Enhancing public real-estate assets has been at the centre of a lively debate in Italy. Public policies have focused on the supply-side, assuming that private demand was ready to develop assets. Yet with the decline in the real-estate market, conditions have greatly changed. Italian authorities begun to experiment new approaches to enhance public assets by supporting the grass-roots participation. The aim of this research is to determine the conditions that can predict the successful outcome of bottom-up value creation dynamics in public real-estate properties. Through a multivariate statistical analysis, the study proposes an interpretation of the elements that determine the successful outcome of bottom-up processes.

In recent years, new forms of enhancement of public real-estate assets have been developed in Italy. These are based on initiatives promoted by a citizenry eager to pursue their cultural, creative, and entrepreneurial activities in unused assets. The aim of this paper is to estimate the value generated by these bottom-up enhancement processes and to evaluate their economic feasibility from the perspective of the administration owner of the asset, beside any other considerations concerning local development or social capital improvement. The uncertainty affecting grass-roots participation and the value creation process is relevant. Therefore, the adopted approach combines Discounted Cash Flow Analysis (DCFA) with dynamic simulation models and the Monte Carlo methodology. The results highlight a significant value creation process: value appraisals appear to be below valuations made before the market downturn of 2008, but higher with respect to the current market values.