INVESTMENT PROFILES

Abstract

The object of the Investment Profiles is to expose the bidden assumptions which lie behind valuations of investment properties, and in doing so to provide a more objective platform for debate and argument about any particular valuation. The traditional approach to valuation is to apply an ‘all risks’ yield to the flow of income from any property, reflecting the advantages and disadvantages of that investment. However, there is no sound objective basis on which to justify the ‘all risks’ yield used. In reality, the valuer arrives at the yield by making a number of subconscious mental adjustments to the yield based on the particular features or disadvantages of the property under consideration. Investment Profiles arrive at the same ‘all risks’ yield by an explicit approach, the valuer making a series of adjustments to the yield. These adjustments can then be debated and argued. The need to resort to unscientific cliches like ‘prime’, ‘semi‐prime’ and ‘secondary’ can be much reduced or avoided. The paper considers a number of example valuations, and demonstrates that the technique is easy to understand and simple to use.

Citation

LEIGH, D. (1986), "INVESTMENT PROFILES", Journal of Valuation, Vol. 4 No. 3, pp. 291-299. https://doi.org/10.1108/eb007997