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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
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Definitions of Analysis 4
Definitions of Evaluation 5
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Project Appraisal 6
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
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
• Essential features of
P
R demand supply
I
Supply excess
C
E
balance point
• Real estate markets Average and constant actual prices of new houses (13 main towns)
in Euros per square meter
PLANNING AND
CONSTRUCTION
ENGINEERING
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Factors that make the real estate market untypical MARKET ANALYSIS
Every assumption about the investment choice in the real estate market
should preliminarily and essentially consider that
the ideal model of the perfect and pure competition market PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Factors that make the real estate market untypical MARKET ANALYSIS
(the participants can easily enter and leave the market) Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Factors that make the real estate market untypical MARKET ANALYSIS
• Heterogeneousness
• Transformability
• Indivisibility
• Viscousness
• Fragmentation
• Opacity SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Project Appraisal
K. Popper, S. Mattia
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Master of Science in
Architecture
Environment n. 1 is nothing else but the world of physical objects to Project Appraisal
As a matter of fact, every following configuration depends from the ARCHITECTURE, URBAN
PLANNING AND
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 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
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
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
17
• Heterogeneousness
• Transformability
• Indivisibility
• Viscousness
• Fragmentation SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
• Opacity CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Heterogeneousness 18
the purpose or not to obtain incomes of a real estate asset Master of Science in
Architecture
Transformability 20
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
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
Project Appraisal
Viscousness 22
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
significant differences in prices, earnings and fluctuations, should be accurately Master of Science in
Architecture
24
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
25
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
MARKET
• CONSTRUCTIONS
MARKET
• SALES AND RENTS
MARKET
BUILT LAND VALUE (VSE(C11))
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
BUILT LAND VALUE (VSE(C11))
FRED LAND VALUE (VSL(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
Master of Science in
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
BUILT LAND VALUE (VSE(C11))
FRED LAND VALUE (VSL(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
Master of Science in
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
BUILT LAND VALUE (VSE(C11))
MARKET
FRED LAND VALUE (VSL(C11))
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
Master of Science in
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
BUILT LAND VALUE (VSE(C11))
MARKET
FRED LAND VALUE (VSL(C11))
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
Master of Science in
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
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
INTRODUCTION TO
THE REAL ESTATE
Italy
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Master of Science in
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
Cagliari Firenze
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Cagliari Firenze
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Genova Roma
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Genova Napoli
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Milano Palermo
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
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
Roma Torino
SCHOOL OF
ARCHITECTURE, URBAN
PLANNING AND
CONSTRUCTION
ENGINEERING
Master of Science in
Architecture
Project Appraisal
prof. Barrese
prof. Pandolfi
Source: data processed by AICI on data Istat and various sources, Reddy’s Group