Transforming surface rights into property rights: An analysis of current estimation procedures and a comparison with an alternative hypothesis.

Law 448/1998 on “Public Financing Measures for Stability and Development” offered Italy’s municipalities the possibility to cede ownership of areas included in ‘Piani di Zona’ (Area Plans), whose surface rights have already been transferred to owners of residential units. The general principles of applicable legislation are implemented by local governments, though using different procedures. The paper presents a survey of the methods used in selected Italian cities, followed by a case study in the city of Pescara, where the current approach differs notably from the dictates of law. After verifying the potential revenues deriving from the reversion of surface rights in approximately half of the real estate properties involved in this process, the same values were recalculated using an alternative hypothesis founded on actualised market value, analogous to the estimation of the value of a bare-ownership property. This alternative is formally correct, present in manuals and founded on assumptions deemed legitimate and free of contrasting jurisprudence. In the case of Pescara, the proposed method generates significantly higher revenues. For this reason it is considered equally interesting for all of Italy’s other municipal governments.