This analysis should be of interest to a host of domestic and international market participants including academics who study real estate markets, tax assessors who determine market value, appraisers who make market-derived rent adjustments, and property managers who set apartment rents. While the monocentric urban models were once adequate for predicting the declining rent gradients for North American cities, the advent of a transportation system with major arteries such as turnpikes, thoroughfares and commuter rails has distorted the rent gradient for many cities. As to be expected, distance to the CBD still continues to exert a dominant influence on apartment values in spite of the impacts of the thoroughfares. The current paper applies the hedonic approach to five rental submarkets in the Quebec region, namely Quebec City, Vanier, Ste-Foy, Beauport and Charlesbourg. In addition, resorting to a regional geographic information system permits integration of neighborhood effects into the analysis.
Findings suggest that significant differences in implicit prices do exist across market segments.
However, while consistent results are obtained for major rent determinants, collinearity clearly emerges with respect to some rental attributes. It attempts to provide a solution for owners and managers of apartments to the thorny problem of setting a property's rental rate. This is then followed by several observations concerning the advantages and disadvantages of such an analysis in a practical setting. The results indicate that the ALN model provides an accurate estimation of rents with only seven input variables, while other multivariate statistical techniques do not. The ALN model automatically selects the best network structure, node types and coefficients, and therefore it simplifies the maintenance of the model.