Sustainable Cities and Green Buildings Valuation: the Application of Discrete Choice Experiments in Property Appraisal

For the purpose of achieving a sustainable city, there has been a significant increase in the construction of green buildings in recent years. Since these are properties with characteristics that differ from those of ordinary buildings and, therefore, few transactions of comparable properties can be collected in the market area in which they are located, it is very difficult to apply the Revealed Preference Methods for green buildings appraisal. These cases produce the same conditions common to industrial products, where it is necessary to estimate goods that have never been traded previously or have little historical data regarding potential consumers’ expectations. Usually, the techniques to use here are based on surveys and hypothetical markets, which consider a range of possible scenarios to estimate the value of goods through the preferences stated by the market operators. It may be assumed that resorting to Stated Preference Techniques in special contexts it is preferable to use alternative methods that produce reliable opinions of value. The paper proposes a property appraisal procedure that, by applying Discrete Choice Experiments, allows selecting the alternatives that are most likely to meet the market’s preference and estimating: a) the incidence of the characteristics in market price formation both for consumers and producers; b) the market share of possible alternative properties, derived from different combinations of the characteristics and the best marketability alternative; c) the hypothetical market price associated with possible alternative options. After outlining the key elements of the issue, the main methodological and operational aspects of the proposed methodology are described.