Property Valuation

Description

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 volumeCombines academic coverage of principles with practical coverage of valuation applicationsIncorporates consideration of non-market value, including countries where land is seldom sold yet has social and environmental valueContains a wealth of well-developed worked examples and classroom-proven teaching and learning devicesIncludes 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. 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