Space-time approach to commercial property prices valuation
There exists three ways of approaching real estate prices: the cost approach, the market data approach and the income capitalization approach. In this article, we propose an improvement of the market data approach that takes into account the spatial component. In particular, we propose a modified market data approach based on interpolation, being the structure of the spatial correlation between the prices of properties the main factor to obtain the weights. Interpolation methods have been widely used for estimating real estate prices, but they do not take into account the structure of their spatial dependence. Although this drawback is overcome by kriged estimation, in the case of the prices of commercial properties, they do not provide good estimates because the scarceness of the market information. This is why auxiliary information is needed and cokriging methods are used to obtain estimates that are more accurate. The aim of this article is the comparison of cokriged estimation of premises prices in two different temporal moments in the emblematic old part of Toledo city (Spain), using housing prices as an auxiliary random function due to their strong correlation with the main one. Cokriging, kriging and inverse distance weighting results are compared.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 44 (2012)
Issue (Month): 28 (October)
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEC20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEC20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ingrid Gould Ellen & Amy Ellen Schwartz & Ioan Voicu & Michael H. Schill, 2007. "Does federally subsidized rental housing depress neighborhood property values?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 26(2), pages 257-280.
- Jose M. Montero & Beatriz Larraz, 2011. "Interpolation methods for geographical data: Housing and commercial establishment markets," Journal of Real Estate Research, American Real Estate Society, vol. 33(2), pages 233-244.
- John M. Clapp & Hyon-Jung Kim & Alan E. Gelfand, 2002. "Predicting Spatial Patterns of House Prices Using LPR and Bayesian Smoothing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(4), pages 505-532.
- M Tiefelsdorf & B Boots, 1995. "The Exact Distribution of Moran's I," Environment and Planning A, SAGE Publishing, vol. 27(6), pages 985-999, June.
- Jorge Chica-Olmo, 2007. "Prediction of Housing Location Price by a Multivariate Spatial Method: Cokriging," Journal of Real Estate Research, American Real Estate Society, vol. 29(1), pages 95-114.
- Cheshire, Paul & Sheppard, Stephen, 1995. "On the Price of Land and the Value of Amenities," Economica, London School of Economics and Political Science, vol. 62(246), pages 247-67, May.
- Goodman, Allen C. & Thibodeau, Thomas G., 2003. "Housing market segmentation and hedonic prediction accuracy," Journal of Housing Economics, Elsevier, vol. 12(3), pages 181-201, September.
- Brasington, David M. & Hite, Diane, 2005.
"Demand for environmental quality: a spatial hedonic analysis,"
Regional Science and Urban Economics,
Elsevier, vol. 35(1), pages 57-82, January.
- David Brasington & D. Hite, . "Demand for Environmental Quality: A Spatial Hedonic Analysis," Departmental Working Papers 2003-02, Department of Economics, Louisiana State University.
- David M. Brasington & Diane Hite, . "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
- Dubin, Robin A, 1998. "Predicting House Prices Using Multiple Listings Data," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 35-59, July.
- Luc Anselin & Nancy Lozano-Gracia, 2008. "Errors in variables and spatial effects in hedonic house price models of ambient air quality," Empirical Economics, Springer, vol. 34(1), pages 5-34, February.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Din, A. & Hoesli, M. & Bender, A., 2001.
"Environmental Variables and Real Estate Prices,"
2001.04, Ecole des Hautes Etudes Commerciales, Universite de Geneve-.
- Peter Scott & Guy Judge, 2000. "Cycles and steps in British commercial property values," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1287-1297.
- Basu, Sabyasachi & Thibodeau, Thomas G, 1998. "Analysis of Spatial Autocorrelation in House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 61-85, July.
- Goodman, Allen C., 1978. "Hedonic prices, price indices and housing markets," Journal of Urban Economics, Elsevier, vol. 5(4), pages 471-484, October.
- José-María Montero-Lorenzo & Beatriz Larraz-Iribas & Antonio Páez, 2009. "Estimating commercial property prices: an application of cokriging with housing prices as ancillary information," Journal of Geographical Systems, Springer, vol. 11(4), pages 407-425, December.
- Elaine M. Worzala & Margarita Lenk & Ana Silva, 1995. "An Exploration of Neural Networks and Its Application to Real Estate Valuation," Journal of Real Estate Research, American Real Estate Society, vol. 10(2), pages 185-202.
- Wojciech Florkowski & Camilo Sarmiento, 2005. "The examination of pecan price differences using spatial correlation estimation," Applied Economics, Taylor & Francis Journals, vol. 37(3), pages 271-278.
- Bradford Case & John Clapp & Robin Dubin & Mauricio Rodriguez, 2004. "Modeling Spatial and Temporal House Price Patterns: A Comparison of Four Models," The Journal of Real Estate Finance and Economics, Springer, vol. 29(2), pages 167-191, 09.
- Timothy J. Fik & David C. Ling & Gordon F. Mulligan, 2003. "Modeling Spatial Variation in Housing Prices: A Variable Interaction Approach," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(4), pages 623-646, December.
- A. F. Militino & M. D. Ugarte & L. García-Reinaldos, 2004. "Alternative Models for Describing Spatial Dependence among Dwelling Selling Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 29(2), pages 193-209, 09.
- I-Chun Tsai & Ming-Chi Chen & Tai Ma, 2010. "Modelling house price volatility states in the UK by switching ARCH models," Applied Economics, Taylor & Francis Journals, vol. 42(9), pages 1145-1153.
- Alan E. Gelfand & Mark D. Ecker & John R. Knight & C. F. Sirmans, 2004. "The Dynamics of Location in Home Price," The Journal of Real Estate Finance and Economics, Springer, vol. 29(2), pages 149-166, 09.
When requesting a correction, please mention this item's handle: RePEc:taf:applec:44:y:2012:i:28:p:3705-3715. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.