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Genetic Algorithm as Automated Valuation Model Component in Real Estate Investment Decisions System

Author

Listed:
  • Chmielewska Aneta

    (Institute of Spatial Economy and Geography, University of Warmia and Mazury in Olsztyn, Olsztyn, Poland)

  • Adamiczka Jerzy

    (Adamiczka Consulting)

  • Romanowski Michał

    (Independent researcher)

Abstract

Every real-estate related investment decision making process calls for the careful analysis of available information even though it is often carried out in conditions of uncertainty. The paper attempts to minimize the impact of the factor on the quality of real estate investment decisions through the proposal of application of tools based on the simulation of the process of natural selection and biological evolution. The aim of the study is to analyze the potential of methodology based on genetic algorithms (GA) to build automated valuation models (AVM) in uncertainty conditions and support investment decisions on the real estate market. The developed model facilitates the selection of properties adequate to the adopted assumptions, i.e. individuals best suited to the environment. The tool can be used by real estate investment advisors and potential investors on the market to predict future processes and the proper confrontation of past events with planned events. Even though genetic algorithms are tools that have already found particular application on real estate market, there are still areas that need further studies in the case of more effective uses. The obtained results allow for the possibilities and barriers of applying GA to real estate market analyses to be defined.

Suggested Citation

  • Chmielewska Aneta & Adamiczka Jerzy & Romanowski Michał, 2020. "Genetic Algorithm as Automated Valuation Model Component in Real Estate Investment Decisions System," Real Estate Management and Valuation, Sciendo, vol. 28(4), pages 1-14, December.
    • Handle: RePEc:vrs:remava:v:28:y:2020:i:4:p:1-14:n:1
    DOI: 10.1515/remav-2020-0027
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    References listed on IDEAS

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    More about this item

    Keywords

    genetic algorithm (GA); uncertainty; decision support system; automated valuation model (AVM); real estate market;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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