A NOTE OF THE ANALYSIS OF DEPRECIATION AND OBSOLESCENCE

Abstract

Analysing depreciation and obsolescence requires a model which separates the effect of abnormal changes in the market from the underlying growth trends. The model presented by Sykes fails to recognise the economic principles involved and, therefore, gives rise to results which are open to misinterpretation. Using the best methods available it is shown that over the period from 1978–85 there is no evidence to suggest that valuers have been misinterpreting growth prospects in either the office or retail sectors. There is some evidence, however, to suggest that this may be the case as far as the industrial sector is concerned. There is insufficient data available at present to confirm whether this trend is one which is likely to be sustained over very long periods. At the practical level it is shown that by combining properties into portfolios it is possible to diversify away the effects of obsolescence.

Citation

BROWN, G. (1986), "A NOTE OF THE ANALYSIS OF DEPRECIATION AND OBSOLESCENCE", Journal of Valuation, Vol. 4 No. 3, pp. 230-238. https://doi.org/10.1108/eb007993