From Engineering to Economics: A Theoretical Framework for Structural Quality in Property Valuation

Siddharth R Desai; CA Marzun E Jokhi

doi:10.36948/ijfmr.2026.v08i03.72581

From Engineering to Economics: A Theoretical Framework for Structural Quality in Property Valuation

Author(s)	Mr. Siddharth R Desai, Dr. CA Marzun E Jokhi
Country	India
Abstract	The question of whether structural engineering quality matters to property value has been settled in the affirmative by a broad body of interdisciplinary evidence. The more pressing challenge—and the focus of this review—is how to ensure that this relationship is properly and systematically accounted for in valuation theory and practice. Structural engineering quality encompasses design, materials, construction methods, and load performance; it is a fundamental determinant of building safety, durability, functionality, and adaptability, all of which bear directly on economic value. Yet contemporary valuation practice routinely subsumes structural considerations within broad categorical assessments such as "construction quality" or "building condition," obscuring their specific contributions and generating potential market inefficiencies. Drawing on scholarship from real estate valuation, structural engineering, construction economics, and investment analysis across multiple international markets, this review examines the principal valuation methodologies—the comparison, income, and cost approaches, as well as emerging hedonic, machine learning, and multi-criteria decision analysis methods—and evaluates the degree to which each captures structural quality. The paper analyses the value-creation mechanisms of key structural systems, including foundations, lateral force-resisting systems, floor systems, and structural framing materials, and explores how seismic resilience, spatial adaptability, and building lifespan translate into market premiums. A central finding is that information asymmetry, temporal mismatch between engineering horizons and market holding periods, and professional knowledge gaps collectively impede the systematic pricing of structural quality—particularly in residential markets. An integrative theoretical framework drawing on capital asset theory, real options theory, and information economics is developed, and the paper concludes with specific recommendations for valuation practice, structural engineering, professional standards bodies, and policymakers, together with priority directions for future empirical research.
Keywords	structural valuation, property valuation methodology, information asymmetry, building performance, structural resilience
Published In	Volume 8, Issue 3, May-June 2026
Published On	2026-05-05
DOI	https://doi.org/10.36948/ijfmr.2026.v08i03.72581

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From Engineering to Economics: A Theoretical Framework for Structural Quality in Property Valuation

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