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Property Valuation

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PROPERTY VALUATION

The new edition of the popular ‘all-in-one’ textbook on the valuation and appraisal of property, offering a more international perspective on valuation practice

Property Valuation provides a comprehensive examination of property valuation principles, methods, issues and applications of the valuation and appraisal of commercial and industrial property across investment, development and occupier markets. With a clear writing style, this easily accessible textbook presents valuation from the client perspective, offering balanced coverage of the theory and practice of single-asset pricing, risk and return issues.

The updated third edition reflects significant developments that have occurred in valuation over the past several years, particularly the expanding internationalisation of the valuation profession and the growing interest in valuation practice in emerging economies. Greater emphasis is placed on international content and context, such as the challenges of real estate asset valuation in countries with developing market economies, to offer a more global view of valuation practice. Throughout this edition, chapters link the most recent academic research to practical applications, incorporate the latest professional guidelines and standards and address land and property taxation, compulsory acquisition of land, the valuation of non-market goods and services and key valuation challenges with a more international perspective.

  • Addresses the key challenges faced by valuation professionals in a single, up-to-date volume
  • Combines academic coverage of principles with practical coverage of valuation applications
  • Incorporates consideration of non-market value, including countries where land is seldom sold yet has social and environmental value
  • Contains a wealth of well-developed worked examples and classroom-proven teaching and learning devices
  • Includes access to a companion website with supporting material for students and lecturers

Property Valuation, Third Edition is an excellent textbook for advanced undergraduate and graduate courses including real estate finance, real estate economics, property surveying, valuation and land economics in the UK, Europe and North America. It is also a valuable resource for early-career practitioners preparing for professional competency assessments as well as those studying property valuation and appraisal in developing countries and emerging economies.

Author(s): Peter Wyatt
Edition: 3
Publisher: Wiley-Blackwell
Year: 2022

Language: English
Pages: 557
City: Hoboken

Cover
Title Page
Copyright Page
Contents
Preface
About the Companion Website
Section A Valuation Principles
Chapter 1 Property Rights and Property Value
1.1 Property rights
1.1.1 Tenure
1.1.2 Property rights in England
1.2 Property value
1.2.1 Extent of property rights
1.2.2 Security of property rights
1.2.3 Physical and geographical characteristics
1.3 Property valuation
1.3.1 Market transactions
1.3.2 Investment decisions
1.3.3 Compensation
1.3.4 Land and property taxation
1.3.5 Accounting, lending and insurance
Note
References
Chapter 2 The Economics of Property Value
2.1 Introduction
2.2 Land as a resource
2.3 Supply and demand, markets and equilibrium price determination
2.4 The property market and price determination
2.4.1 The property market
2.4.2 Price determination in the land market
2.4.3 Price determination in the property (land and buildings) market
2.5 Location and land use
2.6 Economics of property development
2.6.1 Type and density of development
2.6.2 Timing of development
2.7 Non-market concepts of value
Notes
References
Chapter 3 Property Markets
3.1 Introduction
3.2 Property markets
3.2.1 Occupier market
3.2.2 Investment market
3.2.3 Development market
3.3 Property markets interaction
Note
References
Chapter 4 Valuation Mathematics
4.1 Introduction
4.2 The time value of money
4.3 Single-sum investments
4.4 Multi-period investments
4.4.1 Level annuities
4.4.2 From a level annuity to a growth annuity
4.5 Timing of receipts
4.6 Yields
4.7 Rates of return
Notes
References
Chapter 5 Valuation Process and Governance
5.1 Valuation process
5.1.1 Confirm instruction and agree terms of engagement
5.1.2 Inspect the property
5.1.3 Gather and analyse comparable evidence
5.1.4 Establish basis of value
5.1.5 Make assumptions and special assumptions as appropriate
5.1.6 Select valuation approach(es) and method(s) and undertake the valuation
5.1.7 Produce a valuation report
5.2 Valuation governance
5.2.1 Standards of conduct
5.2.2 Valuation process standards
5.2.3 International valuation standards (IVS)
5.2.4 National valuation standards
5.3 Valuation systems
5.3.1 Information systems
5.3.2 Valuation capacity
5.3.3 Professional valuers associations
5.4 Conclusion
Notes
References
Section B Valuation Approaches and Methods
Chapter 6 Market Approach
6.1 Introduction
6.2 The comparison method
6.2.1 Collect comparable evidence of market transactions
6.2.2 Identification of value-significant characteristics
6.2.3 Adjustment of value-significant characteristics
6.3 Hedonic regression method
6.3.1 Simple linear regression
6.3.2 Multiple linear regression
Notes
References
Chapter 7 Income Approach
7.1 Introduction
7.2 Income capitalisation method
7.2.1 Perpetual annuities (freeholds)
7.2.2 Annuities with a term certain (leaseholds)
7.3 Discounted cash-flow method
7.3.1 A discounted Cash-Flow valuation model
7.3.2 Perpetual annuities
7.3.3 Annuities with a term certain
7.4 Profits method
7.4.1 Method
Notes
References
Chapter 8 Cost Approach
8.1 Introduction
8.2 Replacement cost method
8.2.1 Replacement cost
8.2.2 Depreciation
8.2.3 Land value
8.2.4 Application of the replacement cost method
8.2.5 Issues arising from the application of the replacement cost method
8.3 Residual method
8.3.1 Basic residual technique
8.3.2 Basic residual profit appraisal
8.3.3 Discounted cash-flow technique
Notes
References
Section C Valuation Application
Chapter 9 Valuation of Investment Property
9.1 Introduction
9.2 Analysis of rents
9.2.1 Rental lease incentives
9.2.2 Capital lease incentives
9.2.3 ‘Surrendered’ leases
9.2.4 Repairs, insurance, and ground rents
9.2.5 Rent-review pattern
9.3 Analysis of yields
9.3.1 Equivalent yield
9.3.2 Weighted average unexpired lease term
9.4 Market valuation of investment property
9.4.1 Voids and break options
9.4.2 Statutory considerations
9.4.3 Over-rented properties
9.4.4 Turnover leases
9.4.5 Long lease investments
9.4.6 Synergistic value
9.5 Investment valuation of investment property
9.5.1 Inputs and assumptions
9.5.2 Investment valuation using a discounted cash flow
References
Notes
Chapter 10 Valuation of Development Property
10.1 Introduction
10.2 Market valuation of development property
10.2.1 Comparison method
10.2.2 Residual method
10.3 Investment valuation of development property
10.3.1 Estimating the investment value of development property
10.3.2 Financial appraisals of development property
References
Chapter 11 Valuations for Financial Statements and for Secured Lending
11.1 Valuing property for financial statements
11.1.1 Basis of reporting measurement
11.1.2 Property categorisation
11.1.3 Basis of value
11.1.4 Valuation
11.1.5 Other issues
11.1.6 Example valuations
11.2 Valuing property for secured lending purposes
11.2.1 Professional standards and guidance
11.2.2 Valuation methods for loan security valuations
11.2.3 Example valuation
11.2.4 Reinstatement cost assessment
Note
References
Chapter 12 Valuations for Land and Property Taxation
12.1 Introduction
12.2 A land tax or a land and property tax?
12.3 Types of land and property taxes
12.3.1 Occupation taxes
12.3.2 Transfer and wealth taxes
12.3.3 Betterment taxation
12.4 Land and property taxation in England and Wales
12.4.1 Occupation taxes
12.4.2 Transfer and wealth taxes
12.4.3 Betterment taxation in England
Notes
References
Chapter 13 Valuations for Expropriation
13.1 Introduction
13.2 Valuation for expropriation
13.2.1 Valuing property rights that are to be taken or extinguished
13.2.2 Valuing retained property rights
13.2.3 Valuing compensation for disturbance
13.2.4 Valuing customary and informal land for expropriation purposes
13.2.5 Expropriation and non-market value
13.3 Valuations for compulsory purchase and planning compensation in England
13.3.1 Legal background
13.3.2 Compensation for land2 taken (compulsorily acquired)
13.3.3 Identifying the planning position
13.3.4 Compensation for severance and injurious affection
13.3.5 Compensation for disturbance and other losses
13.4 Planning compensation in England
13.4.1 Revocation, modification and discontinuance orders
13.4.2 Purchase notices
13.4.3 Blight compensation
Notes
References
Chapter 14 Valuation Variance, Risk and Optionality
14.1 Introduction
14.2 Valuation accuracy and valuation variance
14.3 Analysing risk
14.3.1 Sensitivity analysis
14.3.2 Scenario modelling
14.3.3 Simulation
14.4 Flexibility and options
14.5 Uncertainty
References
Appendix: Land Uses and Valuation Methods
A.1 Agriculture and fisheries
A.2 Forests and woodland
A.3 Natural resource extraction – water, minerals and other materials
A.4 Recreation and leisure
A.5 Utilities and infrastructure
A.6 Residential
A.7 Community services
A.8 Land and buildings with (Re)development potential
Notes
References
Glossary
Index
EULA