LAND VALUATION – LAND PRICE DETERMINTION IN CUA DAI WARD, HOI AN CITY, QUANG NAM PROVINCE USING GISBASED MULTICRITERIA ANALYSIS APPROACH

TABLE OF CONTENTS INTRODUCTION 1 1. The importance of research 1 2. Objectives Missions 2 2.1. Objectives 2 2.2. Missions 2 3. Research limits 3 4.Meaning Of Practical Science 3 5. Structure 3 CHAPTER 1: LITERATURE REVIEW ABOUT LAND VALUATION – LAND PRICE DETERMINATION AND ESTABLISHING REGION MAP OF LAND VALUE 4 1.1. Overview of land price and Theoretical basis of land price 4 1.1.1. Overview of land price 4 1.1.2. Theoretical basis of land price 5 1.1.3. Factors affecting land price 7 1.2. Theoretical basis for land valuation – land price determination 9 1.2.1. Definition of land valuation – land price determination 9 1.2.2. Land valuation – land price determination’s methodologies 10 1.3. Introduction of region map of land value 14 1.4. Literature reviews on land valuation – land price determination in the world and in Vietnam. 16 1.4.1. In the world 16 1.4.2. In Vietnam 19 1.4.3. General reviews of the science researches 20 CHAPTER 2: ESTABLISHING REGION MAPS OF LAND VALUE BASED ON GEOGRAPHIC INFORMATION SYSTEM AND MULTICRITERIA ANALYSIS 21 2.1. Introduction of Geographic Information System (GIS) 22 2.1.1. Definiton of GIS 22 2.1.2. Functions of GIS 22 2.1.3. GIS data types 23 2.1.4. The main components of GIS 24 2.1.5. Advantages and Disadvantages of GIS 25 2.1.6. Introduction of ArcGIS software 25 2.2. Introduction of Analytic Hierarchy Process (AHP) 26 2.2.1. Definition of AHP 26 2.2.2. The basic steps of AHP 27 2.2.3. Advantages and Disadvantages of MCA 31 2.3. Methodologies 32 2.3.1. The investigation method of secondary data collection 32 2.3.2. The method of data processing and analyzing in GIS 32 2.3.3. The method of establishing spatial database 32 2.3.4. Method of searching and analyzing data 32 2.3.5. Analytical Hierarchy Process (AHP) 32 2.3.6. Interpolation method 32 2.4. Research process 33 2.4.1. Identify the purposes, requirements, responsibilities and scopes of research 33 2.4.2. Investigating, collecting, processing information 34 2.4.3. Building database 34 2.4.4 Calculating effect coefficients 35 2.4.5. Assigning coefficients for land plots 35 2.4.6. Interpolation land prices 36 2.4.7. Establishing mao 37 CHAPTER 3. LAND VALUATION – LAND PRICE DETERMINATION AND ESTABLISHING REGION MAPS OF LAND VALUE AT CUA DAI WARD, HOI AN CITY, QUANG NAM PROVINCE, VIETNAM 38 3.1. Features of research area 38 3.1.1. Natural, socioeconomic situations in Cua Dai ward 38 3.1.2. General assessment of natural, economic, social and environmental conditions 40 3.2. Building a database serving land valuation 41 3.2.1. Legal regulations 41 3.2.2. Application GIS in establishing database serving land valuation 42 3.3. Establishing region map of land value in Cua Dai ward at state price 46 3.3.1. Updating Land price data to database on the map 46 3.3.2. Checking the results and establishing map 50 3.4. Valuating and establishing region map of land value in Cua Dai ward at market price 51 3.4.1. Calculating effected coefficient by multi criteria analysis 51 3.4.2. Insert data into a maps database 57 3.4.3. Interpolating land prices 59 3.4.4. Editing, completing land value map 60 3.5. Comparing the market price with the state price 61 CONCLUSIONS AND RECOMMENDATIONS 63 1. Conclusions 63 2. Recommendations 65 APPENDIX REFERENCES

MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT

HANOI UNIVERSITY OF NATURAL RESOURCES AND ENVIRONMENT

FACULTY OF LAND ADMINISTRATION

STUDENT’S SCIENTIFIC RESEARCH 2016 - 2017

LAND VALUATION – LAND PRICE

DETERMINTION IN CUA DAI WARD,

HOI AN CITY, QUANG NAM PROVINCE USING GIS-BASED MULTI-CRITERIA

ANALYSIS APPROACH

Scientific speciality: Land Administration

HANOI – 05/2017

MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT

HANOI UNIVERSITY OF NATURAL RESOURCES AND ENVIRONMENT

FACULTY OF LAND ADMINISTRATION

STUDENT’S SCIENTIFIC RESEARCH 2016 - 2017

LAND VALUATION – LAND PRICE

DETERMINATION IN CUA DAI WARD,

HOI AN CITY, QUANG NAM PROVINCE USING GIS-BASED MULTI-CRITERIA

ANALYSIS APPROACH

Ẹhnicity: Kinh/Vietnamese

Class: DH3QN, Faculty of Land administration

Department of House and Land administrationSenior year/4-year academic

Supervisors: Assoc Prof Dr NGUYEN An Thinh

Dr PHAM Anh Tuan

HANOI, 05/2017

TABLE OF CONTENTS

REFERENCES

LIST OF ABBREVIATIONS

3 K_D Coefficient of deep indicators

LIST OF TABLES

LIST OF FIGURES

1 The importance of research

Land valuation and land price determination have been and currently being atopical issue in many countries around the world nowadays Its benefits expertise tothe functions of land-use planning and the recording of land tenure cover the areas ofinsurance, compensation, property tax, compulsory purchase and strategic advice togovernments (David Peter Mitchell et al, 2015) Land valuation is not only used forstate management of land but also toward sustainable development and becoming one

of the foundations of land administration (Dale, P.F., McLaughlin, J.D., 1988) Eachcountry has its own way to determine land price and applies several land pricedetermination methods, so that land price changes from places to places (CristinaM.B., 1998) The differences in land price, especially the difference between the landstate price and land market price, will make a big impact on economic – social issues.The land price approached by the government based on the land's ability to make aprofit, the bank interest rate and the supply-demand relationship, which is issued byPeople's Committees of provinces and cities as a detailed price list, is no longerreasonable for land use situation and unable to meet the changes ongoing in the areas

In the developing countries, including Vietnam, the co-existance of two types ofland price is also a major problem in land management and land use situation (LinGan, Chang-chun Feng, 2015) These changes are happened stronger in narrow coastalplains (David Peter Mitchell et al., 2015), especially in Quang Nam coastal area asCua Dai ward, Hoi An city Quang Nam province, where as one of five key economicregion of central, is gradually implementing urbanization – modernization According

to the criteria developed lettered urbanization Quang Nam province, Urbanization Rate

in 2020 will be around 32.3%, and it’s going to reach about 60% in 2030 (decree no.1367/QD-UBND, dated 17 April 2015 by the People’s Committee of Quang Namprovince, regulation on approving the Quang Nam urban development program for theperiod to 2020 and with the vision to 2030) The land price, of course, must bedetermined to meet the changes ongoing in the province Besides, the land state price

is always around from 10 to 70% lower than the market price (Department of NaturalResource and Environment (DNRE), Ho Chi Minh City) This greatly affect landmanagement activities and also make it difficult to specify cost–benefit decisions

during site clearance preparation Thus, minimize the difference between land marketprice and land price approached by government is an important and urgent activity.This is also the first step to ensure a fair land taxation system (David Peter Mitchell etal., 2015).

The development of Geographic Information System (GIS) currently providesseveral tools that could show land prices on space, serve improve efficiency of Statemanagement on land Application of GIS also allows for combining quantitativeanalysis calculations (such as multi criteria analysis, multivariate analysis, ) indefining and classifying the level of influence of the socio-economic factors affectingland price The basis of valuation is extended, more closely and land prices to becalculated more accurately

Due to the actual needs and the importance of land valuation and land price

determination in land management, the research: “Land Valuation and Land Price Determination in Cua Dai Ward, Hoi An City, Quang Nam Province using GIS- Based Multi Criteria analysis approach” was choosen and implemented.

2 Objectives - Missions

2.1 Objectives

Determine land price and create a region map of land value (at state prices andmarket prices) based on GIS and Multi Criteria Analysis application in Cua Dai ward,Hoi An city, Quang Nam province

2.2 Missions

To achieve this goal, the following the research’s missions is conducted

- An overview document on the legal regulations, the science theories, methodsand technologies, practical applications related to land valuation, establishing regionmap of land value in the world and in Vietnam

- Doing research in transfer data and create a map of land value under stateprice

- Studying to apply AHP and GIS, interpolate data to determine land price and

to establish region map of land value at market prices

- Establishing the region map of land value at market price at Cua Dai wardbased on GIS application

- Comparison between land state price and land market price

3 Research limits:

- Space limits: The study is conducted in Cua Dai ward, Hoi An city, Quang Namprovince

- Scientific limits:

+ The map of the land value in Cua Dai ward under state and market price isupdated in 2017.

+ Applying ArcGIS to create a map of landing value

+ Application combines GIS and AHP model for land valuation and establishingthe region map of market price

4 Meaning Of Practical Science

+ Science meaning: The topic of systematizing the scientific basis of landvaluation, valuation methods is using multi-target analysis method and applying GIS

to establish region maps of land value

+ Practical meaning: The research result is scientific basis for using land andfinancial management of land and land prices (such as being the basis for serving thesale, exchange and transfer of land use rights, contributing to stabilize the land market;being the basis for land compensation when the State recovers land; being the basis forthe use of land in order to improve the efficiency of land management and use;…)The research also proposed a methodology to apply technologies to investigate,collect, create and manage data supporting in order that the work of land managementthe state is more efficient

CHAPTER 1: LITERATURE REVIEW ABOUT LAND VALUATION – LAND PRICE DETERMINATION

AND ESTABLISHING REGION MAP OF LAND VALUE

1.1 Overview of land price and Theoretical basis of land price

1.1.1 Overview of land price

In the world, land price and land valuation are always a concerned issue Landprice is an essential part in state management of land, is established for thecompensation, clearance land use tax calculation (Mitchell et al., 2015) Landvaluation is not only used for state management of land but also toward sustainabledevelopment and becoming one of the foundations of land administration Differentcountry has different way to value land, that’s why the price of the lands varies fromone area to another (Cristina, 1998) The difference between land prices at state andmarket price impact a lot on the social economy of the area If the difference is large,the land market will face with many obstacles, the state will have difficulty inmanaging land

Estimating land value between countries around the world and Vietnam hassimilarities, besides, still has differences in the characteristics of each country Ingeneral, the valuation system in each country is stable from central to local withfunction, clear mechanisms of action, with own land management regime

In Vietnam, land belongs to people The Government allocates land toorganization, household and individual for stable and long-term use in planning andzoning The Government authorizes land to users through renting, recognizes landusing right to stable user, regulates rights and obligations to users Otherwise, landprice is the expression by money of land right value defined in rule 23 Article 4 in

2013 Land laws: “using land right price (or Land price) is money in a unit each arearegulated by the Govern or establish in land-owning right negotiation” (Nguyen DucKha, 2007) In principle, land prices formed depends on the profitability and itsmethod of land use However, land is natural resources (not human working), is theinput material for every commercial activities and consuming demands In the marketeconomy, land prices are a component of real estate market and always fluctuate in

sustainable development by means of legislative, zoning and planning So landvaluation is establishment and essential component in making a reasonable landmanagement Land valuation facilitates fairness in the performance of financialobligations related to land between managers and land users, between land users Inaddition, land valuation is also an estimation of the value of land use rights inmonetary form for a defined purpose, at a defined time To estimate the land prices, itmust be based on principles and methods of valuation on the basis of firmly grasp theland market data, based on the economic and natural attributes of the land parcels (Tra

Ho and Quan Nguyen, 2006)

1.1.2 Theoretical basis of land price

In Vietnam, Land Price means the value of land use rights calculated per unit of land area (Section 19, Article 3, The Land Law 2013) and Value of land use rights

means the monetary value of a land use rights over a specific area during aspecified defined use term (Section 20, Article 3, The Land Law 2013)

Land is a non-labor product, and It does not have itself value Therefore, for theland, its price reflects the effect of itself in economic activities, it is the profitability, inother words, land price high or low is determined by high or low earning potential atspecified time Land benefit is go along with its profitability from the land price andthe corresponding price such as ownership price, land tenure price, the price of landrental rights, the price of land mortgage rights and so on (Vo Dieu Linh, 2015)

1.1.3 The main characteristics of land price

Since land is inherently peculiar unlike other commodities, land prices havedifferent characteristics Features of land prices include:

- Differences in means of expression: Different goods are usually denoted bythe price, but the land value is also denoted by the tax beside by the price Land pricereflects the function of the land in the economic activities The more land's benefitowners have, the greater profit they achieve Land also have the respective price suchas: ownership price, land tenure price, the price of land rental rights, the price of landmortgage rights and so on

- Differences in price basis: Commodities have mobility The origin of price isitself value Land is not mobile, it can’t move itself but its benefits and profits

- Differences in formation time: Normal goods can be standardized, easilycompare and also have almost completely market, its form is easy to complete in a

short time Lands have large differences in each individual, is lacks of a completemarket, its prices are formed in the long-term under the influence from the past to thefuture; the formation time of is long, difficult to compare each other

- Land prices are not indicative of monetary value of land: High or low pricesare not determined by the cost of production Reflected land prices are the value ofnatural resources and property, the direct cause of land prices is the degree ofmanipulation of land use rights or land tenure rights Land is not the product of humanlabor, therefore, there is no production cost There are varies costs which are difficult

to allocate for accounting of land price (for example the costs for building socialinfrastructure (schools, hospitals, markets, ) which are contributed to a better life andcaused land prices higher but caused more dificult for accounting of land price)

- The price of land is mainly due to the demand for land: In the normal market,commodity prices are influenced by supply and demand Land prices are determinedprimarily by the demand for land and tend to increase clearly, land price growth wasmuch higher than the ordinary goods price growth There are two main reasons: firstly,because of the socio-economic development and the increasing population while theland area has not been increased, the demand for land increased lead to increased landprices; secondly, the organic structure of capitalist society is enhanced making thereduction of average profit margin , thereby making land prices increasing

- Land prices are regional and distinctly distinct: Because land is fixed in terms

of location, it is difficult to form a unified, unified market between land markets andmarket prices clear area

- Land prices tend to rise sharply: land price increases are higher than normalcommodity prices Mainly due to two-side causes

- Different in market structure: Commodities often have a complete market,price is relatively objective, but land market is not complete, subjective factors affecthave greatly influences on the formation of land prices

- Difference in depreciation: Goods are the more depreciation, the less value.However, land is not only depreciating but also increasing in value, thereforeincrease in land price often go along with socio-economic development

1.1.3 Factors affecting land price

Land prices are influenced by a variety of factors There are some factors whichhave directly impact on land prices like natural elements, economic, user mentalityand indirect factors such as macroeconomic policy, climate factors, social security

factors, international factors etc.

a, General factors:

It is the common factors which are popular to land price, generate an overalleffect on land prices in standard socio-economic conditions, then become the basis ofsetting specified price for different lands

- Administrative factor: It mostly is the participation of the state in land price,this presence has a great influence on land prices

- Demographic factors: It is the most major factor of economy, social Itsaffection on land price related to population density, people essence and familydemographic

- Social factors: There are four main social reasons affecting on land price:stable political situation, social security level, urban and land speculation

- International factors: The development and completion of land market can’t beseparated with International situation The impact of the political and world economy

on land prices is reflected indirectly through the impact on the domestic economic andpolitical situation

- Economy: The development of economy situation plays an important part ininternational people life and international status of each country

These common factors are at macro level, influences on whole area Thatinfluences cause the differences in locals and countries in land price

b, Regional factors:

It mainly refers mainly on natural condition, socio - economic conditions inwhich have local characteristics due to the combination of these factors, createregulations that affect the price of local property

+ Location: The location factor affecting land prices is primarily about theeconomic status, the specific location of each valued object in the city including: Ratedlands, distance to the city center, commercial center, and including the influence level

of centers on other areas of the city or land categories

+ Traffic conditions: The main factors affecting land prices are the type of localtraffic, convenience and the communication methods with the outside, the combination

of traffic network, road and grade conditions, public transport status and trafficnetwork density,

+ Infrastructure equipment conditions: This consists of two major types:infrastructure equipment and service equipment It's underground water system,

electrical power system, telephone system, school system It also take into accountgrade level, guarantee coefficient system, level of synchronization,

+ Environmental quality: It mostly include: human environment and naturalenvironment Natural environment is conditions: Geology, terrain, slope, winddirection, air… Human environment are type of occupations, educational level, andstandard income in that region

+ Limitations of urban planning: Impact on land prices, mainly used in an area,use structures, conditions of restriction of land use

- The influence on the land price of the area correlates directly on zoningfunction and different purposes for land use in urban area

c, Particular factors

It is the featured factor and condition of the land itself Those factors are alsoknown as land factor The influence of individual factors on land prices is affecting theprice of each land parcel of each type

- The acreage: Land acreage should be medium, too large or too small parcelswould be not easy to use therefore it affects to price

- The width: The narrow frontage width affects to land use and also affects theefficiency of display and profit leading to affecting the price

- The depth: The shallow land parcels compared to street side are often toodifficult to use then affect to lands

- Shape: The most beautiful land parcels’ shape is in rectangular, curved forms(such as triangle, trapezoid, parallelogram) are not favorable to use therefore affects toland price

- Slope: High slope is difficult to develop or the development price is too high,

so it affects the price of land

- Condition of land administrative equipment: It is the equipment directlyrelating to land such as surface water, underground water, electricity, gas

- Urban planning: It considered as a particular factor, including the proportion

of soil type, height of the structure

- Land location: It locates at any specific location in the area, distance to the busstation, school, park The land lot locating the head of the road or the street corner has

a great influence on land prices

- Land use duration: This factor determines how long it will be used and howmuch it will benefit from the land plot, so it directly affects the land price.

Comment:

Among the factors mentioned above, there are always big impact factors andsmall impact factors And the most major affecting factors to land price are naturalcondition, land location then land shape and land area Besides, there are some otherindividual cases which make land prices rise at different rates, but they all determinethe profitability of the land

1.2 Theoretical basis for land valuation – land price determination

1.2.1 Definition of land valuation – land price determination

Land valuation is a specialization activity that is both economic - technical,legal, social and artistic The creation, existence and development of valuatingactivity associated with the formation, existence and development of the market Inthe actual economic activity of the land Land valuation – Land price determination

is based on the principle and method of land valuation through the understandingmarket data of the economic and natural attributes of land due to the quality andprofitable situation In the actual economic activity of the land, it is considered allimpact of socio-economic development factors, land use patterns, expected profitsfrom land and land policy, then combine to set prices at a time for a parcel of land orlots of land to a land use rights (Vo Dieu Linh, 2015)

Land is a special asset Apart from the space, time, economic and legalaspects, its price is influenced by psychological and social factors Therefore, landvaluation can only be an estimation of the value, cannot calculate properly or enoughlike common assets valuation (Nguyen Kha Duc, 2007)

The estimation of land value is a problem that has been broached in severalstudies for several years All these models has a common goal, that is, they havealways attempted in order to minimize the differences between estimated and realmarket values For instance, a model currently used to estimate urban land valuesmake use only of weights, which depend on the property’s characteristics Aninternational example of this kind of model is the work of Azar et al (1994) in Beirut.Another method of land appraisal that is widely used is based on multiple regression

models This method has been successfully used in several countries, for instance:Phang và Wong (1997) in Singapore; Abelson (1997) in Australia; Raia Jr et al (1996)

in Brazil ; Gibb (1994) in Scotland; Aoki et al (1994) in Japan; Pasha và Butt (1996)

in Pakistan; Although the multiple regression technique can provide excellentestimations, the search to identify the best model requires a knowledgeable andexperienced person Furthermore, if the analyst ignores the impact factor and problemsarising from an interrupted flow of data, the results can be jeopardized

1.2.2 Land valuation – land price determination’s methodologies

In Vietnam, on 15 May - 2014, the Government issued Decree No

44/2014/ND-CP on Regulations on land prices According to Clause 2, Article 5 stated in DecreeNo.44/2014/ND-CP, there are 5 methods to be used by the authorities in determiningland price, including: The direct comparison method, which is applied to determine theland price when comparable plots of land are sold on the market or at auction; Thesubtraction method, which is applied to determine the land price of the plot of landwith property thereon when there is sufficient data on the real estate price (includingland and assets) that is similar to the land sold or sold at auction; The income-basedmethod, which is applied to determine the plot of land of which income and land usecost are already determined; The surplus-based method, which is applied to determinethe plots of land with development potential as a result of changes of zoning orpurposes of land when the total estimated revenue and expenses can be determined;The co-efficient method, which is applied in some cases

a, Direct comparison method

* Definition

Direct comparison method is a land pricing method meant to compare anddetermine the price for a particular plot of land by analyzing prices for unoccupiedplots of land with similar purposes, locations, profitability, infrastructure, area,shape, legitimacy that have been sold on the market or at auction (hereinafter

referred to as comparable plots of land) (Clause 1, Article 4 Decree no, CP).

44/2014/ND-* Application of Direct comparison method

The direct comparison method is applied to determine the land price when

comparable plots of land are sold on the market or at auction (Point a, Clause 2, Article 5 Decree no 44/2014/ND-CP).

The land price will be determined by the way of using the average of prices inrespect of three to five comparable land parcels or vacant blocks which adjoin or aresituated in an area adjacent to the land in question and which have similarcharacteristics to the land in question in terms of land type, location, land area,infrastructure, legal grounds and use purpose

* Sequence conducted

Step 1: Surveying and gathering of information;

Step 2: Comparison and analysis of information;

Step 3: Adjust the different price elements;

Step 4: The price for the land in question shall be determined by using theaverage of prices for three to five comparable land parcels or vacant blocks whichhas been adjusted for the price difference in Step 3

b The income-based method

* Definition

The income-based method is a method used to determine land price bydividing the average annual net income from a land unit by average annual interestrate of 12-month term deposit on the pricing date at a state-owned commercial bank

of which the deposit interest rate is highest in that province (Clause 3, Article 4 Decree no 44/2014/ND-CP).

* Application of The income-based method

The income-based method is applied to determine the plot of land of which

income and land use cost are already determined (Point c, Clause 2, Article 5 Decree

no 44/2014/ND-CP).

The authorities calculate the total annual income derived from the land Withrespect to a vacant block or land on which buildings (housing) have been constructedfor lease, the total annual income derived from the land in question is the rent for thereal estate (comprising the land plus assets on the land) collectable annually The land

rent or the rent of real estate is calculated on the basis of actual prevailing rates andprices in the local market at the time of calculation With respect to agricultural land

on which a person allocated with such land himself organises agricultural production,the total income earned means the total turnover from production activities on theland collectable annually

land) (Clause 2, Article 4 Decree no 44/2014/ND-CP).

* Application of The subtraction method

The subtraction method is applied to determine the land price of the plot ofland with property thereon when there is sufficient data on the real estate price

(including land and assets) which is similar to the land sold or sold at auction (Point

b, Clause 2, Article 5 Decree no, 44/2014/ND-CP).

* Sequency conducted

Step 1: Gathering of information;

Step 2: On-site survey;

Step 3: Determine a present value for the assets in question in accordance withthe formula set out in Circular 145;

Step 4: Determine the value of the property;

Step 5: Determine a price for the land in question.

Under this method, the authorities will gather market information in order toselect at least three properties (comprising the land plus assets on the land) which havebeen successfully sold on the market and which have similar characteristics to the land

in question in terms of location, status quo, infrastructure conditions, legal grounds,use purpose, cost and so forth

d The surplus-based method

* Definition

The surplus-based method is a method used to determine the price of the landwith development potential as a result of changes of zoning or purposes bysubtracting estimated total cost from estimated total revenue of the real estate

(Clause 4, Article 4 Decree no 44/2014/ND-CP).

* Application of the surplus-based method

The surplus-based method is applied to determine the plots of land withdevelopment potential as a result of changes of zoning or purposes of land when the

total estimated revenue and expenses can be determined (Point d, Clause 2, Article 5 Decree no 44/2014/ND-CP).

* Sequency conducted

Step 1: Determine the optimal use purpose and effectiveness of the land inquestion on the specified base;

Step 2: Estimate the total developed value of the property;

Step 3: Estimate the total costs of developing the property;

Step 4: Determine an estimated land value

The authorities determine the optimal use and purpose for the land, based oncharacteristics, advantages and plans for the land The total developed value of theproperty includes the total value of housing, of sub-divided plots, etc which it isproposed to sell after completion of the investment project

e The co-efficient method

* Definition

The method using land price coefficient (hereinafter referred to as thecoefficient method) is the method used to determine land price by multiplying theland price coefficient by the land price in the land price lists promulgated by thePeople's Committees of provinces and centrally run cities (hereinafter referred to as

provinces) (Clause 5, Article 4 Decree no 44/2014/ND-CP).

* Application of the co-efficient method

The specific land price determined by the coefficient method is applied to

(Point d, Clause 2, Article 5 Decree no 44/2014/ND-CP and Clause 2 Article 18 decree no 44/2014/ND-CP):

- The cases in which the plot of land is worth below VND 30 billion (applied

to land in centrally-run cities), below VND 10 billion (applied to land in highlands),

or below VND 20 billion (applied to other provinces); the cases in which annual rentfor leased land is adjusted; reserve price at land auction when the government leasesout land and collect land rent annually

- Cases with regard to the adjacent plots of land having the same purpose andprofitability from the such purpose

Although 5 traditional methods can provide excellent estimations, the search

to identify the best model requires a knowledgeable and experienced person.Furthermore, if the analyst ignores the impact factor and problems arising from aninterrupted flow of data, the results can be jeopardized

1.3 Introduction of region map of land value

Region of land value is a set of land parcels that is influenced the same bynatural, socio-economic, environmental factors and has the similar the value of use

Region map of land value indicates values itself; this includes factors affectingthe price of a land parcel at a given time This map shows value ranges in currency

Region map of land value shows the visual value of land parcels, and it not onlyprovides managers with an overview of the price of land in the area, but also helpspeople know the value of their land plots On the other hand, the land value map alsoshows the relationship between the location of a land parcel and its value

There are two types of Region maps of land value:

• Region map of land market price:

The basis for creating region map at market prices is based on actual land pricedata collected on the market through information sources such as completed landtransactions in the market, documents from the land administration, the internet or realestate trading floors… in study area

Purpose of establishing region map of land value at market price is expressingpublicity and transparency of land price in the area to help people to quickly know theprice of land then make right investment decision, contribute to the development of thereal estate market in the region

• Region map of land state price:

The basis of creating this map is the decision of the City People's Committee toannounce annual price in the area of that province or city Each locality has its ownspecific regulations depending on the development situation and characteristics of thenatural, economic, cultural and social factors of that locality

- Principles for determining land prices according to state prices in Cua DaiWard are based on profitability, distance to main roads, city center and convenientinfrastructure conditions to live, do business and provide services The location of landparcels is determined by the principle: location 1 is near the road named in the pricelist, positions 2, 3, 4 in order of profitability and less favorable infrastructureconditions

1.4 Literature reviews on scientific research on land valuation – land price determination in the world and in Vietnam.

1.4.1 In the world

• In China:

Yu Quin et al (2016) did a research on the price changes of every Chineseurban land parcels from 2007 to 2012 The average of land prices in 2012 was higherthan 2017, reached 57%, 24% and 41% correspond to civil, commercial andindustrial land categories However, the price gaps were not the same in thedistribution of prices for each land type The land price differences allocated between

2007 and 2012 were determined by the different land properties and impact factorsresulting from the gradient change on the basic functions of land prices Research

result shows that the distribution of efficiencies and effective offset to raw thematerial price variance varies with price distribution sharing and also varies by landtype.

Shoungeng HU et al (2016) did a research on spatial model of relationshipbetween land prices and affected elements in Vu Han city, China Land prices played

an important role in guiding allocation of land resources and development of urbanplanning, especial in big city in developing countries and population changesfrequently Therefore, spatial information in the spatial model of the relationshipbetween land prices and related factors is very important This study used data aboutland prices in 10 years Based on 12 elements from 3 fields (attributes of land,location factors and areas), a system of valuating land prices was established Thespatial distribution of the estimated coefficients and values of the three mainvariables (floor area ratio, distance to the CBD and distance to the nearest lake)collected by the GWR indicated that this relationship reflected factors affecting landprices The positive impact of the floor area ratio on land prices is more important inhigher development areas in less developed regions In contrast, the negative effects

of distances to the central area have the highest land prices Moreover, wealthyresidents may be willing to pay a higher price for the best view of the lake, butinfrastructure constraints have a negative impact This research results providedetailed information between land prices and effecting factors in local area,promising for urban planners to evaluate the science of land prices and implementspecific regional strategies

Haizhen Wen et al (2013) conducted a research on the relationship betweenurban and residential land prices in 21 provinces in China The basic economicprinciples was recognized as decisive factor for housing and land prices on thecity level, but the relationship between housing prices and land prices has beendisputed In this article, a simultaneous model, the equation was developed toexplore the interaction between housing prices and land prices This model usesurban land prices and housing as endogenous variable and 5 factors for land pricesand 7 factors for housing prices as exogenous variables By using sample data of 21provinces in China 2000 - 2005, this model was estimate using the smallest two-squared method Housing prices and land prices have an endogenous correlation, and

as a whole, housing prices have a greater impact on land prices One-time income isnot only an important factor for land prices but also has a direct impact on housingprices Falling house prices have the highest level of impact on housing prices,which implies that house price increases are effectively projected housing prices.This model is effective and reasonable, it can provide a basis for related governmentagencies to establish related policies.

• In the United States

Nichols et al (2013) conducted a research on population and trade pricesurveys in the United States The authors use a large set of land sales dating from themid-1990s to construct land price indices for 23 market sectors in the United States.Price indexes show a significant increase in both commercial and residential landprices in years before developing in 2006-2007 The indexes of a land andstructures, these compares indicate land prices have more fluctuate than structuralprices in this period This results is an important factor of the hypothesis, housingprices and real estate prices will be volatile

• In Euro

Demetriou (2016) conducted a land valuation study in the Mediterranean landconsolidation project There are 2 main methods used to quantify the land value of aparcel of land in a plot exchange scheme The first involved assigning an agronomicvalue based on soil quality and land productivity represented by a number of pointswhile the second determined market prices about money In the Mediterranean area,market prices was used, determined via an empirical process is based on visualinspection of all land parcels and therefore it is a type of bulk land evaluation Thisprocess presents weaknesses in time, cost, transparency, accuracy, reliability,consistency and equity Besides, appropriate sales transactions in rural areascomplicated the whole process Therefore, these deficiencies had had a negativeimpact on the preparation of land consolidation plans and had resulted in disputesbetween landowners and regulators implementing each program The professorsawared about this problem, but rarely research on valuating land prices and thequality of this traditional process The results of this study indicated the issue of landvaluation and appraisal by the Land Valuation Committee (LVC) in a case study inthe Mediterranean landfill and proposed a new framework to implement this process

Current processes are evaluated using advanced spatial analysis techniques,including multiple regression analysis (MRA) and geographic weighting regression(GWR) in the system geographical basis (GIS) The results showed that 8/14valuating land prices factor related to land parcels characteristics are location, legalfactors, physical attributes and economic conditions that are most important Inaddition, the change was fundamentally good, some of the assumptions needed totest hypotheses are not met, showing unreliability and inconsistencies in modelrelationships Further, the presence of spatial correlations indicated significantregional change in the factors that indicated significant contradiction in the pricingpolicy applied by the LVCs The following two findings confirmed the concerns ofexperts and suggest a new land price framework designed to overcome the problems

of the current process

Deac (2014) conducted a study on challenges and difficulties in valuating landprices in Romania The main purpose of this article was to describe methods of landvaluation – land price determination, challenges and constraints applied in Romania.Furthermore, starting with the idea that it is the biggest obstacle to theimplementation of land valuation comparison methods in Romania lack of thegeneral database relates to information on real estate transactions similarly andrecently (necessary for determining land prices) and the allowance to access thisinformation, as a result This need also outlined a number of orientations for effectivesolutions to address these challenges. 

of land value contributed to address the fundamental relationships in real estatevaluation, laying the foundations for each land parcel’s price determination,… The

research results include automatic building the map of valuating land prices, agricultural land in urban area by statistical models and GIS technology.

non-Trinh Huu Lien et al (2015) applied GIS technology in building a currentland-use database from digital cadastral map that serves for land management Thefoundation of modern land management was creating records of land use rights,statistics, current land-use and planning by modern technologies in system Thearticle focused on resolving the differences of statistics from land-use situationdatabase and data from from generalized current land-use map Based on the analysis

of the reason of the differences between statistic sets from land-use situation andcurrent land-use map, the authors proposed to create a current land use situationdatabase for land management

Nguyen Quoc Khanh et al (2015) built a technology progress to create set ofcurrent natural resources maps based on Remote Sensing application and GIS Thearticle explained the technology progress to create set of current natural resourcesmaps in province level based on Remote Sensing application and GIS This progresswas applied in practice and obtained certain effect

There are several scientific projects have introduces about GIS technologysupporting land management: Establish a database to serve the collection of land uselevy in some wards of Bac Ninh city, Bac Ninh province, Application informationtechnology in accessing and predicting the erosion situation in Hoa Binh province,Application GIS in establishing database supporting for land management in DaiDong commune, Van Lam district, Hung Yen province, Application GIS technologysupporting the standardization of spatial data of land in Hai Phong city, Develop adatabase service of land evaluation and land use planning at Phu Son commune,Huong Thuy district, Thua Thien Hue province, Application GIS to build a database

of land prices by location serves the real estate market in Hoa Cuong Bac Ward, HaiChau district, Da Nang city

1.4.3 General reviews of the scientific researches

From the research results of land price, land valuation – land pricedetermination and GIS application, there are some general reviews of these studies inthe world and in Vietnam:

- These studies mainly focused on land price and land valuation – land pricedetermination The research orientation mainly concentrated on issues: changes onurban land price, the relationship between land prices and factors affecting landprices, the relationship between urban land prices and housing, land valuation – landprice determination in land consolidation project, difficulties and challenges in landmanagement.

- In addition to research on land prices and land valuation, these studies alsoapplied GIS technology techniques for land management of the state scientifically.These researches applied GIS technology techniques to build non-agricultural landvalue area in urban or applied GIS technology to build a land-use situation databasefrom digital cadastral map for land management of the state and build technologyprogress of creating current map of natural resources based on Remote Sensingapplication and GIS

- Among database and research methods mostly used by these studies such asland valuation method, comparative land method, land price; and among landvaluation affecting factor, the most important factor was location factor, legal factor,geographical attributes and economic conditions Besides, it also applied assessingthe potential region and economic forecast methods for determining land price asregion level

- The results of these projects reflected that different regions had differentprices, provided detail information about the relationship between land prices andland prices affecting factors and support the government setting policies related toland price In addition there were some works that could be applied in practice andgive out certain effects

CHAPTER 2: ESTABLISHING REGION MAPS OF LAND VALUE

BASED ON GEOGRAPHIC INFORMATION SYSTEM

AND MULTI CRITERIA ANALYSIS 2.1 Introduction of Geographic Information System (GIS)

2.1.1 Definiton of GIS

GIS is a software and hardware system that is designed to capture, manage,manipulate, analyze, model and display spatially-referenced data to solve complexplanning and management problems, especially those concerning thenaturalenvironment (Maguire et al., 1991)

GIS is a computer software that links geographic information (where things are)wih descriptive information (what things are) Unlike a flat paper map, where whatyou see is what you get, GIS can present many layers of different information GIS,which combines computer graphics techniques and databases, can become a platformwhich integrates knowledge and expertise from different disciplines and which iseasily integrable with analytical techniques, such as remote sensing, interferometry,statistics and also operations research and management science (Fischbeck, 1994)

2.1.2 Functions of GIS

- Data Capture: The input of data into a GIS can be achieved through manydifferent methods of gathering For example, aerial photography, scanning, digitizing,GPS or global positioning system is just a few of the ways a GIS user could obtaindata

- Data Storage: Some data is stored such as a map in a drawer, while others, such

as digital data, can be as a hardcopy, stored on CD or on your hard drive

- Data Manipulation: The digital geographical data can be edited, this allows formany attribute to be added, edited, or deleted to the specification of the project

- Query And Analysis: GIS was used widely in decision making process for thenew commission districts We use population data to help establish an equalrepresentation of population to area for each district

- Visualization: This represents the ability to display your data, your maps, andinformation

2.1.3 GIS data types

These data will contain maps of different detail levels (maps of the county, itsmain cities and villages, maps of the archaeological and historical sites etc.), photos ofplaces and monuments, video images, text (in many languages), music and sound.Formore complex applications, multimedia data can be remotely sensed imagery,scannedmaps, digitized video clips, DTMs, one or more dimensional measurements,simulation model outputs and others Most of them are complicated objects, whichhave large data volumes, intensive processing requirements and rich semantics Thebasic data types in a GIS reflect traditional data found on a map Accordingly, GIStechnology utilizes two basic types of data (David J Buckley, 2004) These are:

a Spatial data

Spatial data (answers to questions about the location - where?) Are shown onmaps and geographic information systems under the form of points, roads or areas.Spatial data is data about objects which by its position is determined on the Earth'ssurface Geographic information systems work with two types of geographic datamodel different: vector model and raster model

* Vector data model

In vector data model: Methodology represent geographic characterized by basicgraphics elements (points, roads and areas) and along with attribute data

Data in vector format are organized in two models: Data Structures Spaghetti,topology data structure

- Point: to be identified as a pair of single-value coordinates (x, y), withoutexpress length or area

- Road: to be determined as a set sequence of points

- Region: to be determined by the boundaries of straight roads The objects whichgeographic area and closed by a road objects which regions are called polygons

* The data model raste

Raster data model reflecting the research area under the form of a grid of squares,

or pixels

Raster model has the following characteristics:

- The points are ranked consecutively from left to right and from above to below;

- Each pixel contains a value;

- A set of matrix and corresponding values forming a layer;

- A database can have many layers;

- It has different grid types: rectangle, square, triangle, but square grid is themost common

b Attribute data

Attribute data describes characteristics of the spatial features These characteristicscan be quantitative and/or qualitative in nature Attribute data is often referred to astabular data The coordinate location of a forestry stand would be spatial data, while thecharacteristics of that forestry stand, e.g cove group, dominant species, crown closure,height, etc., would be attribute data Other data types, in particular image andmultimedia data, are becoming more prevalent with changing technology Depending onthe specific content of the data, image data may be considered either spatial, e.g.photographs, animation, movies, etc., or attribute, e.g sound, descriptions, etc

2.1.4 The main components of GIS

- People: GIS users range from technical specialists who design and maintain.Human (professional) is the most important component GIS technology will belimited without human participation in the management system and development ofGIS applications in practice People use GIS can be technical experts, designers andpeople who maintain the system, or the people use GIS to solve problems at work

- Data: A GIS Data: GIS includes a database which contains information onspatial and attribute information are stored under the table linked closely together and

be organized in a certain specialty GIS has the ability to coordinate different sources

of data and to coordinate with many different structures

- Hardware: Computer System, Scanner, Printer, Plotter, Flat Board Software GISsoftware in use are MapInfo, ARC/Info, AutoCAD Map, etc

- The software available can be said to be application specific

- Policy and Management: This is a very important component to ensure theoperability of the system, is crucial to the success of the development of GIS GISsystem should be operated by the management department, this department has beendesignated to organize activities GIS an effective way to serve the people usinginformation (Tam Tran, 2006)

2.1.5 Advantages and Disadvantages of GIS

a Advantages

• Exploring both geographical and thematic components of data in a holistic way;

• Stresses geographical aspects of a research question;

• Allows handling and exploration of large volumes of data;

• Allows integration of data from widely disparate sources;

• Allows analysis of data to explicitly incorporate location;

• Allows a wide variety of forms of visualisation

b Disadvantages

• Data are expensive;

• Learning curve on GIS software can be long;

• Shows spatial relationships but does not provide absolute solutions;

• Origins in the Earth sciences and computer science Solutions may not beappropriate for humanities research. 

2.1.6 Introduction of ArcGIS software

A GIS (Geographic Information System) is a powerful tool used forcomputerized mapping and spatial analysis A GIS provides functionality to capture,store, query, analyze, display and output geographic information This research usedArcGIS Desktop 10, the newest version of a popular GIS software produced by ESRI.This course is meant to teach some fundamental GIS operations using ArcGIS It is notmeant to be a comprehensive course in GIS or ArcGIS

ArcGIS was developed and sold by Environment Research Institute, Inc It has along history and has been through many versions and changes Originally developedfor large mainframe computers, in the last 10 years it has metamorphosed from asystem based on typed commands to a graphical user interface, which makes it mucheasier to use It contains two programs, collectively referred to as ArcGIS desktop:

- ArcMap provides the means to display, analyze, and edit spatial data and datatables Similar in appearance to its ArcView predecessor, it nevertheless containspowerful new functionality

- ArcCatalog is a tool for viewing and managing spatial data files It resemblesMicrosoft Windows Explorer, but it is specially designed to work with GIS data Itshould always be used to delete, copy, rename, or move spatial data files.

In addition, ArcGIS desktop contains ArcToolbox, a collection of tools andfuntions for operations in ArcCatalog and ArcMap, such as converting between dataformats, managing map projections, and performing analysis Users may create andadd their own tools or scripts for special or often-used tasks

The ArcGIS system also provides different levels of functionality that all use thesame basic interface, User can save money by buying only the functions they need

- ArcView provides all of the basic mapping, editing and analysis functions forshapefiles and geodatabases, includes ArcMap, ArcCatalog and a subset of ArcTollboxfunctions

- ArcInfo provides access to the full functionality of the ArcGis desktop toolsand the full version of ArcToolbox, includes the original core Arc/Info software

2.2 Introduction of Analytic Hierarchy Process (AHP)

2.2.1 Definition of AHP

The Analytic Hierarchy Process (AHP) is a multi-criteria decision-makingapproach that can be used for solving complex and opinions of the stakeholders ononly one assessment but also considering the different criteries at the same time, whichcan not be done by normal decision- unstructured problems It helps to capture bothqualitative and quantitative aspects of a decision problem and provides a powerful yetsimple way of weighting the decision criteria, thus reducing bias in decision-making(Saaty, 1970s; Georgiou et al., 2012; Al-Abadi et al., 2016)

Figure 2.1: AHP diagram (Saaty, 1980)

This model is particularly useful when making decisions in a group isnecessary AHP can help identify and evaluate criteria, analyze the data collected bybasing on these criteria, and make the process of making decision faster and moreaccurate AHP Processing based on pairs of comparison among indicators, then thesepairs are combined

2.2.2 The basic steps of AHP

- Determining the criteria

Identify the different indicators affecting the object that is being evaluated Forexample, there are indicators affecting land plots while conducting valuation as naturalindicators, economic indicators - social, environmental indicators, etc

- Estimating the criteria

Estimating the criteria is identifying the scale of values that norms can get Thereare a number of approaches in estimating the norms as follows:

+ Approaching classifying or continuous factors:

This method is used in case the targets have different levels of influence onissues needed assessing If the values of the indicators represent the continuousvariation and there is a clear correlation with each other, a continuous scale isestablished To create this scale, the proportion of data need to be reset The methodused is redefining the proportion linearly

+ Boolean approach

This approach is based on the division into two groups: the appropriate zone(value 1) and the inappropriate zone (value of 0) In this approach, the targets aretransferred to Boolean type Finally they are decoded into the map and overlay to givethe regions corresponding to all of the limitations (called constraint criteria) Thisapproach is useful when we know the suitability extent in some specific purposes andoften simple In the case of complex spending and different levels of importance, themethod is not appropriate as its drawback is considering factors at the same level ofimportance.

When the value of the indicator is continuous but has no clear correlation withthe appropriate level or when the value is not represented as a number, it can be rated

on a classification scale

- Weighting

Weighting the criteria is a very important job There are many indicatorsaffecting object need to be evaluated, however the extent of their influence largelyvary Therefore, determining the extent of their relative importance is required.Indicators' weightings can be calculated through statistical algorithms, measurements,

or based on subjective experiences, knowledge of experts AHP (Analytical HierarchyProcess) developed by Thomas L Saaty (1970s) is a technical decision in which there

is a finite number of options, but each option has different characteristics, so it leads todifficulties in making decisions

This model is particularly useful when making decisions in a group is necessary.AHP can help identify and evaluate criteria, analyze the data collected by basing onthese criteria, and make the process of making decision faster and more accurate AHPProcessing based on pairs of comparison among indicators, then these pairs arecombined AHP processing can be summarized into the following steps:

1 Identify the possible alternatives, and determine the most important criteria inthe evaluation

2 For each criterion of each pair of alternatives, the decider will express theiropinion on the importance of them against each other

3 The decider will determine the levels of importance among these criteria

4 Each matrix of importance will be assessed using the numerical values in order

to ensure consistency of the answers

5 Then, each option will be calculated and given the scores Based on the scores,the decision will be made

To define weight of target layers, the study used results of research works,expert’s opinions and field investigation combined with Analytical Hiearchy Process(AHP) method (Saaty T.L., 1980)

AHP method solves the problem with 4 basic steps:

Step 1: Construction of Pairwise Comparison Matrices based on Experts opinionconsultation Employing the scale of relative importances, one is able to constructjudgment matrices for each selection criterion This step evaluates the performance ofeach possible alternative against the other alternatives in terms of the various selectioncriteria This task is accomplished by employing the Scale of Relative Importance(Saaty, 1980) This scale and others developed since Saaty’s initial work, permitspairwise comparisons within the AHP Saaty’s scale of relative importance is shown intable 2.1:

Table 1.1: The Scale of Relative Importance based on AHP method (Saaty, 1980).

Extreme strong

Table 2.2: Experts opinion matrix (in case applying for 7 factors,

A1, A2, A7 is selection criterions) (Saaty, 1980).

A 5 1/A15 1/A25 1/A35 1/A45 1 A56 A57

A 6 1/A16 1/A26 1/A36 1/A46 1/A56 1 A67

A 7 1/A17 1/A27 1/A37 1/A47 1/A57 1/A67 1

Step 2: Extraction of Priority Vectors aims to give a Consistency Ratio matrix:Upon creating alternative judgment matrices for each selection criterion as well as thecriteria judgment matrix, the analyst then proceeds to the next step in the analytichierarchy process, which is to extract the relative importances implied by each matrix.The crudest method of principal eigenvector attainment is to simply sum the elements

in each row and collum () of the matrix and then normalize them by dividing each sum

by the total of all row sums This will result in a vector whose sum is unity and whosefirst entry is the priority of the first activity, the second of the second activity, and so

on

Step 3: Consistency Evaluation Execution of this step in the algorithm ensuresthat each matrix is within an acceptable consistency tolerance, and therefore does notinadvertently violate the comparison values intended by the analyst

+ The maximum or principal eigenvalue (λmax) is estimated as the average of theentries in consistency vector y and given by the formula (with n is the total number ofselection criterions):

+ This maximum eigenvalue is then used to compute the matrix’s consistencyindex (CI) using:

+ The final step in the consistency evaluation is to examine the ratio of thecalculated consistency index and the random index (RI) derived from the number ofmatrix activities Random indices for varying matrix sizes are shown in table 2.3:

Table 2.3: Random Indices (Saaty, 1980)

RI 0 0 0.58 0.9 1.12 1.24 1.32 1.41 1.45 1.49 1.51 1.48 1.56 1.57 1.59

The ratio of CI to RI is called the consistency ratio (CR):

Generally, a consistency ratio of 0.10 or less is acceptable In the event that theconsistency ratio is greater than 0.10, the weight assignments must be re-evaluatedwithin the matrix violating the consistency limits

Step 4: Determining weight by calculating the ratio of the components in rowsand columns:

- Integrating spending

After estimating and weighting spending, integrating them to calculate theappropriate index or the final result of the expenditure

Appropriate index is calculated as following:

2.2.3 Advantages and Disadvantages of MCA

a Advantages

- Consider different criteria at the same time, which can not be done by normaldecision-making processes basing on a single criterion

- Can be used to sum up the opinions of the stakeholders on only one assessment

- Is a clear and transparent evaluation method (records scores and importance),easy-tested

- MCA can assist in communicating with policy makers and sometimes even withthe wider community MCA alleviates subjective or abstract arguments

b Disadvantages:

- Difficult to help achieve consensus for controversial issues

Figure 2.2: AHP mathematical diagram

- By presenting quantitative information (a set of scores), MCA may create theincorrect impression of accuracy due to the fact that MCA relies heavily on experts'opinion.

Thus, multi-criteria analysis is one of some effective tools to value lands Ithelps to consider the various diffirent factors which affect the land price at a giventime and assess importance of these factors by aggregating scores in order tosummarize and give the final result

2.3 Methodologies

2.3.1 The investigation method of secondary data collection

2.3.2 The method of data processing and analyzing in GIS

2.3.3 The method of establishing spatial database

2.3.4 Method of searching and analyzing data

2.3.5 Analytical Hierarchy Process (AHP)

Based on the importance matrix of the indicator groups and the criteria in eachgroup through expert consultation, the subject will conduct weight calculations forthem For each indicator in each group, the topic will be segmented for each indicatorand expert consultation to assess their importance and give the score

The weighting result and the coefficient of the indicators used are the basis forthe land price investigation process, which interprets unknown values through knownvalues

2.3.6 Interpolation method

Interpolation is a procedure used to predict the values of cells at locations thatlack sampled points It is based on the principle of spatial autocorrelation or spatialdependence, which measures degree of relationshop/dependence between near anddistant objects

Spatial autocorrelation determines if values are interrelated If values areinterrelated, it determined if there is a spatial pattern This correlation is used tomeasure (1) similarity off objects within an area, (2) the degree to which a spatialphenomenon is correlated to itself in space, (3) the level of interdependence betweenthe variables and (4) nature and strength of the interdependence

This research applied the Inverse Distance Weight (IDW), which is based on theextent of similarity of cells while methods, defined by a mathematical function TheIDW function was used in case points is dense enough to capture the extent of localsurface variation needed for analysis IDW determines cell values using a linear-weighted combination set of sample points The weight assigned is a function of thedistance of an input point from the output cell location The greater the distance, theless influence the cell has on the output value.

2.4.1 Identify the purposes, requirements, responsibilities and scopes of research

This is the first step in the process of land valuation

- Purpose: To apply GIS and multi criteria analysis to offer a process to valueland parcels in the study area, then map the land value to express objectivity andtransparency of land prices

- Requirements: Must study and learn about the principles and methods of landvaluation, grasp, understand and apply the concept of geographic information system(GIS) and the steps of the MCA as a basis for formulating the process of landvaluation

- Mission: Collect the material about natural conditions, economic - socialconditions, cadastral maps of the study area, investigate and land prices (both of thestate price and the market price)

- Scope of the study: Cua Dai Ward, Hoi An City, Quang Nam Province

2.4.2 Investigating, collecting, processing information

Collect information about natural conditions, economic - social developmentsituation the study area, cadastral maps and land prices To build the database of landprices based on the market price they must go to the market to gain information.

The collection must be based on the principle that the samples evenlydistributed over the study area, the collected prices should be preliminarily selected toremove the out-of-date price or unreasonable (too high or too low) in order to ensurethat the new prices are as closest to the market price as possible Land prices may besought and obtained from the complete land transaction on the market, cadastral office

of the wards or the land using rights register office of the district, the internet or thelocal real estate trading floors, etc

To facilitate the work of interpolation and enter the land price, the land plotwhich has been surveyed should be marked on the map

The income figures are not just pure land price, but usually the price of theproperty (including the land) So, we need to separate the land price (land price = price

of real estate - housing prices)

2.4.3 Building database

From * .dgn format cadastral maps, we choose the necessary information(roads, hydrology, land parcel boundaries, etc.) and then transferred to ArcGIS format.Enter cadastral map data on ArcGIS software

- In “ArcCatalog” create a “geodatabase” formating in *.mdb and “FeatureDataset” established in coordinate system VN-2000 “Feature Class” has “FeatureDataset” containing space objects of maps (points, lines, regions) and each object has

an associated attribute table

- Use “Conversion Tool” to convert files to ArcGIS format

- Use “Polygon feature class from line” tool to create regions of ArcToolbars forland plots from these lines and associated with attributes

2.4.4 Calculating effect coefficients

In the data processing, it is necessary to calculate coefficients affecting landprices, such as coefficient of shape, position and area, distance to the center