Quantifying terrain factor using GIS applications for real estate property valuation

Abstract

This thesis studies the use of GIS applications to derive adjustment figures for the terrain factor in property valuation tasks. It aims at suggesting a quantitative approach alternative to evaluate the terrain factor as opposed to traditional methods and current industry practices where terrain is qualitatively judged based on visual observation at site and subjected to individual opinion.

In this study, the terrain factor is considered by analysing the slope and surface roughness elements of terrain. To achieve this, slope and surface roughness values are generated from available open source digital elevation models (DEMs) within the Esri ArcGIS software environment. For the purposes of this study, the Shuttle Radar Topography Mission (SRTM) DEM developed by National Geospatial-Intelligence Agency (NGA) and United States National Aeronautics and Space Administration (NASA), as well as the Advance Spaceborne Thermal Emission and Reflection Radiometer (ASTER) Global DEM jointly developed by Ministry of Economy, Trade and Industry, Japan (METI) and NASA, were used to derive terrain values.

The output adjustments were tested on several hypothetical valuation cases, consisting of small and large properties, to see the effects of DEM resolution upon the results.

In order to test the accuracy of the proposed-adjustment outputs and applicability of the study methods, feedbacks from industry experts were collected via an online survey for analysis. Upon analysing the feedbacks, this study finds that industry experts are of the opinion that the terrain adjustments proposed by this method are reasonable for use in the industry practice, although some apprehensions were also noted, as property valuers tend to exercise caution when using automated valuation methods.

The proposed method is simple to apply and does not require advanced knowledge of GIS functions to operate. Therefore, considering the positive feedback from the valuation community, it could pave way towards future incorporation of geostatistical methods/ components in value analysis.

Abstract (Uncoded languages)

Tesis ini mengkaji kegunaan aplikasi GIS untuk mendapatkan pekali pelarasan bagi faktor rupabumi dalam kerja-kerja penilaian. Maksud kajian adalah untuk mencadangkan pendekatan kuantitatif bagi mempertimbangkan faktor rupabumi sebagai alternatif kepada kaedah tradisional dan amalan semasa industri yang bersifat kualitatif, yang mana faktor rupabumi diputuskan berdasarkan pemerhatian visual di tapak dan tertakluk kepada pendapat peribadi.

Dalam kajian ini, faktor rupabumi dipertimbangkan melalui analisis ke atas elemen kecerunan dan kekasaran permukaan rupabumi. Nilai kecerunan dan kekasaran rupabumi dijana daripada model aras digital (DEM) yang diperolehi daripada sumber terbuka (open source) menggunakan pakej perisian Esri ArcGIS. Untuk tujuan kajian ini, nilai elemen cerun diperolehi dari DEM Shuttle Radar Topography Mission (SRTM) yang dibangunkan oleh National Geospatial-Intelligence Agency (NGA) dan United States National Aeronautics and Space Administration (NASA) serta DEM Advance Spaceborne Thermal Emission and Reflection Radiometer (ASTER) yang dibangunkan melalui usahasama Kementerian Ekonomi, Perdagangan dan Industri, Jepun (METI) dan NASA.

Cadangan pelarasan yang dijana (output) daripada kajian ini diuji dalam beberapa kes penilaian andaian (hypothetical) yang terdiri daripada harta tanah bersaiz kecil dan besar, bagi mengkaji kesan perincian resolusi DEM ke atas penilaian.

Bagi menguji ketepatan output pelarasan yang disyorkan dan kesesuaian aplikasi syor pelarasan oleh kaedah-kaedah kajian, maklum balas daripada pakar-pakar industri dikumpul melalui soal-selidik atas talian (online) untuk dianalisis. Berdasarkan maklum balas soal-selidik, pakar-pakar industri pada umumnya berpandangan kadar pelarasan faktor rupabumi yang disyorkan oleh kaedah-kaedah kajian ini adalah munasabah untuk digunakan walaupun beberapa keraguan turut dikesan, tetapi ini adalah kerana penilai berjaga-jaga dengan nilaian janaan komputer.

Kaedah yang dicadangkan oleh kajian ini adalah mudah untuk diaplikasi dan tidak memerlukan pengetahuan yang mendalam tentang GIS untuk digunapakai. Oleh itu, memandangkan maklum balas yang diterima daripada komuniti penilai adalah positif, kaedah kajian mungkin dapat membuka langkah bagi memasukkan (include) komponen analisis geostatistik dalam analisis nilai di masa hadapan.

Popular Abstract

The comparison method of valuation is based on the basic principal that properties that are close to one another in location and most similar to each other in feature would logically be similar in value. Using this method, the value of a subject property at a specific time and for a specific purpose is determined by gathering comparable sale evidences at the stated date of transaction, whereby the transacted amount of the comparable is adjusted to account for factors of dissimilarity between the comparable and the subject. While some factors (e.g.: size) is numerical in nature and thus may be analysed quantitatively, in current practice, many other factors are being analysed qualitatively based on observation and personal opinion. Although this qualitative way of analysing property factors is widely accepted within the valuation community, such approach allows for a wide area for interpretation as it is difficult to put a scale on personal views and opinions. Studies in spatial statistics have contributed towards the development of GIS applications that is able to deal with spatial data in a quantitative manner. In relation to that, this project attempts to use GIS application to analyse a selected adjustment factor to be incorporated into the valuation practice.

This project will propose adjustment values for the surface terrain factor, by generating slope and surface roughness values from free Digital Elevation Models (DEMs). These values are then linked to the corresponding property unit to obtain the average terrain value per property. The terrain value of the comparable property unit is then compared to the terrain value of the subject property and the difference is analysed to suggest a reasonable adjustment value for the comparable.

The adjustment outputs derived from the study methods are tested by gathering feedback from property experts via an online survey based on several hypothetical valuation cases. Response from the survey notes that most respondents find the derived adjustment outputs as reasonable for application in industry, although there are some inconsistencies noted in the survey results, likely due to the small sample size used in the project, as well as due to the coarse resolution of the DEMs used.

It should be noted that the methods proposed in this project is simple to use and does not require advance knowledge in GIS to operate. In fact, it should be said that this method may readily be used, especially in the event of available high quality elevation data.

• author: Mudzaffar Ali, Dahlia
• supervisor: Ulrik Mårtensson
• organization: Dept of Physical Geography and Ecosystem Science
• alternative title: GIS and Property Valuation
• course: NGEM01 20151
• year: 2016
• type: H2 - Master's Degree (Two Years)
• subject: Earth and Environmental Sciences
• keywords: digital elevation model (DEM), GIS, geography, physical geography, property valuation
• publication/series: Student thesis series INES
• report number: 368
• language: English
• id: 8725924
• date added to LUP: 2016-02-18 10:38:07
• date last changed: 2016-02-18 10:38:07