The Assessment of Public Buildings with Special Architectural Features Using the Cost Approach

The growing interest in issues to do with the administration, enhancement and sale of public building stock has increased the need for their valuation and, as a result, has increasingly highlighted the need to identify suitable methods for estimating value that take into account the peculiarities of public buildings. In Italy, public buildings often boast ‘special’ architectural features (interfloor distance, layout, finishings, type of wiring/heating systems, etc.) that render them ‘extra-ordinary’ assets; in some cases, these features also confer grand and/or historical importance to such buildings. Thus when carrying out valuation work in Italy, it is necessary to adopt suitable valuation methods designed for buildings boasting special features prior to drafting any administration plans, enhancement projects or even plans for the sale of public building stock. Given the lack of comparable examples or income-based parameters specifically concerning buildings with special features, the Cost Approach is the only method that can be used to estimate the market value of such properties. This paper aims to identify the ways the Cost Approach can be applied when estimating the market value of properties with special features that fall into the ‘extra-ordinary’ category. The theoretical part will be supported by a practical section where the Cost Approach will be used to estimate the market value of an extra-ordinary landmark building in the EUR district: the “Palazzo della Scienza Universale”, previously owned by the EUR S.p.A. company (formerly known as the Ente EUR), which was recently sold (2015).