01AP - Real Estate Market

Introduction to the real estate market analysis
prof. Carlo Barrese

prof. Alessandra Pandolfi
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Master of Science in Architecture
Architecture
Course of Project Appraisal – Section A & B
Politecnico di Milano – School of Architecture, Urban planning and Construction Engineering
INTRODUCTION TO
THE REAL ESTATE
Index MARKET ANALYSIS
• Economics and Values

• Factors that make the real estate market untypical
• Three kinds of environment
• Real estate markets principal features
• A matter of cycles that work diachronically
• Life cycles of real estate assets SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
• Cycles of the real estate market CONSTRUCTION

ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Economics and Values MARKET ANALYSIS
• Economy is the science that studies the economic choices

that people do to satisfy needs, that are practically unlimited,
with limited (or even scarce) resources → homo oeconomicus
• Real estate appraisal is the science that aims to evaluate

goods through physical and economic measures, based on SCHOOL OF
ARCHITECTURE, URBAN
specific postulates PLANNING AND

CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Definitions of Analysis 4
From Hoepli dictionary:

1. Research method based on the dissection, concrete or abstract, of an object
or a concept into its constitutive parts: a. of a philosophical concept, of an
historical period
‖ LANG grammatical analysis, search of the grammatical value of all the
words creating a phrase
| logical analysis, search of the syntactic value of the constitutive parts of a
phrase SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
| phrase analysis, dissection of the phrase into propositions CONSTRUCTION
ENGINEERING
2. Proceeding of dissection of a substance or a whole of substances in order Master of Science in

Architecture
to establish its fundamental characters: blood analysis, urine analysis Project Appraisal
‖ chemical analysis, search of the qualitative or quantitative constitution of a

chemical substance
‖ medical analysis, examination of healthy or ill parts of the human body prof. Barrese
with a therapeutical purpose prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Definitions of Evaluation 5
From Hoepli dictionary:

1. Action and results of evaluating
‖ Determination of a value, of the price of an object: to call an expert for the
evaluation of a plot of land, of a house, of a jewel
‖ Value of what is evaluated: an evaluation, real estate or not, of 100.000 Euros
2. Extensively, approximate calculation: evaluation of profits and losses for the next
management year
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Project Appraisal 6
The Project Appraisal/Assessment is a subject that was created to reply to

the need of controlling the economical unequal distribution referring to
ancient cadastres (preceding the geometrical formulation of the registered
goods) and it identifies different types of values for goods:
1. Costs values Production costs
referring to the production and Carrying out/construction costs
carrying out activities concerning goods Technical construction costs
SCHOOL OF
ARCHITECTURE, URBAN
2. Market values Actual value PLANNING AND

CONSTRUCTION
ENGINEERING
referring to the exchange activities Potential value → susceptibility Master of Science in
Normal value → ordinarity Architecture
concerning goods in a market Project Appraisal

Complementary value
3. Price values → D meets S
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Project Appraisal 7
The price evaluation is a typical market action (D meets S), but, in some
instances, prices cannot be determined by the market itself, that is why
the Project Appraisal sciences work on:
• estimation methods and procedures,
D S
through which it is possible to P
determine the value of goods (real estate
or not) and of rights on goods (r. of
use, r. of eminent domain, license fee, r. SCHOOL OF
ARCHITECTURE, URBAN
of way, property r., and so on) PLANNING AND

CONSTRUCTION
ENGINEERING
• irreproducible goods, that are the Master of Science in
typical objects of estimation procedures Architecture
Project Appraisal
→ it is difficult to determine a market
price for these goods as meeting point
between D and S Q
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Factors that make the real estate market untypical MARKET ANALYSIS
• Real estate market

untypical features BALANCE PRICE
• Essential features of
P
R demand supply
I
Supply excess
C
E
the pure and perfect S
balance point
competition markets Demand excess
• Three kinds of environment QUANTITY SCHOOL OF

ARCHITECTURE, URBAN
• Real estate markets Average and constant actual prices of new houses (13 main towns)
in Euros per square meter
PLANNING AND
CONSTRUCTION
ENGINEERING
principal features Constant prices 2005

Actual prices
Architecture
Euros per square meter
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Real estate market untypical features 9
Every assumption about the investment choice in the real estate market
should preliminarily and essentially consider that
the real estate market is sensibly different from SCHOOL OF

ARCHITECTURE, URBAN
the ideal model of the perfect and pure competition market PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Essential features of the pure and perfect competition markets 10
• Homogeneousness and divisibleness

(features of the product)
• Uniqueness
(an only market)
• Atomicity
(a great number of participants)
• Transparency SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
(immediate availability of information about transactions) CONSTRUCTION

ENGINEERING
• Fluidity Master of Science in

Architecture
(the participants can easily enter and leave the market) Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Essential features of the Real estate markets 11
• Heterogeneousness
• Transformability
• Indivisibility
• Viscousness
• Fragmentation
• Opacity SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
The environment theories by Architecture
Project Appraisal
K. Popper, S. Mattia
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Three kinds of environment MARKET ANALYSIS
Environment n. 1 (or landscape) 12
Variable distribution of features

in the space of physical objects
DEFINITION: all the elements, processes and interactions having reference to

the systemic, heterogeneous – even if unitary – structures and dynamics
that constitute the ecosphere or a part of it
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Environment n. 1 is nothing else but the world of physical objects to Project Appraisal
which a particular real estate asset belongs

It is easy to limit the environment n. 1 field in order to make it merge to the
prof. Barrese
real estate structure prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Environment n. 1 (or landscape) 13
Environment n. 1 is unsettled and processing
The variable distribution of features in the space of physical objects (Environment n.

1) is nothing else but the effect produced from the actions of external factors
(Environment n. 3)
The sign and intensity of these actions vary referring to the specific nature of places. SCHOOL OF
As a matter of fact, every following configuration depends from the ARCHITECTURE, URBAN
PLANNING AND
interactions with different systems that express Environment n. 3 CONSTRUCTION

ENGINEERING
Environment n. 1 is at the same time: Master of Science in

Architecture
• a unique, complex and complete system Project Appraisal
• an evolutionary process, “in which are integrated the spontaneous activities of

Nature and the ones resulting from the action of the human collectivity, in their
historic, material and cultural dimension” [Romano, 1994] prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Environment n. 2s (or Subjective perception of landscape) 14
Environment n. 2s is not unique
As it results from a consideration that is completely natural: every

landscape is perceived in different ways, depending from the subject
that examines it
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
It should be referred to the existence of real mind processes (or CONSTRUCTION
ENGINEERING
conscious subjective experiences) that determine the construction of Master of Science in
opinions and/or behaviors of the numerous and subjective visions - Architecture
Project Appraisal
that are physical, cultural and social – of the objects that form
landscapes
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Environment n. 2s (or Subjective perception of landscape) 15
In most of the occasions,

Environment n. 2s is not completely defined
Every individual or collective subject creates, as a matter of fact, its own real
world, in the direct, active and selective exploration of a particular physical
environment
This process of decodification of the physical world determines, moreover, the
definition of sectorial environments, that should be related to the different SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
visual interrelations established from every subject to every element or process CONSTRUCTION
ENGINEERING
belonging to landscapes (active interpretations of codified inputs) [Popper, 1963]
Environment n. 2s not only changes relating to the different kind of landscape and to Architecture
the subject that observes it, but it is also the result of different components Project Appraisal
In most of the situations, the different subjects do not perceive even the
necessity of its complete definition
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Environment n. 3 (or Set of the social constructions) 16
Environment n. 3 is the result

of the political-legislative,
demographic-social,
cultural-technologic
and economical
systems
SCHOOL OF
The specific nature of real estate assets influences and increases, as it ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
is sometimes decisive, the continuously varying influence exercised ENGINEERING
from Environment n. 3 to the behaviors of the different stakeholders Master of Science in

Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Real estate markets principal features MARKET ANALYSIS
17
• Heterogeneousness
• Transformability
• Indivisibility
• Viscousness
• Fragmentation SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
• Opacity CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Heterogeneousness 18
accessibility Need to make real

It depends from real estate assets micro- estate assets more
environmental attractive in the
quality reference market
The suitability to a particular use economic, social and
should be connected to the political-administrative
material issues
anthropic, physical and cultural
matrixes or motivations immaterial cultural, sociologic,
creative e spiritual
issues
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
It depends from the subjective from economic CONSTRUCTION

growth ENGINEERING
values of a particular to sustainability Master of Science in
spatial configuration, Architecture
depending from several individual Adversarial nature Project Appraisal
objectives that are

present at the same time community weight vocations
and, often, opposites
prof. Barrese
prof. Pandolfi
vulnerability
INTRODUCTION TO
THE REAL ESTATE
Other immaterial kinds of Heterogeneousness 19
Between other immaterial kinds of Heterogeneousness the ones

referred to the variability and dynamicity of legal and
fiscal conditions should be included, as they don’t influence
the determination of the transformability level. Most of these
elements could not be absolutely connected to localizations
The character presence or absence of a manager is at the

SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
same way immaterial. By the way, it should be mentioned that CONSTRUCTION

ENGINEERING
the purpose or not to obtain incomes of a real estate asset Master of Science in
Architecture
essentially depends from decisions taken on financial criteria Project Appraisal
or made compulsory from specific law dispositions or even

referred to the psychological attitudes
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Transformability 20
Heterogeneousness in most of the situations is staggered:

• between the specific ordination process to a specific real estate asset
• the evolution/re-organization (or the contrary) of the territorial structure
In these conditions, the original condition of perfect and positive correlation between
the internal quality and the localization importance fails. This phenomenon should
be considered, above all, analyzing the variables:
• accessibility
SCHOOL OF
• micro-environmental quality ARCHITECTURE, URBAN
PLANNING AND
The relative modalities enable the evaluator to define respectively: CONSTRUCTION
• the new relationships to the central place or places (accessibility) ENGINEERING
• the context in which is actually placed (micro-environmental quality) Master of Science in

Architecture
Project Appraisal
This variable enables to define the adaptation capability of the total quality
referring to the continuous and, sometimes, radical and unexpected
changes in the time of the solicitations/needs of the Environment n. 3
and/or of the market prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Indivisibility 21
There are essentially two features that determine the real estate assets indivisibility:
• dimension
This condition determines
• lasting relevant effects in the financial issues
The dimensional bond imposes a huge and important investment (lump asset)
and only the turning to recent forms of securitization could contribute
to the limitation of complications and risks
In the moment in which, to the investment extent, it is supported even by SCHOOL OF
ARCHITECTURE, URBAN
lasting, a huge set of complications becomes clear and understandable PLANNING AND
CONSTRUCTION
ENGINEERING
Between these complications there are some elements that are particularly Master of Science in
relevant, as: Architecture
Project Appraisal
a) the risk of over-dimensioning and of not setting the product on markets

b) the rigidity in the mobility of consumers
c) the consideration in the long term of the investment prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Viscousness 22
The action of lasting and to the simultaneous condition of lump asset

should be considered quite totally as responsible of the effect of
limitation of the transactions number
This phenomenon:
• depends also from internal reasons of most of the investors
• is partially influenced from the huge costs of legal and intermediation transfers,
factor that really becomes the principal cause of hindrance of fluidity and SCHOOL OF
conditions of fast portfolio adaptation, as a matter of fact, there are no more ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
detectable, further, relevant and insuperable hindrance to the entrance or exit from ENGINEERING
the market of the different subjects that act as promoters or investors Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Fragmentation 23
The Heterogeneousness factor is responsible for the formation of

numerous sub-markets
The classification of the sub-markets is made for the fundamental distinction of the
anthropic activities:
• agricultural
• industrial Every further division should be considered in
the constant reference of the laws
• offices of the formation of spatial demand curves
• residential SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
In every situation, at that level the principal elements, that could determine ENGINEERING
significant differences in prices, earnings and fluctuations, should be accurately Master of Science in
Architecture
individuated and studied Project Appraisal
This knowledge factor is influenced and influences

the knowledge level of the market prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
A matter of cycles that work diachronically MARKET ANALYSIS
24
Assessing a project or a real estate asset means

• Understanding its intrinsic features
– Life cycles of real estate assets
• Understanding its extrinsic features
– Real estate market cycles
SCHOOL OF
– Life cycles of urban systems

ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Life cycles of real estate assets MARKET ANALYSIS
25
Evans integrated model

• Simple situation (Evans)
• Fred land situation (Evans)
• Disuse period situation (integration)
• Non-development bond situation (integration) SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
• Non-development bond and disuse period CONSTRUCTION

ENGINEERING
situation (integration) Master of Science in

Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Evans integrated model 26
The spatial organization of existing buildings (C10) and the following

qualitative and functional stages (C1w0)
MARKET
• CONSTRUCTIONS
MARKET
• SALES AND RENTS
MARKET
BUILT LAND VALUE (VSE(C11))
NORMAL LIFECYCLE • FINANCIAL MARKET

(CVN(C))
PROLONGED
LIFECYCLE (CVP(C))
ENVIRONMENT n. 3
DCIcI= VSE(C1c1)
• POLITICAL-
LEGISLATIVE,
SYSTEM
• DEMOGRAPHIC- SCHOOL OF
SOCIAL SYSTEM ARCHITECTURE, URBAN
• CULTURAL- PLANNING AND
TECNOLOGIC CONSTRUCTION
SYSTEM ENGINEERING
• ECONOMICAL
Ct0 Ctb Ctd Ctr Ctw Ctu Ctv Ctz TIME SYSTEM Master of Science in
tw-t0 Architecture
tz-t0
Project Appraisal
The decreasing trend of the VSE(Cti) curve is determined from the physical and
economical deterioration. This phenomenon could be usefully contrasted, both giving
to the real estate asset the most adequate typologic and technologic features, with the
realization during the lifecycle of targeted interventions of preservation, re-use and
conservation and/or with filtering processes. The saw-tooth curve represents the prof. Barrese
prof. Pandolfi
possibility of prolonging in this way the normal lifecycle (CVN)
INTRODUCTION TO
THE REAL ESTATE
MARKET
• CONSTRUCTIONS
MARKET
• SALES AND RENTS
MARKET
FRED LAND VALUE (VSL(C11))
VSL(C11) • FINANCIAL MARKET

VSE(C11)
ENVIRONMENT n. 3
VSE(C1c1)
• POLITICAL-
LEGISLATIVE,
SYSTEM
• DEMOGRAPHIC-
SOCIAL SYSTEM
• CULTURAL-
Ct0 Ctm Ctz TIME TECNOLOGIC SCHOOL OF
SYSTEM ARCHITECTURE, URBAN
• ECONOMICAL PLANNING AND
SYSTEM CONSTRUCTION
ENGINEERING
The higher curve represents the geometric place of high vales of transformation of Architecture
the existing spatial organization (VSL(C'ti)). The balance point (P) represents the Project Appraisal
moment in which it gets convenient to substitute the initial structure (Ct0) with new
spatial elements (C'ti (i>m)) even completely different in the spatial and functional
features. If this balance in the financial calculation is verified, when the normal or
prolonged lifecycle of the Ct0 configuration has ended, the place is disused for a
period that ends when it gets financially convenient to realize the existing buildings prof. Barrese
prof. Pandolfi
substitution or radical interventions of transformation
INTRODUCTION TO
THE REAL ESTATE
MARKET
• CONSTRUCTIONS
MARKET
• SALES AND RENTS
MARKET
VSL(C11) • FINANCIAL MARKET

VSE(C11)
ENVIRONMENT n. 3
DISUSE PERIOD • POLITICAL-
LEGISLATIVE,
SYSTEM
tz-tμ • DEMOGRAPHIC-
SOCIAL SYSTEM
• CULTURAL-
Ct0 Ctz Ctμ TIME TECNOLOGIC SCHOOL OF
SYSTEM ARCHITECTURE, URBAN
• ECONOMICAL PLANNING AND
SYSTEM CONSTRUCTION
ENGINEERING
The higher curve represents the geometric place of high values of transformation of Architecture
the existing spatial organization (VSL(C'ti)). The balance point (P) represents the Project Appraisal
moment in which it gets convenient to substitute the initial structure (Ct0) with new
spatial elements (C'ti (i>m)), even completely different in the spatial and functional
features. If this balance in the financial calculation is verified, when the normal or
prolonged lifecycle of the Ct0 configuration has ended, the place is disused for a prof. Barrese
period that ends when it gets financially convenient to realize the existing buildings prof. Pandolfi
substitution or radical interventions of transformation
INTRODUCTION TO
THE REAL ESTATE
MARKET
• CONSTRUCTIONS
MARKET
• SALES AND RENTS
MARKET
VSL(C11)
• FINANCIAL MARKET
VSE(C11)
ENVIRONMENT n. 3
• POLITICAL-
LEGISLATIVE,
SYSTEM
Ctc TIME • DEMOGRAPHIC-
SOCIAL SYSTEM
Ct0 Ctz • CULTURAL- SCHOOL OF
TECNOLOGIC ARCHITECTURE, URBAN
SYSTEM PLANNING AND
• ECONOMICAL CONSTRUCTION
SYSTEM ENGINEERING
This is the situation in which the existence of a bond of absolute preservation of the Architecture
initial spatial organization, imposed from the political-legislative system, prevents the Project Appraisal
substitution in the periods following the formation of the balance point. In this
conditions, as it is impossible to operate referring to the market laws, it is necessary to
act on the real estate asset to prolongue its maximum lifecycle (lower curve). The
other growing curves represent the trends without this bond prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
MARKET
• CONSTRUCTIONS
MARKET
VSL(C11) • SALES AND RENTS
MARKET
VSE(C11) • FINANCIAL MARKET
ENVIRONMENT n. 3
• POLITICAL-
LEGISLATIVE,
Ctc Ctz Ctμ Ct0μ SYSTEM
• DEMOGRAPHIC-
SOCIAL SYSTEM
Ct0 • CULTURAL- SCHOOL OF
TIME TECNOLOGIC ARCHITECTURE, URBAN
SYSTEM PLANNING AND
• ECONOMICAL CONSTRUCTION
SYSTEM ENGINEERING
Architecture
The VSE and VSL curves are to be considered in the case of a temporary imposition Project Appraisal
of a normative bond. The disuse period in absence of these conditions (tm-tz) is
prolonged in this case (tp-tz)
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Cycles of the real estate market MARKET ANALYSIS
CPI and Residential Property Price Index (RPPI) in Italy 31
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
RPPI and average Italian employee purchasing power index in Italy 32
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
RPPI and CPI in Italy 33
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
RPP cycles in Italy 34
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
RP transactions in Italy 35
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Nominal and real variations of residential property prices in Italy 36
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
GDP and inflation in Italy 37
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
GDP and inflation in Italy 38
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
The honeycomb scheme 39
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
The honeycomb cycles in Italy referred to RP 40
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
S&P: Stock Price Percentage Total Return / Percentage Home Price 41
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
The honeycomb cycles in Italy referred to RP 42
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Residential property price index in Italy - nominal prices 1982-2014 43
Italy
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
Source: data processed by AICI on data Istat and various sources, Reddy’s Group
INTRODUCTION TO
THE REAL ESTATE
Bari Bologna
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Cagliari Firenze
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Cagliari Firenze
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Genova Roma
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Genova Napoli
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Milano Palermo
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Roma Torino
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi

01AP - Real Estate Market

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01AP - Real Estate Market

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Introduction to the real estate market analysis

prof. Carlo Barrese

Index MARKET ANALYSIS

• Economics and Values

• Cycles of the real estate market CONSTRUCTION

Economics and Values MARKET ANALYSIS

• Economy is the science that studies the economic choices

• Real estate appraisal is the science that aims to evaluate

specific postulates PLANNING AND

Economics and Values MARKET ANALYSIS

From Hoepli dictionary:

2. Proceeding of dissection of a substance or a whole of substances in order Master of Science in

‖ chemical analysis, search of the qualitative or quantitative constitution of a

Economics and Values MARKET ANALYSIS

From Hoepli dictionary:

Economics and Values MARKET ANALYSIS

The Project Appraisal/Assessment is a subject that was created to reply to

2. Market values Actual value PLANNING AND

referring to the exchange activities Potential value → susceptibility Master of Science in

Normal value → ordinarity Architecture

concerning goods in a market Project Appraisal

Economics and Values MARKET ANALYSIS

of way, property r., and so on) PLANNING AND

• irreproducible goods, that are the Master of Science in

typical objects of estimation procedures Architecture

• Real estate market

the pure and perfect S

competition markets Demand excess

• Three kinds of environment QUANTITY SCHOOL OF

principal features Constant prices 2005

Real estate market untypical features 9

the real estate market is sensibly different from SCHOOL OF

Essential features of the pure and perfect competition markets 10

• Homogeneousness and divisibleness

(immediate availability of information about transactions) CONSTRUCTION

• Fluidity Master of Science in

Essential features of the Real estate markets 11

The environment theories by Architecture

Three kinds of environment MARKET ANALYSIS

Environment n. 1 (or landscape) 12

Variable distribution of features

DEFINITION: all the elements, processes and interactions having reference to

which a particular real estate asset belongs

Three kinds of environment MARKET ANALYSIS

Environment n. 1 (or landscape) 13

Environment n. 1 is unsettled and processing

The variable distribution of features in the space of physical objects (Environment n.

interactions with different systems that express Environment n. 3 CONSTRUCTION

Environment n. 1 is at the same time: Master of Science in

• a unique, complex and complete system Project Appraisal

• an evolutionary process, “in which are integrated the spontaneous activities of

Three kinds of environment MARKET ANALYSIS

Environment n. 2s (or Subjective perception of landscape) 14

Environment n. 2s is not unique

As it results from a consideration that is completely natural: every

conscious subjective experiences) that determine the construction of Master of Science in

opinions and/or behaviors of the numerous and subjective visions - Architecture

Three kinds of environment MARKET ANALYSIS

Environment n. 2s (or Subjective perception of landscape) 15

In most of the occasions,

Three kinds of environment MARKET ANALYSIS

Environment n. 3 (or Set of the social constructions) 16

Environment n. 3 is the result