Pricing and Sustainability of Urban Real Estate

Real estate as an academic field of study has gained momentum in recent years due to the sub-prime crisis and sustainability discourses. The issue of sustainable development stretches far beyond the agenda based on a€?greena€? (i.e. environmentally and ecologically sustainable) buildings which has dominated to date. Developing a novel framework based on the concept of the economic sustainability of real estate locations, this book also connects with the recent financial crisis, credit crunch and housing bubble discourses, unlike in traditional approaches where housing market modelling and sustainable development paradigms are treated as incompatible. For urban residential property three specific issues are pertinent which are analysed in this book: the price in relation to quality; the price in relation to income (affordability); and the diversity of the product. Using a pragmatic approach to the construction of sustainability indicators results in a procedure where valuation automata is applied consistently to local house prices and other complex databases over several years in order to develop various economic sustainability metrics. This is vital for setting the appropriate incentives for sustainable real estate investments and government policies. In the automated value model (AVM) other kinds of quantifiable data such as income or real estate quality indicators can be combined with the price data. Subsequently, less tangible criteria and indicators can be incorporated into the outcome of the automated modelling of real estate value. The resulting metrics based on long term and partial criteria provide a basis for real world decisions concerning economic sustainability.

Tom J. Kauko is Associate Professor of Urban Geography in the Department of Geography at the Norwegian University of Science and Technology.