DCF discounted: further implications for the valuation surveyor arising from the over‐rented property debate

Abstract

Reconsiders some of the market issues surrounding the over‐rented property valuation problem and extends the discussion to the valuation of self‐financing properties where the market yield exceeds that of long‐dated stocks. Emphasizes the problem of using long‐term implied growth rates in market conditions where short‐term conditions of no growth or indeed continuing decline may have significant impact on value. Concludes with the suggestion that those who support a DCF approach to valuation have still to convince the market of their case. There is also a need for further study in all areas associated with implicit valuation and explicit DCF valuations in particular in relation to the determination of all risk yields, determination of target rates, assessment of market rental value and the degree to which the market can accept valuations based on the judgement, intuition, or experience of a valuer in times of minimal comparable market evidence.

Citation

Mackmin, D. (1995), "DCF discounted: further implications for the valuation surveyor arising from the over‐rented property debate", Journal of Property Valuation and Investment, Vol. 13 No. 2, pp. 5-15. https://doi.org/10.1108/14635789510084694