Purpose This paper highlights Bryan MacGregor's contribution to the literature on the definition of real estate submarkets in the context of hedonic house price analysis and commercial property investment diversification. Design/methodology/approach This paper provides a summary and discussion of Bryan's work on real estate submarkets, focusing on three of Bryan's published research papers. Findings Bryan's publications include an application of principal components analysis and cluster analysis to the definition of housing submarkets for hedonic modelling purposes. They also include studies of the usefulness of cluster analysis for commercial property investment diversification. Although Bryan is best known for his work on commercial property markets, his most-cited work is the paper on housing submarkets. Originality/value This paper calls attention to Bryan's contribution to research on real estate submarkets, particularly the analysis of housing submarkets.
Purpose Institutional investors play a critical role in adapting the built environment to the unavoidable impacts of climate change. However, little is known about their decision-making behaviours and the factors driving climate adaptation (CA) investments. Drawing on institutional theory, this study aims to examine how organisational and institutional contexts influence CA decision-making. Design/methodology/approach This study employs a qualitative approach, drawing on nine semi-structured interviews with senior managers at different management levels in Dutch real estate investment organisations. Findings Although coercive, normative and mimetic pressures drive CA, their capacity to generate action remains limited by low legitimacy perceptions for taking CA actions, lack of prioritisation of CA goals, partial enforcement of regulatory or policy frameworks, divergent views on climate uncertainty and low environmental interconnectedness. These limitations point to a prevailing institutional pattern of sustainable finance 2.0 that positions CA as a risk management tool rather than a systemic response. Practical implications This study highlights structural institutional constraints that can limit stronger CA adaptation approaches and provides insights for policymakers and industry practitioners seeking to promote or engage in more coordinated, collective and systemic adaptation responses in real estate investment. Originality/value The study contributes to a limited but growing body of knowledge on CA in institutional real estate investment by empirically enquiring about the drivers and institutional factors shaping CA decision-making. Grounded in theory, it contributes to the sustainable finance debate by providing new explanatory insights into why growing awareness does not consistently translate into CA actions, pointing to a structural lock-in that constrains CA.
Purpose This study aims to investigate public and private sector participation in public-private partnership (PPP) infrastructure investment decisions and identifies key strategies to enhance engagement. Design/methodology/approach A qualitative methodological approach, utilising semi-structured interviews with 13 PPP professionals from New Zealand and Malaysia. Guided by an interpretivist philosophical stance, this study explores and interprets the lived experiences and perspectives of these professionals to gain deeper insights into their decision-making processes. Findings Risk transfer and allocation, political and institutional settings, the nature of PPP contracts and projects and market conditions emerged as critical in shaping the decision of both public and private sectors to participate in PPP projects. This study identifies six essential strategies to foster greater participation: (1) strong institutional and political frameworks, (2) improved PPP guidelines, (3) training and capacity building, (4) effective communication and engagement, (5) a supportive environment and (6) enhanced transparency. Practical implications This study offers deeper insights into how policy frameworks, market conditions and organisational objectives interact to shape PPP adoption, enhancing both theoretical understanding and practical approaches to effective partnership implementation and governance in infrastructure delivery. Originality/value This study provides a deeper understanding of the decision-making processes underlying participation in PPPs, offering valuable insights for both public and private sectors. These findings can be leveraged to design more effective PPP frameworks for promoting sustainable participation.
Purpose Monte Carlo simulation has been available to property valuers for over fifty years but remains largely unadopted. This paper examines whether the probability distributions used in existing implementations have contributed to that resistance. The normal and triangular distributions used as defaults in academic literature do not match how valuers assess market variables. Beta distributions offer a better fit for these variables. They are confined to the valuer's specified range, shaped by market judgement, and available through native Excel functions. Design/methodology/approach The paper traces distributional assumptions across the Monte Carlo valuation literature, from Pyhrr (1973) through to post-2005 applications that shifted predominantly toward development appraisal, identifies the theoretical limitations of normal, triangular, and log-normal distributions, and develops the case for beta distributions through the intermediate step of the PERT distribution. A comparative illustration replicates the four-variable DCF model of French and Gabrielli (2005a) under four distributional assumptions (normal, triangular, PERT, and general beta) using 10,000 iterations with correlated inputs implemented through Cholesky decomposition. Findings Distributional choice affects all output statistics relevant to uncertainty reporting. The triangular distribution produces a 90% certainty range that is 55% wider than the beta distribution with valuer-specified parameters. The beta distribution allows the valuer to express directional market views that shift the output mean by approximately 7% of capital value, a capability unavailable with the triangular or PERT distributions. Practical implications The beta distribution requires no software beyond Excel's built-in BETA.INV function. It takes four inputs (minimum, maximum, a, ss), where the minimum and maximum are the same bounds valuers already specify for triangular distributions. The PERT distribution serves as a transitional step, deriving a and ss automatically from the familiar three-point estimate. The Monte Carlo model used in this paper, including correlated inputs, four-distribution comparison, convergence testing, and sensitivity analysis, was adapted from an existing workbook in a single working session using a generative AI add-in for Excel. Originality/value The beta distribution has appeared in the property Monte Carlo literature since Pyhrr (1973) but has never been examined in detail. Gimpelevich (2011) noted its potential superiority without developing the point. This paper addresses that gap and shows that distributional choice has material consequences for every output statistic a valuer reports to a client.
Purpose Research has investigated the effects of a range of behavioural issues in property valuation, with recent studies focusing on various approaches to enhancing the quality of valuation decisions. This study explores valuers' opinions on how a collaborative approach enhances property valuation practice. Design/methodology/approach This study adopts a qualitative research design. Data for the study were collected using semi-structured, in-depth interviews with 17 property valuers that carryout commercial property valuations in Auckland, New Zealand. The interview data were analysed using thematic analysis. Findings The study identified five major themes related to valuers' perception of how valuation practice could be enhanced through collaborative valuations. These themes revolve around benefits related either to valuers (i.e. increasing efficiency and managing personal bias), the valuation process (i.e. broadening sources of market evidence and enabling more robust property inspections) or the outcome of the valuation (i.e. improving the overall quality of valuation outcomes). Findings from the study further suggest that expert-novice collaboration provides complementary competencies that enable valuers to reason out their instincts within the valuation decision-making process. Practical implications These findings call for policy reforms in valuation firms and professional institutions to foster collaborative learning environments that strengthen the credibility and integrity of valuation practice. Originality/value This study contributes to the limited literature on collaborative valuation by providing empirical evidence on how collaborative practices can influence valuation quality.
Purpose-This study aims to stimulate debate on the long overdue strategic reform of property taxes. Design/methodology/approach-This study adopts an approach combining a systematic literature review with economic analysis. Findings-Property tax reform is highly desirable and practical. Strategically thought-out reform could align incentives in a both economically and socially efficient way. There are powerful implications for the form and mechanisms of property taxes. There are also implications for policy and environmental efficiency and equity. Originality/value-This study draws on existing literature but provides a novel analysis and solutions.
Purpose-Purpose-built student accommodation (PBSA) has recently become an important real estate sub-sector for real estate investment managers (REIMs) and institutional investors. The purpose of this practice briefing is to assess the significance and increasing importance of PBSA in global REIMs' fund portfolios between 2020 and 2024. Design/methodology/approach-Using the IPE annual surveys of the top 150 REIMs' real estate portfolios, the level of PBSA assets in these real estate fund portfolios is assessed over 2020-2024. This is supported by details from the REIMs' websites highlighting the importance and benefits of PBSA in institutional investor portfolios. Using documentary analysis, this practice briefing sees a deep understanding of REIMs setting up PBSA funds, and the institutional investor strategies concerning the role of PBSA in their portfolios. Findings-A significant increase in the level of PBSA was evident in REIM portfolios over 2020-2024, in terms of the number of PBSA funds and the level of PBSA assets under management (AUM). In 2024, this saw 36 REIMs engaged in the PBSA sub-sector and $63.3 B in PBSA AUM in portfolios of the top 150 REIMs; significantly more than 2020 levels. A range of strategies was employed for this PBSA exposure for REIMs and institutional investors. Geographic diversification was evident in many PBSA portfolios, reflecting PBSA growth; driven by increasing levels of international students in many countries .Practical implications-Student accommodation, part of the living sector, is an important real estate sub-sector that has become increasingly institutionalised in recent years. This is particularly important, as many institutional investors (e.g.: pension funds, sovereign wealth funds) now see PBSA as an important real estate sub-sector in their overall real estate portfolios. This practice briefing gives institutional investors a deeper understanding of the investment opportunities available to access high-quality PBSA assets via these REIMs' global PBSA portfolios, as well as enhancing the level of understanding of PBSA by real estate professionals. Originality/value-This research enables more informed and practical real estate investment decision-making regarding the increasing opportunities available with REIMs for PBSA as a real estate sub-sector in a real estate portfolio for institutional investors. This will contribute to satisfying the increasing appetite for PBSA assets by institutional investors going forward.
Purpose - To challenge existing practice recommendations. Design/methodology/approach - Review recent literature with some theoretical advances. Findings - The larger advisory companies, supported by their economists and research departments, should certainly have the capacity to form an informed view about fair market pricing for the bigger, more transparent and liquid markets. But surely it is asking too much of valuers to jump into this area of responsibility across all real estate markets without much more public discussion of the issues we raise in this paper. Practical implications - More public discussion of the issues we raise in this paper is called for. Originality/value - This is a review with some original challenges.
Purpose Grand challenges have been identified in a growing number of professions, institutions, governments, and industries to focus attention on significant problems and opportunities. In real estate, grand challenges have received limited attention. This paper explores grand challenges and whether real estate may benefit from identifying, framing, and pursuing solutions to grand challenges. Design/methodology/approach The research involves identifying and exploring how grand challenges have been pursued in other fields and disciplines and the related outcomes. These findings are then considered within the context of real estate. Suggestions are developed for possible frameworks to facilitate the value of grand challenges in real estate. Findings Grand challenges in engineering and management have produced results in education and research. Other research has defined four categories of grand challenges with real estate fitting into three of the four categories. The only scholarly real estate-related article on the topic considers how real estate aligns with each of the seventeen UN Sustainable Development Goals. It then outlines the skills necessary for real estate to effectively address grand challenges and finds these skills to be in short supply. Additional findings include how identifying and framing grand challenges contributes to their solution and how the civic wealth creation framework may expand real estate's conception of how it contributes to value and wealth creation. Research limitations/implications Grand challenges merit additional research into their potential value in real estate. The relationship of development, equity investment, operation, and redevelopment and grand challenges may be fruitful. Limitations include a dearth of real estate research on grand challenges and a willingness to initiate such research. Practical implications Real estate often faces resistance in the form of "NIMBY" and "BANANA" attitudes. Grand challenge research may provide an approach to developing a "do good" mindset to replace the "do no harm" mindset. Shared goals among all stakeholders generated by grand challenges may facilitate more trust within the entire real estate ecosystem. Social implications Real estate and the built environment are crucial elements of society and its functioning. Grand challenges can focus research on the underlying mechanisms that may move real estate from seeking to minimise harm to seeking to increase civic wealth. Originality/value Grand challenges and real estate's role in addressing them have received scant attention. This paper explores how to initiate thinking about real estate and its responsibility to society.
PurposeThis study aims to investigate barriers to adopting valuation technology (VTech) in the property valuation profession and its implications for property investment and financial market stability. Despite advances in automation, data analytics and artificial intelligence (AI), the sector has been slow to digitise. The research examines how institutional, cultural and technical factors shape resistance, with consequences for asset pricing, collateral risk modelling and investor confidence. Design/methodology/approachA qualitative design was employed using semi-structured interviews with valuers, firm leaders and regulators in New Zealand. Thematic analysis was guided by Rogers' diffusion of innovations and institutional theory, synthesised into an institutionally mediated diffusion of innovations (IDOI) framework to explain how professional logics mediate perceptions of innovation. FindingsBarriers to adoption arise primarily from institutional conservatism, outdated regulation and weak data governance rather than technical shortcomings. The Valuers Act (1948), fragmented infrastructure and sovereignty concerns limit innovation. Generational divides, protectionist attitudes and fears of automation reinforce digital resistance, while practitioners stress that human judgement remains indispensable, positioning technology as an aid rather than a replacement. Practical implicationsRegulatory modernisation, secure national data infrastructure and targeted digital training are essential to enable sustainable innovation in valuation practice. For lenders and investors, wider VTech adoption can enhance valuation accuracy, portfolio transparency and collateral risk assessment, strengthening confidence in property markets and capital allocation. Originality/valueThe study reframes VTech adoption as legitimacy-seeking rather than efficiency-driven. The IDOI framework provides a transferable model for understanding digital transformation in regulated, high-trust professions and highlights the market-level risks of institutional inertia in property valuation.
Purpose Post-earthquake functional recovery is an emerging concept in the built environment, often examined through engineering parameters, with limited attention given to building users. While structural integrity is critical, a building's functionality following a disaster is not solely determined by its physical stability. This study investigates the perspectives of office tenants across three major New Zealand cities. Design/methodology/approach A qualitative research strategy was employed, drawing on interpretative phenomenological and grounded theory methods. A systems thinking approach, underpinned by a micro-level building-system functionality framework, was used to illustrate the dynamic relationship between users and their buildings. Findings This study reveals that a building's functionality is intrinsically linked to how well it supports an organisation's specific needs, as the physical workspace directly embodies corporate culture and values. For commercial property investors, a compelling strategy must therefore converge social and technical perspectives, recognising that the ability to align the physical asset with profound socio-cultural shifts is critical to determine long-term asset value and resilience. Practical implications The findings highlight that tenant perceptions and behaviours are profoundly shaped by situation, context and time. The widespread adoption of work-from-home (WFH) arrangements has become a core component of business continuity plans (BCP). Immediate return to an office following a major disaster is generally reserved for critical business functions with essential services such as power/standby generator. Originality/value This study advances understanding of post-disaster recovery by applying a micro-level building-system functionality framework, demonstrating that functionality is both technically and socially driven.
Purpose To examine the concept of equilibrium in the context of real estate markets and the insights that the concept brings to the modelling of adjustment processes. Design/methodology/approach The paper proceeds by introspection. Findings Even if real estate markets' normal state is disequilibrium, an underlying model of market processes that seek to restore those markets to balance provides invaluable insights into the way property markets respond to shocks. This is not to deny the path dependency of market outcomes. Research limitations/implications In the context of market economies, discarding equilibrium principles risks misunderstanding market dynamics, for all the noise that behavioural anomalies bring. Practical implications Appreciation of the adjustment processes can help market participants avoid over-reaction to short-run and noisy signals. Markets operate in aggregate and adjustment processes may be long-term but those processes drive market dynamics. Social implications Society would be better if markets avoided over-reacting to noisy short-run signals. Originality/value This is for others to judge.
PurposeThis study examines the sector-level herding and herding spillover across 11 US-listed Real Estate Investment Trust (REIT) sectors. Design/methodology/approachWe examine herding behaviour of REITs employing returns-based methods in the context of the standard linear model, along with extensions that capture any time-varying component of herding. FindingsA standard linear model shows no herding behaviour for all sectors, except for the lodging and resorts sector; whereas, a more robust quantile regression reveals significant herding in all 11 sectors and for the overall market at the lower tails of the distribution of cross-sectional return dispersion. The time-varying parameter ordinary least squares approach demonstrates spasmodic switches between herding and anti-herding behaviours during the sample period across all sectors and the overall market. A spillover analysis highlights significant and original herding spillover effects across REIT sectors. Practical implicationsOur results could be useful for investment management purposes since herding can drive asset price volatility to a higher level and undermine the effects of portfolio diversification. Thus, investors should pay attention to sectors that are involved in significant herding spillovers for the sake of portfolio and risk management inferences in the US REIT sectors. Regulators should monitor the developments and deploy effective policies to mitigate the effects of herding since it is widely known that herding could ultimately pose a threat to market stability. Originality/valueThis study contributes to the dynamic nature of behavioural biases of investors in US equity REITs and enhances our understanding of contagious effects of herding across sectors.
PurposeThis practice briefing develops a coherent framework for identifying and measuring commercial and industrial externalities, addressing the lack of standardised approaches in valuation practice. Design/methodology/approachThe briefing synthesises evidence from environmental economics, urban planning and real estate finance to construct a five-category typology and translate empirical distance decay patterns into GIS-ready measurement strategies. FindingsCommercial externalities exhibit predictable spatial signatures that can be measured consistently using proximity-based indicators. When organised into a structured typology, these patterns provide a basis for integrating externalities into valuation and investment analysis. Practical implicationsThe framework enables practitioners to replace subjective adjustments with transparent, replicable spatial measures, improving valuation defensibility, underwriting accuracy and communication among market participants. Originality/valueTo our knowledge this is the first unified, practitioner-oriented framework that consolidates empirical externality research into a usable structure tailored to commercial valuation and GIS-based analysis.
PurposeFamily offices are privately-held investment companies established to effectively manage the significant assets of high-net-worth families for the purposes of building the level of assets for future family generations. This practice briefing examines the significance of real estate in family office portfolios. Case studies of major family offices are presented, concerning their real estate portfolios. The strategic implications for family office portfolios and real estate professionals are also assessed. Design/methodology/approachUsing a diverse range of information sources, the significance of real estate in family office portfolios is examined. Case studies highlight the strategies used by family offices to obtain this real estate exposure. FindingsFamily offices are significant investment players. They use a range of effective strategies to obtain their real estate exposure, including direct real estate, joint ventures, non-listed real estate funds, debt and real estate investment trusts. Their primary real estate investment focus is via direct real estate investment. Many leading family offices have significant real estate exposure in their family office portfolios. The use of both the traditional asset classes and the alternative asset classes is a strong feature of family office portfolios. Practical implicationsReal estate is seen to be a significant asset class for family offices, with several important investment strategies used to obtain this real estate exposure. The real estate strategies used are delivered via both in-house teams and via real estate asset managers. A deeper understanding of real estate in family offices by asset managers is important for the effective delivery of the real estate agenda within family office portfolios. Originality/valueThis is the first paper to examine the significance of real estate in family office portfolios. Major insights are provided concerning family offices and how they obtain their real estate exposure. The real estate investment structures used are seen to be different priorities to those used by other institutional investors, such as pension funds. This study expands our understanding of the significance of real estate in major investor portfolios.
Purpose-The paper examines Low-Constraint Investors' (LCIs') approach to the design, selection and governance of strategic institutional real estate investment partnerships. LCIs differ in their mission (long-horizon), capital profile (outsized portion of their balance sheet funding long-dated liabilities and goals) and risk budget (higher tolerance for illiquid investment risks, volatility, complexity, scale, duration and uncertainty). LCIs include select sovereign wealth funds, public pensions, endowments, large family offices and life insurance companies that operate with long-term mandates and stable and growing capital bases: they are natural liquidity generators. LCIs often rely on external partners to access, execute and manage investment strategies. Well-structured partnerships allow for greater LCI optionality (e.g. timing of investments and recovery, asset selection, risk budgeting, workout plans if needed, programme extensions and curtailments) and greater capital stability and flexibility for execution partners (relaxation of programme maturity deadlines, greater flexibility around investment timings, broader investment themes). Both sides benefit from long-term, growing relationships that allow them to focus more on investing and less on capital raising. The paper considers how LCIs evaluate partnering models, align with external counterparts and govern longterm collaboration. It offers potential execution partners guidance on how to engage effectively with LCI capital. Design/methodology/approach-The paper adopts an expert opinion approach, drawing on insights from two senior industry practitioners. The first is a global real estate executive with over 25 years' leadership experience as CEO, CIO and Global Head of Real Estate across multi-billion-dollar investment platforms. The second is a co-founder of a real estate investment and asset management boutique (later acquired by a listed global firm) with 25 years of sector experience. The paper synthesises institutional observations, behavioural patterns and governance practices derived from real-world partnering engagements and strategic programme design. Findings-Strategic partnering is a core enabler for LCIs to operationalise their investment objectives. Effective deployment often depends on the selection and governance of capable external partners. The paper identifies primary partnering models and maps their suitability based on control, integration, governance complexity and strategic repeatability. Partner selection is shown to address behavioural alignment, infrastructure quality and strategic fit. Sustained alignment over time requires deliberate incentive structuring, adaptive governance and institutional oversight capacity. Without these, investors may face style drift and underperformance. Practical implications-The paper offers tools to align partner capabilities with investor intent, assess and select among partner models and govern investment programmes. Asset managers, co-investment partners and operators can better position themselves with LCI capital and understand the behavioural expectations such capital typically carries. Originality/value-The paper provides a new perspective on how LCIs can approach strategic partnerships in real estate. Instead of focusing only on performance or transaction-level decisions, it looks at partnerships as long-term, structural components of investment strategy. The paper offers clear, practical considerations that help LCIs build more effective relationships with external partners. It also helps managers and operators understand how LCIs think, what they value and how to successfully work with them over time.
PurposeThis study aims to examine why discounted cash flow (DCF) remains marginal in South African secured-lending valuations and to assess whether semi-digitised workflows can shift adoption intent. Design/methodology/approachA predominantly qualitative study with limited quantification where possible (descriptive statistics): 12 semi-structured interviews (valuers and bank risk specialists), a structured survey of panel valuers exposed to a semi-digitised DCF workflow; coded themes and descriptive statistics are reported. FindingsThe current industry practice is income-capitalisation centric. However, after viewing a semi-digitised DCF workflow (a research instrument developed for this study), 94% found it easy to understand and 94% indicated they would or likely would use it; 69% said it addresses prior challenges, 81% that it helps manage complexity, and 75% perceived efficiency gains. Interviews highlight efficiency, standardisation, and data clarity as enablers, but training gaps, fragmented market data, and behavioural inertia remain headwinds. Practical implicationsBasel standards apply to banks' capital models—not to valuers' choice of method. Lenders can request an optional/additional investment DCF baseline alongside Market Value for internal risk analysis. Adoption is most likely with targeted training, common data standards, and proportionate digitalisation aligned with professional guidance (e.g. Royal Institution of Chartered Surveyors [RICS]). Originality/valueThis study provides South Africa–specific evidence on adoption barriers and behavioural change, with a clear regulatory narrative and a practical digitalisation route that preserves professional judgement.
Purpose The purpose of this article is to examine the Brazilian context of real estate feasibility practice, highlight the gap between deterministic and probabilistic approaches - common across emerging markets - and demonstrate how probabilistic modelling can be made accessible even under data-scarce conditions. Design/methodology/approach The article is structured in two interlinked parts. The first reviews previous research, current developer practices, educational content and institutional guidelines to assess the Brazilian context. The second presents a case study that applies Monte Carlo simulation in a spreadsheet environment using expert-judgment elicitation to define input probability distributions. Findings Although local practitioners acknowledge uncertainty qualitatively, feasibility studies in Brazil remain dominated by fixed-point cash-flow simulations. This gap is driven by limited data availability, low technical awareness, restricted access to analytical software and institutional inertia. The adapted model further illustrates that even modest probabilistic integration can enhance transparency and support more informed investment decision-making. Practical implications The framework offers developers and analysts an accessible pathway to incrementally incorporate risk analysis into feasibility studies, helping to align local practice with international standards such as those of the Royal Institution of Chartered Surveyors (RICS). Originality/value This Practice Briefing revisits and extends previous work on Brazilian feasibility practice, offering one of the first contextualised discussions of how probabilistic reasoning can be operationalised in emerging markets, bridging the gap between academic modelling and professional application.
PurposeThe purpose of this briefing is to discuss the implications of the Royal Institution of Chartered Surveyors (RICS) Independent Review of Investment Valuations, which recommended a shift towards (explicit) discounted cash flow (DCF) valuations for the valuation of investment properties. Part I discussed the background to the review and Part II discusses the implementation and adoption of the recommendations. Design/methodology/approachThis briefing discusses the reason for the review and the impact of the recommendations related to a shift towards explicit DCF valuations. A comparative analysis is conducted to contrast implicit valuation models with an explicit DCF model. This has been promoted by the RICS with the publication, in 2023, of the RICS (Global) Practice Information – Discounted Cash Flow valuations. FindingsThe proposed shift to DCF valuations in the real estate industry carries both subtle and direct implications. This briefing will discuss the likely development of a market consensus for an agreed framework and structure of DCF modelling and the need for transparency when determining and reporting the assumptions underpinning the market valuation. Practical implicationsImplicit valuation models are widely adopted in property valuations as they capture, through the capitalisation rate determined, market sentiment and expectations that underpin the market valuation. There are issues with the opaqueness of this model and this briefing examines whether a move towards explicit modelling, which by definition makes explicit the assumptions used in the valuation, will help the investment better understand the concept of market value and its relationship to the (individual) worth of the property asset in question. Originality/valueThis briefing identifies the distinction between market value and the investor’s own calculation of the worth of the asset to themselves based on their own forecasts of market growth and capital value changes. It proffers that a move towards DCF modelling will allow investors to better identify the market expectation assumptions within the valuation model and better compare them, and the Market value, to their own forecasts and worth calculation.
PurposeThis case study examines how structural, locational, and amenity attributes influence residential rents in Tokyo, one of the world's largest metropolitan areas. The scoring and modelling approach offer a scalable framework for identifying high-potential investment opportunities.Design/methodology/approachWe introduce the Amenities Magnet Score (c) (AMS), an AI-enabled metric quantifying a location's attractiveness for metropilitan Tokyo based on 98,869 Points of Interest (POIs). AMS and its temporal evolution are computed on a 5,000-cell grid covering similar to 189 km2. The higher the AMS, the better a location is supplied with amenities for residential living. This framework is refined by incorporating a Tokyo-specific Basic-Living-Need category, Proximity to Transit Hubs, reflecting the city's emphasis on a reliable and highly frequented commuting system. A Generalized Additive Model (GAM) with a spatial Gaussian-process smooth is fitted to 1.53 million rental listings to assess their non-linear response to static and dynamic AMS.FindingsThe GAM explains 91.5% of variation in log rents, confirming amenities as a fundamental determinant of rental values. AMS ranks as the fourth most influential predictor. We observe a convex-concave amenity response, with rent growth saturating beyond AMS approximate to 92. Mid-AMS zones (approximate to 65-92) near secondary hubs exhibit the strongest growth potential, underscoring the strategic value of amenity-based investment targeting.Practical implicationsThe results indicate that in Tokyo amenities and the Proximity to Transit Hubs are fundamental determinants of rental values, providing useful strategic implications for all real estate market participants.Originality/valueAMS and BLN scores are calculated via an AI-driven, scalable algorithm tailored to Tokyo's urban dynamics. This research empirically validates amenity scoring as a tool for optimizing real estate investment strategies.
