The appraisal of urban regeneration land: A contemporary perspective allowing for uncertainty

Abstract

Purpose

The value of land for development is normally estimated by the use of the comparative method or the residual approach. The aim of the paper is to examine appraisal practice, in particular the bases of valuation, availability and utilisation of data, reporting of the value figure and the management of risk.

Design/methodology/approach

The paper reports the findings of a survey of valuers from leading practices throughout the UK, bank lenders and developers. An example of an appraisal of an urban regeneration site is included in order to highlight the key issues within the discussion.

Findings

A variety of reporting practices is found from a tightly drawn range of values to single‐point estimates along with a detailed explanation of the assumptions employed. Developers and lenders favoured the latter, but they appeared to be open‐minded about a range of values or an expression of uncertainty being reported, provided that there is a clear and well supported justification. Risk management approaches are underdeveloped within the profession.

Originality/value

The valuation of urban regeneration land is said to be one of the most vexed issues in the appraisal of projects due to a lack of data transparency in urban regeneration markets, shortcomings in traditional appraisal methodologies and complexities of public sector grant procedures.

Citation

Adair, A., Hutchison, N., Burgess, J. and Roulac, S. (2005), "The appraisal of urban regeneration land: A contemporary perspective allowing for uncertainty", Journal of Property Investment & Finance, Vol. 23 No. 3, pp. 213-233. https://doi.org/10.1108/14635780510599449