The Valuation of Hope Value for Real Estate Development
| Autor: | Małgorzata Renigier-Biłozor, Maurizio d'Amato |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2017 |
| Předmět: |
Actuarial science
Real estate development Option fee business.industry 05 social sciences 0211 other engineering and technologies HD1361-1395.5 Future value Cost approach hope value 021107 urban & regional planning Small sample Real estate 02 engineering and technology option theory 0502 economics and business Economics 050207 economics business Real estate business Real estate development option theory hope value Valuation (finance) Income approach |
| Zdroj: | Real Estate Management and Valuation, Vol 25, Iss 2, Pp 91-101 (2017) |
| Popis: | In the valuation of a property subject to development, the valuer may consider the potential aspect of the value of both land to be improved and a building to be refurbished. These kinds of valuations are complex, especially when a prudent assessment of value is required. In general terms, all properties may have potential development which, in some cases, can be termed “hope”. In particular, uncertainty regarding the change in the legal framework may create expectations as to the uncertain variation of property value in the future. In these cases, it may be necessary to deal with hope value or future value, trying to reach the value of a property subjected to uncertain changes. Hope value is the difference between the existing use value and the price that the market might pay for future transformation. The main aim of the paper is the elaboration of a methodology to determine the hope value. In this work, a real option model for the valuation of hope value in the real estate market will be applied to a small sample of residential properties located in Olsztyn that are subject to possible transformation. The possibility of a transformation may create expectations and may influence the value of the property. Although the applications of these methods to real estate valuation are fairly recent, the International Valuation Standards have included real option theory in the income approach as a valuation method since 2011. |
| Databáze: | OpenAIRE |
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