Capturing Social Value using Ordinal Data, Gower Distance & Quality Point

Social value refers to an actionable concept and something that will positively impact stakeholders and broader society for better living. Capturing the social value of a building in a sales or rental price is very important but challenging because its definition could be interpreted widely due to the subjectivity and nature of social value for each case building, which produces ambiguity for the different auditors and the stakeholders. To give a reasonable estimate for the value (either for sales and/or rental price), we propose and illustrate how to use ordinal (and nominal) rating data to capture social value together with other common building characteristics. We propose a novel, simple, and practical approach using Gower Distance, i.e., Gower (Dis)similarity index(es) among comparable buildings & clustering technique as the basis. Hence, it is more flexible in selecting comparable buildings & can be easily adapted to measure Social Value. Together with the classic grid adjustment method (Quality Point/Quality Rating adjustment), they can be used to provide a fair market estimate for the rental (or sale) price of buildings capturing the social value. Calculation using numerical examples from a client in Jakarta is provided to illustrate how the proposal works.