<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>The assessment of income-producing properties - considered as the bulk of the existing assets - has rapidly increased. An efficient assessment of the market value of this kind of properties requires an adequate involvement of the main risk factors of the local real estate market for the determination of the capitalization rate for the income approach application. The aim of the work is to identify the most significant local real estate risk factors related to the market, the tenant and the context on the residential capitalization rate. The development of a regressive methodological approach applied to the residential sector of the city of Rome (Italy) is proposed. The obtained results show the susceptibility of the analyzed capitalization rate to the variation of the local real estate risk factors, in particular the per capita income and the variation of the rental values, by also considering the influences of the exogenous shocks and the expectation of the investors. The practical implications of the work consist in the possibility for evaluators to assess the likely changes in the capitalization rate in different residential contexts if variations occur in the most influential local risk factors identified by the proposed model.</p>
</abstract>

The assessment of income-producing properties - considered as the bulk of the existing assets - has rapidly increased. An efficient assessment of the market value of this kind of properties requires an adequate involvement of the main risk factors of the local real estate market for the determination of the capitalization rate for the income approach application. The aim of the work is to identify the most significant local real estate risk factors related to the market, the tenant and the context on the residential capitalization rate. The development of a regressive methodological approach applied to the residential sector of the city of Rome (Italy) is proposed. The obtained results show the susceptibility of the analyzed capitalization rate to the variation of the local real estate risk factors, in particular the per capita income and the variation of the rental values, by also considering the influences of the exogenous shocks and the expectation of the investors. The practical implications of the work consist in the possibility for evaluators to assess the likely changes in the capitalization rate in different residential contexts if variations occur in the most influential local risk factors identified by the proposed model.

Capitalization Rate and Real Estate Risk Factors: An Analysis of the Relationships for the Residential Market in the City of Rome (Italy)

Department of Civil, Environmental, Land, Building Engineering and Chemistry

Real Estate Management and Valuation

This work is licensed under the Creative Commons Attribution 4.0 International License.

The assessment of income-producing properties - considered as the bulk of the existing assets - has rapidly increased. An efficient assessment of the market...

Capitalization Rate and Real Estate Risk Factors: An Analysis of the Relationships for the Residential Market in the City of Rome (Italy)

Published Online: May 22, 2024

Page range: -

Received: Jan 17, 2024

Accepted: May 14, 2024

DOI: https://doi.org/10.2478/remav-2024-0028

Keywords
capitalization rate, real estate risk, exogenous shock, incomeproducing properties, real estate assessment, regression model

© 2024 Benedetto Manganelli et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Capitalization Rate and Real Estate Risk Factors: An Analysis of the Relationships for the Residential Market in the City of Rome (Italy)

Published Online: May 22, 2024

Page range: -

Received: Jan 17, 2024

Accepted: May 14, 2024

DOI: https://doi.org/10.2478/remav-2024-0028

Keywordscapitalization rate, real estate risk, exogenous shock, incomeproducing properties, real estate assessment, regression model

© 2024 Benedetto Manganelli et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

Keywords
capitalization rate, real estate risk, exogenous shock, incomeproducing properties, real estate assessment, regression model