Within an efficient market, price is supposed to mirror the quality of a product: A high quality product gets a higher price than a low quality product. However, for real estate products one has to question this assumption. Real estate markets are nontransparent and properties are rather complex products. Thus the informational content of the price of a property will reflect rather scarcity then quality. Within a well-defined sub-segment of an office market similar properties are seen as substitutes for one another. Therefore the transaction price of one property is more influenced by the prices of the other properties than by detailed analyses of the quality of this specific property.

For portfolio management a key task is to examine the value chain of each property and to determine potentials for improvements. Consequently, it is important to have a good assessment of the quality of a property in order to decide whether it will be worthwhile to invest in quality improvements. We developed a new approach and tested it for the French, German and UK real estate markets. This methodology is directly based on the dimensions of the quality, elicited via qualitative interviews with experts. We introduce a new approach where the contributions of each characteristic are judged by market participants themselves. More precisely, this approach consists in making explicit market quality judgments used questionnaire on line.

In the first phase, a group of national market participants are asked to formulate overall quality judgements on buildings ofthe national office market. Then an econometric procedure is applied to identify what are the most valued characteristics. This approach allows different buildings to be positioned relatively to a benchmark and provide an alternative way to consider quality, i.e. the reference value of the building. Furthermore, a comparison between the three countries France, Germany and UK is possible. This approach also allows determining the impact of the “green"" component of a property. 

Altogether, the paper highlights the need for a more comprehensive approach including all the dimensions of quality, objective as well as subjective, to define a indicator of the ""real value” of a building enabling buildings to be compared on a the overall quality dimension.