Purpose – The purpose of this paper is to explain the rationale for integrating sustainability issues into property valuation theory and practice and to provide initial suggestions for valuers on how to account for sustainability issues within valuation reports.Design/methodology/approach – The authors emphasise the key role of valuation professionals and of the valuation process itself in achieving a broader market penetration of sustainable construction. It is explained that, on the one hand, property valuation represents the major mechanism to align economic return with environmental and social performance of property assets, and thus to express and communicate the advantages and benefits of sustainable buildings. On the other hand, it is explained that gradual changes in market participants' perceptions in favour of sustainable buildings must be reflected within the property valuation and associated risk assessment process (otherwise valuers would produce misleading price estimates). The authors ident...

Sustainability in property valuation: theory and practice

Purpose – The purpose of this paper is to propose and discuss practical approaches on how to address risk and uncertainty within valuation reports, particularly when there is only insufficient comparable transaction evidence available.Design/methodology/approach – A four stage approach to property valuation is proposed that can be particularly useful if there is insufficient comparable transaction evidence available: Identifying, measuring and expressing risk by making use of property rating approaches. Transforming risk into risk premia for calculating the yield on a risk free basis by partially making use of models of risk and return usually applied in finance. Simulating risk premia (since there is great deal of uncertainty involved in determining these premia) by making use of a statistical method commonly referred to as Monte Carlo Simulation. Using the derived yield's probability distribution in combination with further probability distributions for other valuation input variables (e.g. market rent)...

Addressing Risk and Uncertainty in Property Valuations: A Viewpoint from Germany

Purpose




Real estate property has been established as a composite good, and its value is determined by many variables. The heterogeneous nature of real estate property has made different stakeholders value these variables differently. Therefore, this study aims to identify and evaluate these sets of variables which influence residential property value in the Lagos metropolis property market, Nigeria, based on professional valuers’ perception.




Design/methodology/approach




A list of variables that influences property value was generated through literature review, and the list was used to design an online questionnaire that was administered to valuers practicing in the metropolis. The valuers were asked to rank these variables in order of significance. Their response was analysed to establish the mean score of each variable that depicts their level of significance.




Findings




In order of importance, property location, neighbourhood characteristics, property state of repair, size of property, availability of neighbourhood security and age of property are the most highly significant variables that are influential on the property value in the Lagos metropolis.




Practical implications




The findings of this study will inform all existing and prospective real estate stakeholders, including facility managers of the major determinants of the value of their investments and, at the same time, will be a tool for valuers and researchers in property value modelling.




Originality/value




This study is the first attempt to develop a framework of property value determinants in this research area in Nigeria.

Critical determinants of residential property value: professionals’ perspective

Addressing risk and uncertainty in property valuations: a viewpoint from Germany

This paper is concerned with assessing how valuations for mortgage purposes reflect market evidence. Differences between the value obtained through the analysis of comparables and the final assigned value are analysed. The study is undertaken for the Spanish housing market at the peak of the house price boom. High levels of accuracy are apparent but with a tendency to over- rather than undervalue properties. Physical housing variables are shown to have a relatively homogeneous effect, whereas factors relating to the environment and location lead to wider differences between valuations. The effect of characteristics is shown to vary substantially between cities. There is no evidence from the analysis that the property bubble in Spain was driven by inaccuracy in valuations.

An analysis of factors influencing accuracy in the valuation of residential properties in Spain

Purpose – Valuation is a “snapshot” in time. It is an assessment of the market price at a single point in time. It is an estimate and any estimate is uncertain. This paper aims to investigate how the property profession conveys this uncertainty to their clients. Uncertainty must be dealt with in a professional manner in order to offer a reputable service to the general public. It is argued that uncertainty must be expressed within the valuation to offer each party a thorough understanding of the circumstances that surround that particular valuation. It is suggested that the Royal Institution of Chartered Surveyors (RICS) should develop a standard approach to uncertainty expression, not only for the valuer's peace of mind, but in order to offer the best possible service to the general public.Design/methodology/approach – The paper reports the findings of a survey of valuers from leading practices throughout the UK. Examples of uncertainty are included in order to highlight the key issues within the discuss...

An investigation into the expression of uncertainty in property valuations

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An investigation into the expression of uncertainty in property valuations