Real Estate and GIS

The Application of Mapping Technologies

Richard Reed, Chris Pettit, Richard Reed, Chris Pettit

• Editorial: Routledge
• Año: 2018
• ISBN:
  9781317284048
• Edición: 1
• Categoría: Business
• Categoría: Real Estate

Real Estate and GIS focuses on the application of geographic information systems (GIS) and mapping technologies in the expanding property and real estate discipline. Whilst a thorough understanding of location is understood to be fundamental to the property discipline, real estate professionals and students have yet to harness the full potential of spatial analysis and mapping in their work. This book demonstrates the crucial role that technological advances can play in collecting, organising and analysing large volumes of real estate data in order to improve decision-making.

International case studies, chapter summaries and discussion questions make this book the perfect textbook for property and applied GIS courses. Property and real estate professionals including surveyors, valuers, property developers, urban economists and financial analysts will also find this book an invaluable guide to the understanding and application of GIS technology within a real estate industry context.

1

Introduction

Richard Reed and Chris Pettit

Introduction

As the technological age continues to rapidly evolve and present increasing opportunities to operate more efficiently, this research book addresses an emerging gap relating to the application of geographic information systems (GIS) and mapping technologies to the expanding global property and real estate field. A core strength of this book is the multidisciplinary approach, which provides a unique and innovative investigation into the application of GIS concepts in the real estate sector. The contributors to the chapters in this book are recognised experts in their fields, with each chapter based upon a solid theoretical foundation incorporating research question/s and a case study approach.

This book covers both the GIS and property/real estate disciplines where the focus is placed on the synergy and interaction between both areas, rather than each field in isolation. It has been an increasing trend in many research institutions and industry bodies to collaborate at the discipline level. Therefore this book has been written to assist property stakeholders, GIS stakeholders and those who have an interest in GIS and/or property-related research and application. It successfully strikes a balance between these two fields. Even though there is an expanding body of knowledge about each individual area, there is a slow uptake with the application of GIS in the property and real estate discipline (Sosnowska et al. 2016). The real estate discipline itself, especially when referring to the assessment of real estate value by property valuers and surveyors, is largely premised on parameters associated with the location of the property (Reed et al. 2014). At the same time, surprisingly, there has been relatively little attention given to the underlying fundamentals of locational intelligence which is made possible through the use of spatial information, analysis and mapping methods (Michael et al. 2013). Although the property and real estate industry has a strong reliance on maps, often they are produced at a very basic level where the user has relatively little knowledge about how to create, manipulate and produce maps, or how to utilise more advanced spatial analysis tools and techniques (Hadiguna et al. 2014). Accordingly, this book has been written to fill this gap in knowledge.

The underlying framework for the research in this book is the importance of the situs or location of every parcel of land, either in its natural state or one that has been improved in some form or another (Reed 2015). Due to the heterogeneous nature of property, every individual parcel of land has a unique location identifier and no two parcels on earth are identical. This is in contrast to other asset classes, including structural improvements to land (i.e. two buildings can be identical and constructed at the same time), cash and shares/stocks. The scenario is further complicated by the large number of varying land uses observed in cities subject to the requirements of local planning legislation; for example, refer to Appendix B for an extensive list of property classification codes highlighting the large number of alternative land uses. Taken together, these aspects ensure a thorough knowledge of GIS is therefore essential to fully understand how the complex property and real estate market operates individually and collectively, let alone with the addition of other dimensions (e.g. three dimensions) and also the added consideration of change over time (Mishra and Nagar 2009). While other disciplines have made sound advances and have embraced technology in the 21st century, there is now an urgent need for the real estate discipline to catch up with the rapid pace of change as observed in the discipline of GIScience (Krause et al. 2012).

The largest single asset class in most countries is property and real estate in its many varying land uses, including areas covered with water, air rights and property rights below the earth’s surface; however, the different values (e.g. monetary, social, historical values) of individual and collective real estate is largely of interest to stakeholders, including owners, buyers, lenders, insurers and government agencies (Reed et al. 2014). The operation of the real estate market is also of interest in broader society as it affects most people, at the very least via the provision of shelter in the form of residential property. At the same time, there is a strong argument that as the international property discipline and its associated valuation process have been transforming from an ‘art’ to a ‘science’, there is a need for additional information about how to use GIS and mapping technologies to better undertake property and real estate analysis. From an international perspective it is common practice to refer to the built environment as ‘property’ in certain countries (e.g. the UK) and as ‘real estate’ in other countries (e.g. the US), hence the reference to ‘property and real estate’. For the remainder of this text the terms ‘property’ and ‘real estate’ are used interchangeably. From a mapping perspective the term ‘geographical information systems’ is referred to as ‘GIS’, with the underpinning discipline known as GIScience.

The contributions from this book to the real estate and GIS disciplines

The catalyst for this book is to address the clear gap in knowledge between these two disciplines, as observed by the authors in both the research/university sectors and in industry. Accordingly, this book is focused on research combining real estate and GIS, rather than examining the independent and separate disciplines of real estate and also GIS. As a starting point, there is an assumed basic level of knowledge about property/real estate which will assist in understanding how property is enhanced by mapping applications. For example, the importance of location for a property is commonly accepted (Reed 2015). If the reader is completely unfamiliar with the basic concepts of property prior to commencing this text (e.g. they may come from a pure GIS background), it would be beneficial to become familiar with basic property and real estate principles. In addition, it would be advantageous for each reader to investigate the circumstances surrounding information in their own local area/region, as it is not realistic to cover all contingencies and references to local jurisdictions in this book.

Another important consideration is the availability of real estate and spatial/mapping-related information in a specific area or identified areas of focus. Some of the accepted differences between jurisdictions are listed below, although it is strongly recommended to make individual investigations for individual circumstances:

(a)Detailed property-related characteristics/attributes may be freely available, while certain other information (e.g. owners’ names) may be withheld due to privacy law restrictions. The minimum accessible information typically refers to the registered address of the property, the location based on the street address, the land area and other relevant attributes.

(b)Information about improvements (e.g. type of structure, timing/type of renovations), if any, may also be available.

(c)Information relating to other characteristics about each parcel, if applicable (e.g. shape and topography of the land, contamination considerations, potential water views).

(d)Availability of mapping data in softcopy format including GIS shapefiles and other file formats.

(e)Cost of access to property and mapping-related data. In some countries this information is freely available (i.e. zero cost), while in other countries accessing large volumes of detailed data can be practically cost-prohibitive.

(f)Means of accessing data. The simplest approach is to access the data via an online portal over the internet, although alternatives include using a CD (compact disc), a spreadsheet or database package, or possibly via hard copy only.

This research book has been written primarily to provide insights into the array of spatial methods available with applicability for all international property markets. However, each property market will have individual characteristics that need to be fully understood when considering real estate and GIS applications. The main characteristics of real estate can be separated into two core attributes:

•type of land use – e.g. housing, industrial, office, retail, rural property (Appendix B); and

•actual location of the land – e.g. city centre, suburb or rural.

This research book is strong evidence of the rapid growth in research into real estate and GIS over the past 50 years (Krause et al. 2012). The catalyst for this book was to highlight the latest up-to-date research and provide a framework for the reader to increase their knowledge and skills about the relevance and application of real estate and mapping. For readers from a real estate background, it may be their first foray into GIS and hopefully will prove an inspiration to embrace advanced mapping programs, rather than relying solely on the simple generic and basic maps that are freely available as web mapping or mobile phone applications. Since the majority of real estate information has some aspect of spatial dimension, GIS outputs can be tailor-made to suit most situations, and an improved understanding of GIS and a property’s location directly results in better knowledge about a specific property. At the very least, the mapping can enhance the decision-support process. When relying on real estate as an input, a GIS analyst can embrace an optimal platform to undertake research, including sourcing expansive detailed data and associated analysis, which has ‘real life’ relevance and provides meaningful results. Most importantly, this research area is evolving as a rapidly emerging area where GIS has an important contribution to make over the long term.

Research in the real estate and property market

The property and real estate discipline is arguably one of the broadest of all research areas (Li et al. 2016). Rather than being easily defined and quantified in a similar manner to other disciplines (e.g. architecture, engineering, construction), real estate draws upon of many sub-disciplines which collectively form the property discipline. Examples include:

•Built environment: including, construction, sustainability.

•Finance: including valuation, cost of capital.

•Geography: including urban geography, demography, locational theory.

•Law: including legal ownership, transfer of ownership.

•Engineering.

Each of these disciplines, from a real estate perspective, publish their research in targeted journals in each area. Underlining the relatively new status of the combined real estate and GIS field, there are no journals which are specifically focused on both areas, but rather on either (a) specific aspects of the real estate discipline (e.g. International Journal of Housing Markets and Analysis) or aspects for the GIS discipline (e.g. Computers, Environment and Urban Systems or Applied Spatial Analysis and Policy).

‘Art versus science’ debate

From a real estate perspective, most of the discussion about the property and real estate market relates to the value of a parcel of land. There are many other discussions and related studies into real estate, such as for statutory planning purposes, but the most common reference to land is linked to the value of the land parcel as an asset at a particular point in time. The underlying premise is that practically all freehold land parcels at one point in time will have their ownership transferred; most often this transfer will conform to standard economic theory where the new owner will pay the arm’s-length market value in the form of monetary compensation to the seller (Reed 2015). In other words, it is the ‘value’ of the parcel which forms the reference for much of the discussion in real estate markets, where the location of the property most often adversely affects the property’s value (Bowcock 2015).

The accepted approaches to the valuation process are closely aligned to GIS principles and will be substantially enhanced by an improved understanding of mapping fundamentals (Sosnowska et al. 2016). To appreciate even a basic understanding of valuation it is essential to consider briefly the background to the valuation discipline, which has often been referred to as the ‘art vs. science’ debate. Since a valuation is based on a hypothetical sale of a property between a willing buyer and a willing seller, a rudimentary valuation approach is to consider the perception of both parties in the market-place based on judgement; this is generally referred to as the ‘judgement’ component, which actually lacked a substantial scientific basis. However, over time and with the advent of computer technology, there has been a gradual albeit slow uptake of the ‘science’ component in the process of assessing value. Accordingly, the use of GIS is a substantial component of this modern scientific approach (Krause et al.2012), and whilst it is accepted that many real estate-related activities will include both ‘art’ and ‘science’ as per conventional expectations, the emphasis in this book is placed on mapping as a scientific approach that will assist stakeholders in the real estate market as a form of decision-support system.

Technology and real estate

Broadly speaking, the real estate discipline has been relatively slow to adapt to change with reference to technology (Black et al. 2003). There are many reasons for this lagged approach, many of which are associated with the fundamental characteristics of the real estate market including:

•the lack of a central trading place or market;

•the unique or homogeneous nature of every property parcel;

•a relatively large number of potential buyers and potential sellers; and

•the lack of reliable and freely available information in the market.

Although other competing asset classes have embraced technology, such as online trading in the share or stock market, many aspects of the real estate market have remained relatively unchanged. However, since the early 21st century there has been a limited uptake of computer technology in the industry by property professionals, for example, assisted by the portability of laptop computers in the field and access to centrally located databases. In many countries most of the maps being referenced remained paper-based up until the mid-1990s, although this has gradually changed to online mapping, as access costs have decreased and the availability of online mapping products has increased. The emerging challenge has been to the ability of real estate stakeholders in using this new technology to improve their efficiency levels (Roig-Tierno et al. 2013).

There has remained a sustained level of resistance to the uptake of technology in the built environment, which was acknowledged in the early 1970s (Lee 1973). Arguably, this may be partly due to the long-standing nature of real estate theory which h...