A Proposed Statistical Model for Real Estate Appraisal in Historical Mixed Use

Abstract

This chapter (This chapter was published in the International Journal of Sustainable Development and Planning.) introduces a new statistical methodological approach for the real estate appraisal based on the consideration of the changing purchasing power of money, by deducing an equation based mainly on all the affecting urban context variables other than the market, cost and income approach that are currently used for that purpose. This is achieved through testing the proposed statistical model using these urban variables on one of the most important districts in downtown Cairo, Maspiro (next to Tahrir Square incorporating 1,130 land lots), together with comparing its predicted values with a sample evaluated by professional real estate appraisers to ensure its validity. Maspiro district confronts the Nile River, and faces the Egyptian Union of Radio and Television Building, Ministry of Foreign Affairs, Embassy of Brazil, Embassy of Italy and others. Accordingly, the chapter finally illustrates that all theoretical approaches dealing with the real estate appraisal are subject to some defects ignoring the changing circumstances of each district and the urban planning variables that constitute its real value. They mainly depend on factors that are subject to change from time to time in accordance with the surrounding political, social, and economic circumstances. Over or under estimations may lead to economic loss and mislead the proposed developmental plans for the regions. The urban variables, on the other side, once measured for each real estate are not subject to these changes. Therefore, the research tests the validity of finding strong correlation between these variables and their real value, in the form of an equation by using statistical methods.