Scoring Sustainable Residential Locations

residential location

What constitutes future-oriented residential areas? The answer is complex and can not be answered in a general or even complete manner for all residential real estate between Norderney and Berchtesgaden. A recent study searched for similarities that characterize future-proof and long-term profitable housing, and examines these success criteria more closely.

Ten macro-location and nine micro-location criteria with a particularly large impact on the future viability of residential real estate were identified. These macro and micro factors were evaluated.

This scoring does not just consider the macro criteria that determine the future viability of an entire city. For the first time, the scoring combines these insights with microcriteria that refer to a single location, a self-contained neighborhood or borough. The particular challenge lies in the selection of the set of criteria on the micro level. Living is very individual, the requirements of people vary depending on their life model, age and preferences.

The quantitative basis for the analysis is provided by the scoring, which combines macro and micro aspects using a standardized, specially developed tool for the initial assessment of residential areas. For the analysis, data from 30 German cities (“macro locations”) and 30 city districts according to KGS 12 (“micro locations”) were collected, examined and evaluated. In doing so, attention was paid to a balanced geographical distribution and the inclusion of residential locations from all clusters of cities in order to achieve the most realistic possible representation of the overall market. With regard to residential locations, the approach distinguishes between macro-location and micro-location criteria.

Some of the criteria show an inventory, such as security or affordability. Others are strongly forward-looking, such as forecasts of population growth and sustainable housing demand. Each of the criteria is then evaluated by means of defined value classes on a scale of one to five, one representing the lowest value and five the highest value.

The individual results are aggregated and add up to a score for the selected macro and micro-situation. The microvariable “Attractiveness of the residential area” is overweighted in the model because it consists of different subcriteria. All other variables are included equally in the scoring.

The study may offer helpful pointers and landmarks. From the perspective of long-term oriented investors, approaches for own investment strategies can be derived.