Essay in real estate appraisel

Abstract: This is an academic dissertation submitted in partialfulfilment of the requirements for the degree of Doctor ofTechnology. The dissertation consists of a short summary anddiscussion of seven enclosed essays. All seven papers aredevoted to central issues within real estate appraisal andvaluation, with emphasis on the market for income property.Essay Ianalyses the market prices for mixed-use incomeproperties, with mainly residential use. A hedonic priceequation is estimated based on market transactions. The timeperiod under study is 1992?1994. The geographicalsub-market analysed is the city of Stockholm. The hedonictechnique is also used for estimating an assessment equation.Certain types of properties were found to be systematicallyunder-assessed.Essay IIis an inquiry into the topic of choosing arelevant functional form for the hedonic equation applied toincome property. Certain characteristics of two common modelspecifications are identified. The shortcomings and advantagesare illustrated through the application of the two models toempirical data.Essay IIIinvestigates if the distance to CBD affectsthe property prices, i.e. if there are (negative) distancegradients. The sub-market analysed is that of mainlyresidential income properties, though the residential market issubject to a rent control system. The distance gradient onrents was insignificant. However, there is a significantnegative price gradient. With one exception (direction east),there is also a significant negative assessment gradient.Essay IVdeals with cycles on the market for incomeproperty. The time-period under study is 1979?1992, whichincludes the Swedish property crisis. The use of the grossincome multiplier (GIM) as an indicator of the phases of theproperty cycle is suggested. The analyses indicate that theproperty boom during the late 1980s may have been partly drivenby a speculative price bubble.Essay Vanalyses the determinants of the rent level andthe rent drift on the residential rental market, which issubject to rent control. Furthermore, the rate of return oninvestment, as well as maintenance input (for increasing thequality of the property) is estimated. The micro-location isfound to affect the rent level, but not the age of thebuilding. The return on quality-improving investments andmaintenance was found to be reasonable. The rent increases wereslightly larger than what was agreed upon in officialnegotiations.Essay VIanalyses the total rate of return (TRR) overthe time-period 1979?1997 within a portfolio of mixed-useincome property. Different definitions of TRR were estimated.The results do not vary over definitions used. The determinantsof the TRR are identified in regressions using panel datamodels. The TRR may be separated into a commercial and aresidential component, respectively. The average values forthese two components are found to be almost equal for the wholetime-period under study, however, the evolution over time isfound to follow patterns that show important differences.Essay VIIpresents a literature review of studies whereprice equations on the property market are estimated byregression analysis. In all, 145 papers are investigated. Theessay analyses how the methodological procedures, andparticularly those related to econometrics, are presented inthe papers.Keywords: property, real estate, real estate economics,appraisal, assessment, income property, hedonic technique,model specification, distance gradients, property crises,speculative bubble, gross income multiplier, GIM, rent control,total rate of return, Sweden.