Multicriteria analysis and genetic algorithms for mass appraisals in the Italian property market

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.