Cap Rate as the Interpretative Variable of the Urban Real Estate Capital Asset: A Comparison of Different Sub-Market Definitions in Palermo, Italy
نویسندگان
چکیده
Real estate capital is in constant competition with other capital assets due to its different and complementary economic functions such as direct use, productive investment, and speculative investment. These features and the resulting opportunities cannot be easily deduced from direct observation of the real estate markets, so some further insights need to be carried out in order to highlight the relationship between prices, rents and performances. This study aims at providing a multifaceted perspective of a specific urban real estate market to overcome the difficulties arising from opacities and informative asymmetries that hinder the decision of investors, by facilitating the comparison of different options such as capital value, income and performance. Within the mass appraisal approach, the study proposes a methodology for the analysis of the cap rate, intended as the expression of profitability and liquidity of the urban real estate capital asset. The methodology is based on a detailed survey of a sample of the housing market data, collected within a structured database, supported by statistical and territorial analyses of the sample, in order to display the range of cap rates featuring each sub-market, and the related distributions. The methodology is applied to a case study of nearly 1000 properties distributed in a vast urban area of the municipality of Palermo, Italy. The consistency of the relationships between the three variables has been tested with reference to two hypotheses about the sub-market definition, which has been carried out by cluster and by neighbourhood.
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