Is quality central? Perceived quality, monocentricity, and financial assumptions

Abstract

Purpose

In this article, the aim is to document the divergences/convergences between the market perceptions of quality and the financial estimations for office buildings relative to the notion of centrality and the distance to the central business district (CBD).

Design/methodology/approach

Based on a hierarchical approach that decomposes and estimates the perceived quality of buildings from the stakeholders’ perspectives, we study the geographies of perceived quality measures in the Greater Paris Metropolis and compare them to the financial geography.

Findings

The perceived location quality decreases with distance from the CBD whereas judgments on the built structure and the workplace do not, exhibiting a ring-shaped pattern. The gradient of the components of the perceived quality are heterogeneous, having positive, negative or null values. Appraisers tend only to consider the quality of location in their estimations.

Originality/value

This article raises the issue of fair spatial judgments by appraisers and the financial market. Monocentricity is not the rule in the market perceptions of quality. It suggests that financial estimates are strongly biased, with mental representation of centrality as a judgmental heuristic.

Citation

Andriot, P., Larceneux, F. and Simon, A. (2024), "Is quality central? Perceived quality, monocentricity, and financial assumptions", Journal of European Real Estate Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JERER-08-2022-0019