No abstract

Purpose This paper aims to test and compare two innovative methodologies (utility additive and evolutionary polynomial regression) for mass appraisal of residential properties. The aim is to deepen their characteristics, by exploring the potentialities and the operating limits. Design/methodology/approach With reference to the same case studies, concerning samples of residential properties recently sold in three Italian cities, the two procedures are tested and the results are compared. The first method is the utility additive, which interprets the process of the property price formation as a multi-criteria selection of multi-objective typology, where the selection criteria are the property characteristics that are decisive in the real estate market; the second method is a hybrid data-driven technique, called evolutionary polynomial regression, that uses multi-objective genetic algorithms to search those models expressions that simultaneously maximize accuracy of data and parsimony of mathematical functions. Findings The outputs obtained from the experimentation highlight the potentialities and the limits of the two methodologies, as well as the possibility of jointly applying them to interpret and predict the real estate phenomena in a more realistic representation. Originality value In all countries, mass appraisal techniques have become strategic for the definition of management and enhancement policies of public and private property assets, in the case of investments of technical and economic refunctionalization (energy, environment, etc.), and for the alienation of buildings no longer suitable for public needs (military barracks, hospitals, areas in disuse, etc.). In this context, the use of mass appraisal techniques for residential properties assumes a leading role for sector operators (buyers, sellers, institutions, insurance companies, banks, real estate funds, etc.). Therefore, the results of the applications outline the potentialities of the two methodologies implemented and the opportunity of further insights of the topics that have been dealt with in this research.

This research tries to investigate, in the current condition of the Italian real estate market, the economic advantage of investing in energy retrofitting of existing buildings or in expenditure aimed at obtaining higher energy performances in the construction phase of new buildings. A cost-benefit analysis is developed referring to the construction industry entrepreneur. Firstly, the increase in value due to a different measurement of the energy performance of new buildings or newly redeveloped residential buildings is achieved through an innovative statistical approach. Energy performance is measured by taking as a reference the category of energy certification, as required by European legislation. In the estimate of the contribution, the measurement of energy performance, expressed on an ordinal scale, is treated as a categorical variable in the implementation of an iterative regression model, called the alternating least squares model. Afterwards, this contribution is compared to the cost of sustainable building, trying to define a percentage increase in cost compared to a minimum condition according to different and increasing levels of energy performance. In the developed case studies, the comparison between likely benefits and investment spending showed that the entrepreneur would have no convenience at an expense for energy retrofitting while obtaining a positive balance in the construction phase of new buildings. The financial advantage grows if the investment is aimed at achieving the best energy performance and in areas where the price level of the real estate market is lower. The finding can be used as a guide for construction industry investors to make decisions in energy-efficient residential buildings production or transformation.