ASSESSMENT OF FUNCTIONAL QUALITY AS AN EARLY WARNING INDICATOR FOR PROPERTY MARKET RISKS

Jan Zak and Thomas Lützkendorf

ERES from European Real Estate Society (ERES)

Abstract: Nowadays in many European regions the property market has already been changing from a supplier to a demander market. Shrinking and aging of the population on one hand and fast changes of working processes in the service sector on the other will lead to changing requirements on buildings in residential and commercial real estate sectors. The result of the description and assessment of the technical and functional quality can work as an early warning indicator to early recognize letting and marketing risks. The meaning of the description, assessment and representation of selected features and qualities of objects also in the sense of signalization of quality were already discussed in earlier works. These criteria and qualities include both the quality of the functional and technical solution as well as the contribution to a sustainable development. The paper shows, that the present discussion features two existing approaches: one being the building performance approach based on an assessment of functionality and serviceability, the other we call the approach of sustainability assessment, judging the ecological, economical and social quality. More and more sustainability aspects find recognition in the performance approach, whereas the sustainability assessment is extended by judgments of the functional and technical quality. This change elevates the assessment of the technical and functional quality of buildings to a common base and connecting element. In a further development based on the actual standardization, the authors show the possibilities, to describe on one hand the major features and qualities of buildings (supply side) and on the other hand the needs and requirements of the consumer (demand side), followed by an assessment on the degree of agreement on supply and demand. With this comparison the paper shows, that current letting and marketing risks can be analyzed and future risks predicted as well as actions can be recommended.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2008-01-01
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