Preface xi SECTION A VALUATION PRINCIPLES 1 1 Property Rights and Property Value 3 1.1 Property rights 3 1.1.1 Tenure 4 1.1.2 Property rights in England 6 1.2 Property value 8 1.2.

1 Extent of property rights 9 1.2.2 Security of property rights 11 1.2.3 Physical and geographical characteristics 13 1.3 Property valuation 13 1.3.1 Market transactions 14 1.

3.2 Investment decisions 15 1.3.3 Compensation 15 1.3.4 Land and property taxation 16 1.3.5 Accounting, lending and insurance 16 Note 18 References 18 2 The Economics of Property Value 19 2.

1 Introduction 19 2.2 Land as a resource 19 2.3 Supply and demand, markets and equilibrium price determination 21 2.4 The property market and price determination 22 2.4.1 The property market 22 2.4.2 Price determination in the land market 23 2.

4.3 Price determination in the property (land and buildings) market 26 2.5 Location and land use 29 2.6 Economics of property development 36 2.6.1 Type and density of development 36 2.6.2 Timing of development 38 2.

7 Non-market concepts of value 40 Notes 42 References 42 3 Property Markets 45 3.1 Introduction 45 3.2 Property markets 46 3.2.1 Occupier market 47 3.2.2 Investment market 59 3.2.

3 Development market 63 3.3 Property markets interaction 69 Note 72 References 72 4 Valuation Mathematics 75 4.1 Introduction 75 4.2 The time value of money 76 4.3 Single-sum investments 77 4.4 Multi-period investments 78 4.4.1 Level annuities 78 4.

4.2 From a level annuity to a growth annuity 82 4.5 Timing of receipts 83 4.6 Yields 84 4.7 Rates of return 85 Notes 90 References 91 5 Valuation Process and Governance 101 5.1 Valuation process 101 5.1.1 Confirm instruction and agree terms of engagement 101 5.

1.2 Inspect the property 103 5.1.3 Gather and analyse comparable evidence 104 5.1.4 Establish basis of value 106 5.1.5 Make assumptions and special assumptions as appropriate 109 5.

1.6 Select valuation approach(es) and method(s) and undertake the valuation 110 5.1.7 Produce a valuation report 110 5.2 Valuation governance 112 5.2.1 Standards of conduct 113 5.2.

2 Valuation process standards 115 5.2.3 International valuation standards 115 0005388997.INDD 6 06/03/2022 9:06:49 Contents vii 5.2.4 National valuation standards 116 5.3 Valuation systems 117 5.3.

1 Information systems 119 5.3.2 Valuation capacity 121 5.3.3 Professional valuers associations 122 5.4 Conclusion 125 Notes 127 References 127 SECTION B VALUATION APPROACHES AND METHODS 129 6 Market Approach 131 6.1 Introduction 131 6.2 The comparison method 132 6.

2.1 Collect comparable evidence of market transactions 132 6.2.2 Identification of value-significant characteristics 134 6.2.3 Adjustment of value-significant characteristics 139 6.3 Hedonic regression method 150 6.3.

1 Simple linear regression 151 6.3.2 Multiple linear regression 156 Notes 168 References 168 7 Income Approach 173 7.1 Introduction 173 7.2 Income capitalisation method 174 7.2.1 Perpetual annuities (freeholds) 175 7.2.

2 Annuities with a term certain (leaseholds) 179 7.3 Discounted cash-flow method 183 7.3.1 A discounted Cash-Flow valuation model 184 7.3.2 Perpetual annuities 190 7.3.3 Annuities with a term certain 193 7.

4 Profits method 195 7.4.1 Method 196 Notes 204 References 204 8 Cost Approach 235 8.1 Introduction 235 8.2 Replacement cost method 236 8.2.1 Replacement cost 236 8.2.

2 Depreciation 237 8.2.3 Land value 240 8.2.4 Application of the replacement cost method 242 8.2.5 Issues arising from the application of the replacement cost method 243 8.3 Residual method 245 8.

3.1 Basic residual technique 246 8.3.2 Basic residual profit appraisal 254 8.3.3 Discounted cash-flow technique 255 Notes 260 References 260 SECTION C VALUATION APPLICATION 271 9 Valuation of Investment Property 273 9.1 Introduction 273 9.2 Analysis of rents 274 9.

2.1 Rental lease incentives 274 9.2.2 Capital lease incentives 277 9.2.3 ''Surrendered'' leases 280 9.2.4 Repairs, insurance, and ground rents 281 9.

2.5 Rent-review pattern 283 9.3 Analysis of yields 284 9.3.1 Equivalent yield 284 9.3.2 Weighted average unexpired lease term 285 9.4 Market valuation of investment property 285 9.

4.1 Voids and break options 285 9.4.2 Statutory considerations 288 9.4.3 Over-rented properties 294 9.4.4 Turnover leases 296 9.

4.5 Long lease investments 299 9.4.6 Synergistic value 299 9.5 Investment valuation of investment property 302 9.5.1 Inputs and assumptions 303 9.5.

2 Investment valuation using a discounted cash flow 306 References 311 10 Valuation of Development Property 359 10.1 Introduction 359 10.2 Market valuation of development property 359 10.2.1 Comparison method 361 10.2.2 Residual method 362 10.3 Investment valuation of development property 369 10.

3.1 Estimating the investment value of development property 369 10.3.2 Financial appraisals of development property 372 References 381 11 Valuations for Financial Statements and for Secured Lending 401 11.1 Valuing property for financial statements 401 11.1.1 Basis of reporting measurement 402 11.1.

2 Property categorisation 403 11.1.3 Basis of value 405 11.1.4 Valuation 407 11.1.5 Other issues 411 11.1.

6 Example valuations 413 11.2 Valuing property for secured lending purposes 415 11.2.1 Professional standards and guidance 416 11.2.2 Valuation methods for loan security valuations 420 11.2.3 Example valuation 420 11.

2.4 Reinstatement cost assessment 424 Note 424 References 424 12 Valuations for Land and Property Taxation 449 12.1 Introduction 449 12.2 A land tax or a land and property tax? 450 12.3 Types of land and property taxes 452 12.3.1 Occupation taxes 453 12.3.

2 Transfer and wealth taxes 455 12.3.3 Betterment taxation 455 12.4 Land and property taxation in england and wales 456 12.4.1 Occupation taxes 457 12.4.2 Transfer and wealth taxes 466 12.

4.3 Betterment taxation in England 469 Notes 472 References 472 13 Valuations for Expropriation 477 13.1 Introduction 477 13.2 Valuation for expropriation 478 13.2.1 Valuing property rights that are to be taken or extinguished 478 13.2.2 Valuing retained property rights 479 13.

2.3 Valuing compensation for disturbance 479 13.2.4 Valuing customary and informal land for expropriation purposes 480 13.2.5 Expropriation and non-market value 481 13.3 Valuations for compulsory purchase and planning compensation in England 482 13.3.

1 Legal background 482 13.3.2 Compensation for land2 taken (compulsorily acquired) 483 13.3.3 Identifying the planning position 486 13.3.4 Compensation for severance and injurious affection 487 13.3.

5 Compensation for disturbance and other losses 491 13.4 Planning compensation in England 493 13.4.1 Revocation, modification and discontinuance orders 493 13.4.2 Purchase notices 493 13.4.3 Blight compensation 494 Notes 494 References 495 14 Valuation Variance, Risk and Optionality 499 14.

1 Introduction 499 14.2 Valuation accuracy and valuation variance 500 14.3 Analysing risk 502 14.3.1 Sensitivity analysis 503 14.3.2 Scenario modelling 504 14.3.

3 Simulation 506 14.4 Flexibility and options 511 14.5 Uncertainty 513 References 515 Appendix A: Land Uses and Valuation Methods 525 Glossary 529 Index 000.