Double Perspective DEA on Real Estate Appraisal by Brazilian Standards

Luiz Fernando Lyra Novaes, André Felipe Fraga, Manoela Maria Rapuano De Lyra Novaes, Luiggi Senna

Abstract


Objective: This article innovates when we incorporate the statistical analysis to the method of Double-Perspective Data Envelopment Analysis (DP-DEA), with the objective of obtaining an estimate of greater accuracy and reliability according to the assumptions of the Best Unbiased Estimator (BUE).

 

Design / Research Method: Double Perspective Data Envelopment Analysis (DP-DEA) is an extension to Classical Data Envelopment Analysis (DEA) for estimating efficiency, asset values, indicators, and other attributes from two perspectives, achieving a common result is the main objective. This article innovates in DEA methodology, in two aspects: 1. To demonstrate the ability of the DP-DEA to perform at intervals the estimation of values from a random sample; 2. Through the statistical analysis, making estimates of central tendency according to the assumptions of the Best Unbiased Estimator (BUE – Best Unbiased Estimator).

 

Conclusions / findings: The practical procedures performed step by step through DP-DEA according to the assumptions of the BUE, presented in its main findings and conclusions are: 1. Incorporation of statistical analysis to the DP-DEA method, which assumes assumptions of properties of the Best Estimator Non-biased; 2. Within the scope of the DEA, it presents an innovative capacity to make estimates from random samples, and; 3. At the end of the article, by simulation, able to validate modeling through the variation of property characteristics, demonstrating that the estimation of the corresponding values is consistent according to the market’s expectations.

 

Originality / value of the method: This article opens new avenues to be explored by the DEA community. Firstly, as a tool for valuing assets, according to the Comparative Market Data Method. In Brazil, DP-DEA has been approved by the Brazilian Association of Technical Standards for this purpose. Another innovation is to evaluate performance which results from common gain according to two perspectives, which interact in the process or procedure under analysis.


Keywords


Double Perspective; Data Envelopment Analysis; Real Estate Appraisal

Full Text:

PDF

References


Appraisal Institute Commercial Data Standards (2004), Marshall and Swift - Version 2.0 Commercial Data Standards, http:www.redi-net.com,adn_db,AI _standards.pdf .

U.S. Department of Housing and Urban Development (2015), Appraisal Report and Data Delivery Guide, FHA Single Family Housing, B. Uniform Residential Appraisal Report Form for One Family Residential Properties. http://valuationmanagementgroup. com/ wp-content/uploads/2015/10/Appraisal-Report-and-Data-Delivery-Guide_ver-June-15-2015.pdf.

ABNT (Associacão Brasileira de Normas Técnicas) (2011), Avaliação de bens. Parte 2: Imóveis urbanos, Anexo D, ABNT NBR 14.653-2, https:,,www.ebah.com.br,content,ABAAAg6hAAI,nbr-14653-2-2011 [24.11.2018].

Banker R.D. (1993), Maximum likelihood, consistency, and Data Envelopment Analysis: a statistical foundation, “Management Science”, vol. 39 no. 10, pp 1265-73.

Banker R.D., Charnes A.W., Cooper W.W. (1984), Some models for estimating technical and scale inefficiencies in Data Envelopment Analysis, „Management Science”, vol. 30 no. 9, pp 1078-1092.

Bayraktar E., Tatoglu E., Sari K. (2008), Investigating the impact of value chain practices on retailer's performance: a casual approach, Icovacs, Izmir, Turkey.

Boldrini J.L., Costa R.S., Figueiredo V.L., Wetzler H.G. (1980), Álgebra linear, 3rd. ed., Harbra , São Paulo.

Brázdik, F. (2004), Stochastic data envelopment analysis: oriented and linearized models, CERGE-EI Discussion papers # 116, http://home.cerge-ei.cz/brazdik/research.html [11.02.15].

Charnes A.W., Cooper W.W., Rhodes E.L. (1978), Measuring the efficiency of decision-making units, „European Journal of Operational Research”, vol. 2 no. 6, pp. 429-444.

Davidson M. (2008), The Normal Distribution and the Central Limit Theorem https:// www. maplesoft.com/applications/view.aspx?sid=6879and view=html.

Eckard E.W. (2004), The law of one price in 1901, „Economic Inquiry”, vol. 42 no. 1, pp. 101-110.

El-Demerdash, B.E., El-Khodary, I.A., Tharwat, A.A. (2013), Developing a stochastic input-oriented data envelopment analysis (SIODEA) model, “International Journal of Advanced Computer Science and Applications”, vol. 4 no. 4, pp. 40–44.

Emrouznejad A., Yang G. (2017), A survey and analysis of the first 40 years of scholarly literature in DEA: 1978-2016, „Socio-Economic Planning Sciences”, vol. in press.

Färe R., Grosskopf G., Lovell C.A.K. (1996), Production frontiers, Cambridge University Press, Cambridge.

Gujarati D.N. (2003), Basic econometrics, 4th ed., McGraw-Hill, New York.

Hitchner J.R. (2017), Financial valuation. Applications and models, John Wiley and Sons, Hoboken NJ.

Koch R.K. (2013), Parameter estimation and hypothesis testing in linear models, 3rd ed., Springer, Berlin.

Kuosmanen T.K., Cherchye L., Sipiläinen T. (2006), Law of one price in data envelopment analysis. Restricting weight flexibility across firms, „European Journal of Operational Research”, vol. 170 no. 3, pp. 735-757.

Land K.C., Lovell C.A.K., Thore S. (1993), Chance-constrained Data Envelopment Analysis, “Managerial and Decision Economics”, vol. 14 no. 6, pp. 541-554.

Lins M.E., Meza L.A. (2006), Data Envelopment Analysis and integration perspectives, Decision Support Theory, Coppe,UFRJ, pp. 7-53.

Lins M.E., Novaes L.F.L., Legey L.F.L. (2005), Real estate appraisal. A Double Perspective Data Envelopment Analysis approach, „Journal of Operational Research”, vol. 138 no. 1, pp. 79-96.

Lins M.P.E., Sollero M.K.V, Calôba G.M., Silva A.C.M (2007), Integrating the regulatory and utility firm perspectives, when measuring the efficiency of electricity distribution, European Journal of Operational Research”, vol. 181 no. 3, pp. 1413-1424.

Mackmim D. (1994), The valuation and sale of residential property, Cengage Learning EMEA, Andover.

Maddala G.S. (2001), Introduction to econometrics, 3th edition, Wiley, New York.

Misra M., Katiyar G., Dey A.K. (2013), Consumer perception and buyer behaviour for purchase of residential apartments in NCR, „International Journal of Indian Culture and Business Management”, vol. 6 no. 1, pp. 56-66.

Morita H., Seiford L.M. (1999). Characteristics on stochastic DEA efficiency – reliability and probability being efficient, “Journal of the Operations Research Society of Japan”, vol. 42 no. 4, pp. 389–404.

Novaes L.F.L. (2002), Double Perspective DEA in real estate appraisal with GIS, doctoral thesis, Coppe,UFRJ, Rio de Janeiro, http:,,www.pellisistemas.com.br,downloads,Tese_EDO_DEA.pdf [24.11.2018].

Novaes L.F.L., Fraga A.F., Novaes M.M.R.L. (2016), www.avalsoft.com.br software, LOOP-DP-DEA.

Novaes L.F.L., Lins M.E., Paiva S.A., Pinheiro Jr. L.F. (2002), Avaliação Imobiliária pelo Método da Envoltória sob Dupla Ótica, 3º Simpósio Brasileiro de Engenharia de Avaliações, Curitiba.

Novaes L.F.L., Paiva S.A. (2010), Double Perspective Data Envelopment Analysis. One approach to estimate the „LOOP” arbitrage, „iBusiness”, vol. 2 no. 4, pp 354-362.

Plagnet M.A. (2006), Use of benchmarking methods in Europe in the electricity distribution sector, Conference on Applied Infrastructure Research, https:,,www.infraday.tu-berlin.de,fileadmin,fg280,veranstaltungen,infraday,conference_2006,papers_presentations,paper---plagnet.pdf [24.11.2018].

Ray S.C. (2004), Data Envelopment Analysis. Theory and techniques for economics and operations research, Cambridge University Press, New York.

Sampaio L.P.C.B. (2011), Applying Double Perspective Data Envelopment Analysis to the benchmarking process of public utilities, doctoral thesis on electric engineering, Electrical Engineering Department, University of Brasília, Brazil.

Shephard R.W. (1970), The theory of cost and production functions, Princeton University Press, New Jersey.

Simar L., Wilson P. (1998), Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models, “Management Sciences” vol 44 no. 11, pp. 49-61.

Souza R.M.S. (2009), Análise comparativa do intervalo de confiança dos mínimos quadrados versus envoltórias da envoltória – III Simpósio SOBREA, http:,,www.scielo.br,scielo.php? script=sci_arttextandpid=S0006-87052002000200013 [24.11.2018].

Subhash C. Ray (2004), Data Envelopment Analysis – theory and techniques for economics and operations research, Cambridge University Press, Cambridge, USA.

Vasconcellos M.A.S., Alves D. (1999), 1TH Edition, Code – 040555111.

Varian, H.R. (1985), Nonparametric analysis of optimizing behavior with measurement error, “Journal of Econometrics”, vol. 30, pp. 445-458.

Wanke P., Barros C.P., Emrouznejad A. (2017), Assessing productive efficiency of banks using fuzzy-DEA and bootstrapping: a case of Mozambican banks, “European Journal of Operational Research”, vol. 249, pp. 378-389.

Whelan J., Msefer K. (1994), Economic supply and demand, MIT System Dynamics in Education Project Under the Supervision of Professor Jay W. Forrester, https:,,ocw.mit.edu,courses,sloan-school-of-management,15-988-system-dynamics-self-study-fall-1998-spring-1999,readings,economics.pdf [24.11.2018].

Wonnacott T.H., Wonnacott R.J. (1990), Introduction statistics for business and economics, 4th ed., John Wiley and Sons, Hoboken NJ.




DOI: http://dx.doi.org/10.29015/cerem.553

Refbacks

  • There are currently no refbacks.


Copyright by Wyższa Szkoła Bankowa we Wrocławiu

Wydawca/Publisher:

Wyższa Szkoła Bankowa we Wrocławiu

ul. Fabryczna 29-31
53-609 Wrocław

The Central European Review of Economics and Management

ISSN 2543-9472

eISSN 2544-0365

 

Zeszyty Naukowe Wyższej Szkoły Bankowej we Wrocławiu (WSB Research Journal)

ISSN 1643-7772
eISSN 2392-1153