This is an introductory, first year text on property valuation with a clear, well-defined structure based around the five valuation methods. Each approach is identified and the author discusses the appropriateness of the methods to different situations. The strengths and weaknesses of each method are highlighted and the ways in which each approach has been received and criticised are considered. The author introduces some of the more recent thinking in relation to valuation and alternatives are discussed and demonstrated using practical examples. The intention throughout is to encourage a better understanding of valuation by bridging the gap between theory and practice while at the same time introducing the practitioner and student to recent developments.
Table of Contents
Preface. Part One: The background to valuation. Setting the scene. The general investment market: types of investment; yield and risk. The property market: property as an investment; the perfect investment; valuations for other purposes. Part Two: The comparative method. The market. Approach to comparison: determinants of value; expiry of lease; assessment of rental value; rental evidence; restrictions on use; lease terms; the tenant's "covenant"; anchor tenants; the yield; analysis; evidence. Part Three: The investment method. The determinants of value: Introduction; outgoings; yield; rent and rental value; the lease terms; service charges; the building; the tenant's "covenant"; business tenancies; residential tenancies; the planning framework; The valuation process: conventional valuation approach; rack rented investments; initial and annual costs; the two-income model; long terms at fixed rents; application to term income; leasehold interests; contemporary approaches. Relevant issues: introduction; rents payable at intervals of less that 1 year; equivalent yield calculations; inflation; inflation and valuation; non-standard review patterns; implied rental growth; accuracy in valuation; depreciation and obsolescence; performance; modern aids and approaches. Part Four: The residual method. The problem: introduction; the basic approach. The process: value on completion; development costs; professional fees; building contract; other costs; short-term finance; advertising and marketing; fees and costs; developer's profit and risk; land value. Part Five: The profits method. The profits principle: retail outlets; other commercial users; the use of trading accounts; potential; special features; business accounts. Application of the profits approach. Part Six: The contractor's method. Evolution and principles: lack of merkte evidence; valuations for other purposes; scope for differences; judicial guidance; decapitalization rates; costings. Application of the contractor's method: annual rental value; decapitalization rates. Appendices. Index.