<p>A rough estimation technic consists in <em>(i)</em> getting the <em>half</em> of the Gross Urban Product (GUP), thinking of it as a perpetual yearly <em>net</em> income flow (i.e. a profit flow) attributable to the entire city as such, and <em>(ii)</em> dividing it by the average cost of capital that is immobilized locally, say, <span class="math-container">$2\%$</span>, minus the GUP's growth rate, say, <span class="math-container">$1\%$</span> <em>(both real and assumed constant over an infinite horizon)</em></p>

<p>In the case of <a href="https://en.m.wikipedia.org/wiki/Munich_Metropolitan_Region" rel="nofollow noreferrer">Munich</a> it would be</p>

<p><span class="math-container">$\frac{1}{2}\frac{GUP_{2018}}{.02 - .01} = 105\text{E}^{11}€$</span></p>

<p><span class="math-container">$10.5$</span> trillions euros, actually calculated using the <a href="https://en.m.wikipedia.org/wiki/Dividend_discount_model" rel="nofollow noreferrer">DD Model</a>.</p>

<p>Note that public infrastructures are not excluded from the above valuation since the city is considered as an indivisible whole.</p>

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2019-10-17T11:32:47.417Z
Any question @user1412631 ?
keepAlive
CC BY-SA 4.0
2019-01-31T21:13:25.883Z
2019-01-31T21:51:40.567Z
2019-01-31T21:51:40.567Z
keepAlive
<p>At lunch we pondered, how much a hypothetical investor would have to pay for a whole city.</p>

<p>What would the combined value of all real estate in a large city (like Munich) be?
Is there a way to estimate this even halfway reliably?</p>

<p>Of course there are buildings, that won't ever be for sale, like public buildings or cultural heritage. These should probably be excluded from the computation.</p>

<investment>
Hypothetical price of a city (e.g. Munich)
user1412631
# Hypothetical price of a city (e.g. Munich)

(Asked by: username_0 on 2019-01-29)

At lunch we pondered, how much a hypothetical investor would have to pay for a whole city.

What would the combined value of all real estate in a large city (like Munich) be?
Is there a way to estimate this even halfway reliably?

Of course there are buildings, that won't ever be for sale, like public buildings or cultural heritage. These should probably be excluded from the computation.

**Tags:** investment


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## 1 answers

### Answer by username_1 on 2019-01-31. Score: 2

A rough estimation technic consists in *(i)* getting the *half* of the Gross Urban Product (GUP), thinking of it as a perpetual yearly *net* income flow (i.e. a profit flow) attributable to the entire city as such, and *(ii)* dividing it by the average cost of capital that is immobilized locally, say, $2\%$, minus the GUP's growth rate, say, $1\%$ *(both real and assumed constant over an infinite horizon)*

In the case of [Munich](https://en.m.wikipedia.org/wiki/Munich_Metropolitan_Region) it would be

$\frac{1}{2}\frac{GUP\_{2018}}{.02 - .01} = 105\text{E}^{11}€$

$10.5$ trillions euros, actually calculated using the [DD Model](https://en.m.wikipedia.org/wiki/Dividend_discount_model).

Note that public infrastructures are not excluded from the above valuation since the city is considered as an indivisible whole.

> **Comments:**
> **username_1**: Any question @username_0 ?  

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