The Institutional Architecture of Value: Appraisals and the Formation of Bubbles in the Financialised Real Estate Sector

Abstract

This paper analyses the construction of value under the context of radical uncertainty (Keynes, 1936; Orléan, 1987) in the financialised real estate sector in France. It is based on a participant observation of valuation practices in an international real estate consulting firm and 26 in-depth interviews with professionals of the sector. We show that these practices rely on an institutional architecture that participates in the consolidation and legitimisation of the accumulation activity of asset managers and thus in the feeding of real estate bubbles in the hearts of large metropolises. Completing the conventionalist approach of value (Orléan, 2011) by focussing on the functioning of the organisations involved in the valuation process, I show that the determination of value is less the result of the emergence and autonomisation of a collective belief through market relationships than the product of power relationships between agents integrated in hierarchical professional organisations and in a specific legal framework.

Citation

Duros, M. (2021), "The Institutional Architecture of Value: Appraisals and the Formation of Bubbles in the Financialised Real Estate Sector", Bourghelle, D., Pérez, R. and Rozin, P. (Ed.) Rethinking Finance in the Face of New Challenges (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 15), Emerald Publishing Limited, Leeds, pp. 115-130. https://doi.org/10.1108/S2043-905920210000015022