The Role of Amenities in Strategic Asset Selection

Anett Wins, Marcelo Cajias and Rebecca Restle

ERES from European Real Estate Society (ERES)

Abstract: Using artificial intelligence (AI) algorithms, modern location analysis evaluates attractiveness almost in real time. In this paper we explore the relationship between amenities and residential asking rents in several large European cities. The study introduces the Amenities Magnet Score (AMS) differentiated by seven basic living needs as crucial metric for assessing and evaluating the attractiveness of urban locations. Research results emphasize the critical role of amenities and their impact on residential rental prices: It highlights that the AMS directly correlates with rental prices in European cities, with higher AMS associated with rental premiums. Different types of amenities affect rental prices variably, and there are threshold effects where rental premiums stabilize or sharply increase as the AMS reaches certain thresholds, highlighting the nuanced relationship between amenities and rental values.Findings offer valuable insights for real estate investors seeking to understand and navigate the dynamics of urban rental markets and developing strategies for asset allocation that capitalize on the demand for amenities.

Keywords: AI; Amenities Magnet Score (AMS); GAM; residential rental pricing (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2024-191

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