and resources not normally exchanged on the market. However, the method is often unable to account for the great variety of qualities in an urban context and faces scarce and heterogeneous market data. This paper presents a model for the valuation of benefits generated by environmental and urban improvement investments adopting a mixed hedonic-multi-attribute procedure for modeling a value function of urban real estate values. The peculiarity of the model is that the independent variables are aggregated indicators, which synthetize more detailed characteristics. Using the expertise of real estate agents, all relevant variables influencing real estate values were weighted and synthetized in a set of cardinal indicators. Next, market prices were used to calibrate a hedonic function that transforms the cardinal indicators into real estate values. The valuation model was integrated into a GIS for mapping the housing value, and its variation induced by urban investment. The proposed model pointed out plausible and robust results, in particular, the possibility to use any available information, such as location, position, technical and economic characteristics of buildings, and organize it in a flexible and transparent way, and to keep evident the role of each characteristic through the hierarchical structure of the model. The model was applied to the real estate market of Venice to test the effects of the MOSE project (Electromechanical Experimental Module) for the protection of Venice from high tides. The results of the application showed a relevant increase in real estate values in the center of Venice, especially related to property in ground floor units, of about 1.4 billion €. View Full-Text
Keywords: hedonic pricing method; multi-attribute analysis; real estate market; urban improvement; MOSE project hedonic pricing method; multi-attribute analysis; real estate market; urban improvement; MOSE project
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Rosato, P.; Breil, M.; Giupponi, C.; Berto, R. Assessing the Impact of Urban Improvement on Housing Values: A Hedonic Pricing and Multi-Attribute Analysis Model for the Historic Centre of Venice. Buildings 2017, 7, 112.

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