Valuation calculations: 101 worked examples

Citation

French, N. (2013), "Valuation calculations: 101 worked examples", Journal of Property Investment & Finance, Vol. 31 No. 3, pp. 307-308. https://doi.org/10.1108/14635781311322265

As I read this book, I was constantly asking myself if the author was one of my ex‐students of the same name and, if so, if I could rightly take any reflected glory for the production of such a good book. I am pretty certain that the answers are “yes” and “no”, respectively.

The book is published by the Royal Institution of Chartered Surveyors (RICS) and, by inference, endorsed by the same. I like this book as “it does what it says on the can”. It is not a textbook and it is not a training manual. It is simply 101 worked examples and there is a place for that on the bookshelf of any practitioner or student.

That said, and this is probably more of a reflection of the reviewer than the author, I often wanted more explanation. There are times when the “this is how it is done” approach left me asking whether it was the “right way” to undertake the task. But, in fairness, the author in his introductions sets out the terms of reference and he delivers on that basis:

There is no prescriptive way in which to value any property; the approach is entirely down to the valuer, but this book will show some of the ways in which valuers approach their number crunching. This book is a starting point – I have deliberately kept the examples relatively simple so that the principles and approaches can be easily understood. However, part of the valuer's skill is to “stand back and look” at‐the overall answer rather than rely upon the output of a computer.

The 101 examples presented tend to concentrate upon the income approach (and the subsets of investment, profits and residual methods) albeit the sister approaches of cost and market are covered.

When looking at the (implied) investment method, the author in most cases shows a preference (I am glad to say) to the term and reversion technique for the valuation of reversionary freehold interests. He also, cleverly, looks at implicit (traditional) and explicit discounted cash flow[1] approaches with no sense of ambivalence as is often the case in other valuation texts. Although he does not explicitly state this, it is clear that he sees all valuation techniques as having an equal standing in his armoury and that he chooses the most appropriate technique for the problem in hand. That is both refreshing and insightful.

My only real criticism of the examples is that they lack consistency. For example, some of them refer to the percentage of “purchase's costs” and some are silent (albeit they are at the same rate). Likewise, some examples refer to “rent”; some to estimated rental value; some to rental value and some to market rent. Given that the last of those terms is the one required by the RICS Valuation – Professional Standards, I would prefer if that was the term used throughout albeit I do understand that in practice that precision of terminology is not widespread.

Overall, there is not much more to say. The book, by its nature, is very UK orientated but it does not pretend to be anything else. It clear and easy to follow and covers the vast majority most of property interests that valuers will come across during their working weeks. I recommend it. It has already become an important part of my own work library.

Notes

One of my pedantic dislikes of the book is that it erroneously refers to “cashflows”. This is not a word yet. Both the OED and Webster's comment that it is still two words. It may evolve into one but it has not yet and the editor should have spotted this.