Search results

This paper aims to investigate the stigma effect on property valuation/sale price for remediated residential leaky buildings constructed in New Zealand during the 1990s and 2000s. In particular, the authors want to know whether meeting the regulatory standards for remediation work will totally eliminate the negative stigma effect on remediated properties.

Property transaction data for remediated leaky homes are often limited and not well recorded. Thus, it is very difficult or even impossible to identify those remediated properties in a standard property transaction data set. Moreover, a vast amount of information regarding the nature of property defects, remediation process and method is very difficult to obtain. In this study, members of the Property Institute of New Zealand (PINZ) and the Real Estate Institute of New Zealand were invited to participate in an online website survey. The results were then analysed using the principal component analysis, ordinary least squares and multinomial logit regressions.

This study indicates that for monolithic-clad dwellings, the price discount due to leaky building stigma is significant. Depending on the severity of the leaking problems, this is about 11 per cent on average for general market stigma and an additional 5-10 per cent for post-remediation stigma. The results highlight that meeting the regulatory standards for remediation work cannot totally eliminate the negative stigma effect on remediated properties. The findings are in line with the lemon theory introduced by Akerlof (1970) and robust to individual characteristics of the survey respondent.

General market stigma has been widely researched and documented in the literature. In contrast, there is a lack of research as to whether remediation will eliminate stigma, particularly in the presence of general market stigma. The authors are the first to show that post-remediation stigma can cause value loss in addition to general market stigma based on the lemon theory proposed by Akerlof (1970).

The “stigma” associated with remediated contaminated land is the blighting effect on property value caused by perceived risk and uncertainty. Uncertainties relate to negative intangible factors such as the inability to effect a total “cure”, the risk of failure of the remediation method, the risk of changes in legislation or remediation standards, the difficulty in obtaining finance, or simply a fear of the unknown. Post‐remediation “stigma” is the residual loss in value after all costs of remediation, including insurance and monitoring, have been allowed for. It equates to the difference in value between a remediated contaminated site and a comparable “clean” site with no history of contamination. The initial results from a study of the market sales data of post‐remediated vacant residential land along the Swan River, in Perth, Western Australia, from 1992‐1998 are summarized. The aim of this ongoing research is to estimate the amount of “stigma” arising from a site’s contamination history and measure the effect of this on residential property values of remediated property. The results show that while a site’s contamination history impacts negatively on property prices, the price decreases are offset by the positive influence on price from additional amenities provided in the case study neighbourhood.

This study aims to provide a review of brownfield policy and the emerging sustainable development agenda in the UK, and to examine the development industry's (both commercial and residential) role and attitudes towards brownfield regeneration and contaminated land.

The paper analyses results from a two‐stage survey of commercial and residential developers carried out in mid‐2004, underpinned by structured interviews with 11 developers.

The results suggest that housebuilding on brownfield is no longer the preserve of specialists, and is now widespread throughout the industry in the UK. The redevelopment of contaminated sites for residential use could be threatened by the impact of the EU Landfill Directive. The findings also suggest that developers are not averse to developing on contaminated sites, although post‐remediation stigma remains an issue. The market for warranties and insurance continues to evolve.

The survey is based on a sample which represents nearly 30 per cent of UK volume housebuilding. Although the response in the smaller developer groups was relatively under‐represented, non‐response bias was not found to be a significant issue. More research is needed to assess the way in which developers approach brownfield regeneration at a local level.

The research suggests that clearer Government guidance in the UK is needed on how to integrate concepts of sustainability in brownfield development and that EU policy, which has been introduced for laudable aims, is creating tensions within the development industry. There may be an emphasis towards greenfield development in the future, as the implications of the Barker review are felt.

This is a national survey of developers' attitudes towards brownfield development in the UK, following the Barker Review, and highlights key issues in UK and EU policy layers.

Increasing litigation involving land contamination and an escalation in the number of incidents where property owners have suffered financial losses from these cases has resulted in negative impacts on property values and greater risks associated with investments in contaminated property. To date, there has been little systematic research on the valuation methodology that accounts for these risks. To help address this, two similar surveys were undertaken within New Zealand (NZ) and the United Kingdom (UK), the results of which are summarised here. The survey instruments were designed to determine what the respondents are currently doing when providing advice or producing valuations to account for the financial risks associated with investing in contaminated properties. It is hoped that the survey results will aid the process of developing “best practice” methodologies for use by valuers.

The value of land for development is normally estimated by the use of the comparative method or the residual approach. The aim of the paper is to examine appraisal practice, in particular the bases of valuation, availability and utilisation of data, reporting of the value figure and the management of risk.

The paper reports the findings of a survey of valuers from leading practices throughout the UK, bank lenders and developers. An example of an appraisal of an urban regeneration site is included in order to highlight the key issues within the discussion.

A variety of reporting practices is found from a tightly drawn range of values to single‐point estimates along with a detailed explanation of the assumptions employed. Developers and lenders favoured the latter, but they appeared to be open‐minded about a range of values or an expression of uncertainty being reported, provided that there is a clear and well supported justification. Risk management approaches are underdeveloped within the profession.

The valuation of urban regeneration land is said to be one of the most vexed issues in the appraisal of projects due to a lack of data transparency in urban regeneration markets, shortcomings in traditional appraisal methodologies and complexities of public sector grant procedures.

The purpose of this study is to solve five key brownfield valuation problems.

This aim is achieved by using doctoral research on integrating the scientific process into the appraisal process. The first objective is demonstrating why four of the problems require solutions prior to solving the first problem, a valuation procedure for formerly used sites. A second objective is to use empirical data from appraisals to reveal why existing methodology is not reliable – because it does not solve the four problems.

The resulting findings are that a developmental model that incorporates the Triad approach to quantifying environmental uncertainty, initially used in the USA, simulates a process used by buyers to establish the price paid for brownfields with contaminated land.

The practical implication that results from this research is that valuers need to emulate the buyer's process when valuing this property type. Prescriptive procedures for valuation requiring the use of scientific methods, as used in the Triad process, need to be set forth to quantify the atypical uncertainties in valuing this property type. The results of this research should be of significant interest to all stakeholders that are involved in brownfield redevelopment, so that they can insure that their needs will be met by improved feasibility analysis.

This research is unique in that it is the first empirical test of the reliability of the valuation of brownfields that need to undergo a time‐consuming and often expensive soil remediation process.

UK government policy regarding the clean‐up of contaminated land favours treatments which are appropriate to the actual or proposed use of the land. This suitable‐for‐use approach predicates against the total removal of contaminated soil and in favour of in situ remedies. Any in situ treatment, whether it comprises containment of the contamination or changing its physical characteristics through chemical or biological methods, will leave behind some degree of residual risk. This risk may take many forms, for example the appropriateness or otherwise of the concentrations of materials left on treated sites, the possible failure of the treatment method and the potential for future changes in legislation. If valuers are to prepare valuations of sites, both before and after treatment, which adequately reflect the true situation and do not seek to avoid the influence of past contamination, then they need to be able to assess the risks associated with the site. In a numerically small market, and with limited information as to past contamination and treatment methods, valuers need to place considerable reliance on their professional judgements. Discusses possible guidelines which may be adopted in the treatment of affected sites for residential, industrial, commercial and leisure uses. Discusses the perceptions of valuation and development professionals through the results of questionnaire and interview surveys. Considers the “stigma” implications in respect of contaminated land values, both before and after remedial treatment, and attempts to place land contamination into context with other, everyday environmental issues. Proposesd a list of potentially contaminative industrial uses and ranks these in order of perceived hazard. Proposes a multi‐disciplinary approach with a view to the adoption of a risk assessment method for the appraisal of contaminated land.

This paper seeks to reduce the lack of quantitative research by addressing diminution in value to non‐residential property resulting from environmental contamination.

This meta‐analysis extracts data from approximately a dozen peer‐reviewed articles and 100 case studies from real estate appraisers in the USA. A dataset containing 106 contaminated non‐residential observations is examined using Regression (OLS). Forward (stepwise) and backward selection was performed. The dependent variable included percentage loss and dollar amount. The independent variables were contamination type, US region, land use type, distance from the source (mostly contaminated subjects), passage of time, year, urban or rural, market conditions, litigation, and indemnification.

The model adjusted R squares range from 37 percent to 66 percent. Approximately a third of cases had no loss. This research used petroleum case studies as the reference category for comparison with other types of contamination. The following variables were statistically significant in all four models: Creosote/PCB and Other contamination. The following were significant in two models: Other land use, 30‐year mortgage rate, Rural location, TPH, Multiple contamination, TCE, Under‐remediation, and Mineral extraction region. Finally, the following variables were significant in one model at least at a 90 percent level of confidence: Heavy metals, Industrial Midwest region, and pre‐1995 sale.

Properties in the remediation phase show less of a loss in value. Selective case studies within the same period of the clean‐up cycle make the best comparables. The US regional location was less important.

This is the first empirical research using a meta‐analysis to study damage effects for non‐residential property affected by contamination.