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Article
Publication date: 1 December 2004

Nick French

Provides a brief overview of the methods that used in real estate valuation with a particular emphasis on the valuation of specialised property. Proposes that the…

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8351

Abstract

Provides a brief overview of the methods that used in real estate valuation with a particular emphasis on the valuation of specialised property. Proposes that the underlying requirement is to estimate market value and that the role of the valuer is to choose the method that is the best model to achieve this objective. Concludes that a valuer must work with the recognised techniques and, in the case of specialised property, these are methods that go back to analysing value from first principles by identifying the value of the property to the business.

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Journal of Property Investment & Finance, vol. 22 no. 6
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 June 2002

Jeffrey D. Fisher

The purpose of this paper is to stimulate thinking as to how we might produce timely and more reliable estimates of changes in the value of portfolios, price indices based…

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1883

Abstract

The purpose of this paper is to stimulate thinking as to how we might produce timely and more reliable estimates of changes in the value of portfolios, price indices based on a portfolio of properties, and other aggregate measures of trends in property values. It is argued that a traditional market value appraisal of each individual property may not be necessary or optimal when the objective is to value portfolios or get a leading indicator of shifts in market value at an aggregate level. Rather, it is more important to use a critical mass of current market data that captures systematic movements in property values. Although a traditional market value appraisal is always more likely to capture the unique unsystematic characteristics of an individual property, automated valuation models using a database of valuation data may provide the best way to get real time interim updates of real estate portfolios and create more timely real estate indices.

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Journal of Property Investment & Finance, vol. 20 no. 3
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 10 June 2014

Jinhuan Li and Paavo Monkkonen

Assessing the value of property management services is challenging because of collinearity between property quality and the quality of property management companies. In…

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2829

Abstract

Purpose

Assessing the value of property management services is challenging because of collinearity between property quality and the quality of property management companies. In order to overcome this challenge and isolate the impact of property management services, the purpose of this paper is to use an experimental approach inspired by work in labor economics (Bertrand and Mullainathan, 2004) to measure the value of property management services for residential properties in Hong Kong.

Design/methodology/approach

The authors surveyed over 150 experts in the real estate industry and asked them to estimate the value of five hypothetical properties. In each survey, the authors randomly assign different property management companies, which we have ranked by levels of quality, to the properties. In this way the authors were able to test whether property management services significantly impact property prices and whether this impact varies across types of residential buildings.

Findings

Results show that property management does add value, especially to older and more dilapidated properties.

Practical implications

Findings suggest that there is money to be made by high-quality companies providing services for lower quality buildings.

Originality/value

The experimental survey methodology applied in this paper provides an innovative way to measure company value.

Details

Property Management, vol. 32 no. 3
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 1 March 1996

Peter Wyatt

Property valuers in England and Wales face a difficult task; they must collect and assimilate data from a variety of sources which differ widely with regard to quality…

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2603

Abstract

Property valuers in England and Wales face a difficult task; they must collect and assimilate data from a variety of sources which differ widely with regard to quality, currency and coverage. This is because of legislative restrictions on access to public sector data sources and organizational constraints on access to property data within the private sector, such as confidentiality and commercial secrecy. Proposes a system for the dissemination of property data for valuation and other property‐related procedures, namely, a National Land Information Service (NLIS). Suggests that a NLIS should be developed using geographical information system technology. Describes a methodology which shows how a spatial analysis technique available on a GIS was used to examine the influence of accessibility on property value.

Details

Journal of Property Valuation and Investment, vol. 14 no. 1
Type: Research Article
ISSN: 0960-2712

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Article
Publication date: 1 January 1991

Andrew J. Buck and Simon Hakim

Examines the nexus of economic development, induced crime andproperty values focused on casino gambling introduced to Atlantic City,New Jersey. Uses econometric techniques…

Abstract

Examines the nexus of economic development, induced crime and property values focused on casino gambling introduced to Atlantic City, New Jersey. Uses econometric techniques to calculate the effects to which monetary increase in property values is directly attributable to the casinos and the extent to which these values have been diminished due to crime. Concludes that the gain in property taxes that a municipality may realise when a reduction in its property crime rate imbalances assessed values.

Details

Journal of Property Valuation and Investment, vol. 9 no. 1
Type: Research Article
ISSN: 0960-2712

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Book part
Publication date: 18 December 2017

Kimberly Key, Teresa Lightner and Bing Luo

This study investigates the relation between residential property values and both property taxes and public services in Georgia’s counties. Capitalization theory predicts…

Abstract

This study investigates the relation between residential property values and both property taxes and public services in Georgia’s counties. Capitalization theory predicts that property values relate negatively to property taxes, and positively to public services. Palmon and Smith (1998) state that errors in public service measures create a capitalization coefficient bias that makes it difficult to isolate tax effects from public service effects. This paper is a first step in defining and quantifying public services and their marginal effect on housing values. It develops public service measures in four quality-of-life areas – economy, education, health, and public safety. The models suggest a strong negative relation between effective tax rates and property values, and a significant positive association between the public service measures and property values. Analyses indicate that property taxes are capitalized into housing prices at greater than 100%, suggesting prior underestimations based on measurement errors in public service variables.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-78635-001-5

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Article
Publication date: 22 December 2020

Laura Gabrielli and Nick French

Valuation is the process of determining Market Value. Property valuation, as with the valuation of all assets, is an estimation of price in the market. It is value in…

Abstract

Purpose

Valuation is the process of determining Market Value. Property valuation, as with the valuation of all assets, is an estimation of price in the market. It is value in exchange. The valuer role is to determine the appropriate approach, the method and use the right model to achieve this aim as best as possible. It is a combination of analysing the market and determining the critical variables for the valuation method/model. The method is separate from the valuation process which should be followed (according to the International Valuation Standards Council Valuation Standards) regardless the valuation method chosen. There are valuation approaches, valuation methods and, as a subset of the methods, techniques or models.

Design/methodology/approach

This practice briefing is an overview of the Valuation Methods and Models available to the valuer and comments on the appropriateness of valuation each in assessing Market Value for specific property types.

Findings

This briefing is a review of the valuation methods and models and models that can be applied to determine market value.

Practical implications

The role of the valuer in practice is to identify the method of valuation and then apply the correct mathematical model for the valuation task in hand.

Originality/value

This provides guidance on how valuations can be presented to the client in accordance with the International Valuation Standards.

Details

Journal of Property Investment & Finance, vol. 39 no. 5
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 29 April 2020

Niina Leskinen, Jussi Vimpari and Seppo Junnila

Contrary to the traditional technology project perspective, real estate investors see building-specific renewable energy (on-site energy) investments as part of the…

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1700

Abstract

Purpose

Contrary to the traditional technology project perspective, real estate investors see building-specific renewable energy (on-site energy) investments as part of the property and as something affecting the property’s ability to produce a (net) cash flow. This paper aims to show the value-influencing mechanism of on-site energy production from a professional property investors’ perspective.

Design/methodology/approach

The value-influencing mechanism is presented with a case study of a prime logistics property located in the Helsinki metropolitan area, Finland. The case study results are compared with the results of a survey answered by over 70 property valuation professionals in the Finnish real estate market.

Findings

Current valuation practice supports the presented value-creation mechanism based on the capitalisation of the savings generated by a building’s own energy production. Valuation professionals see benefits beyond decreased operating expenses such as enhanced image and better saleability. However, valuers acted more conservatively than expected when transferring these additional benefits to the cash flows of the case property.

Practical implications

Because the savings in operating expenses can be capitalised into the property value, property investors should consider on-site energy production when the return of on-site energy exceeds the return of the property. This enhances the profitability of on-site energy, especially in urban areas with low initial yields.

Originality/value

This is the first research paper to open the value-influencing mechanism of on-site energy production from a professional property investors’ perspective in commercial properties and to confirm it from a market study.

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Article
Publication date: 26 September 2008

David Lorenz and Thomas Lützkendorf

The purpose of this paper is to explain the rationale for integrating sustainability issues into property valuation theory and practice and to provide initial suggestions…

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13128

Abstract

Purpose

The purpose of this paper is to explain the rationale for integrating sustainability issues into property valuation theory and practice and to provide initial suggestions for valuers on how to account for sustainability issues within valuation reports.

Design/methodology/approach

The authors emphasise the key role of valuation professionals and of the valuation process itself in achieving a broader market penetration of sustainable construction. It is explained that, on the one hand, property valuation represents the major mechanism to align economic return with environmental and social performance of property assets, and thus to express and communicate the advantages and benefits of sustainable buildings. On the other hand, it is explained that gradual changes in market participants' perceptions in favour of sustainable buildings must be reflected within the property valuation and associated risk assessment process (otherwise valuers would produce misleading price estimates). The authors identify both the financial benefits and risk reduction potential of sustainable design as well as valuation input parameters that would allow these benefits to be reflected in property price estimates.

Findings

The authors show that the main reasons for immediately and rigorously integrating sustainability issues into property valuation are as follows: more sustainable patterns of behaviour are urgently necessary to sustain the viability of the Earth's ecosystems; a huge untapped market potential exists for sustainable property investment products and consulting services; sustainable buildings clearly outperform their conventional competitors in all relevant areas (i.e. environmentally, socially and financially); neglecting the benefits of sustainable design leads to distorted price estimates; and reflecting sustainability issues in property price estimates is already possible and the validity of this decision depends solely on the valuer's capability and sophistication to explain and justify his/her assumptions within the valuation report. However, it is also shown that efforts need to be undertaken to improve the description of property assets in transaction databases in order to provide the informational databases necessary to empirically underpin a valuer's decision to assign a “valuation bonus” to a sustainable building or a “valuation reduction” to an unsustainable/conventional one.

Originality/value

The paper postulates that valuation reports should be extended to include the following additional elements: a clear description of the availability of certain sustainability‐related property characteristics and attributes; a statement of the valuer's opinion about the benefits of these characteristics and attributes; and a statement of the valuer's opinion about the impact of these benefits and/or risks on property value.

Details

Journal of Property Investment & Finance, vol. 26 no. 6
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 1 April 1992

Neil Crosby, Geoffrey Keogh and Geraldine Rees

Examines the methodological issues that arise in generatingstandardised transaction data for use in analysing the determinants ofretail rents. Looks at the issues raised…

Abstract

Examines the methodological issues that arise in generating standardised transaction data for use in analysing the determinants of retail rents. Looks at the issues raised by the use of comparative information and the existence of widely accepted conventions for adjusting comparative evidence to allow for the specific physical and legal characteristics of individual properties. Concludes by questioning the need to test valuation convention against market evidence and the notion of open market value is reassessed.

Details

Journal of Property Valuation and Investment, vol. 10 no. 4
Type: Research Article
ISSN: 0960-2712

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