Determining the Increase in a Building’s Appreciation Rate Due to a Reconstruction

Jaromir Vrbka, Tomas Krulicky, Tomas Brabenec and Jan Hejda
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Jaromir Vrbka: Institute of Technology and Business, School of Expertness and Valuation, Okružní 517/10, 37001 České Budějovice, Czech Republic
Tomas Krulicky: Institute of Technology and Business, School of Expertness and Valuation, Okružní 517/10, 37001 České Budějovice, Czech Republic
Tomas Brabenec: Department of Corporate Finance, Faculty of Finance and Accounting, University of Economics, nám. W. Churchilla 1938/4, 13067 Prague, Czech Republic
Jan Hejda: Institute of Technology and Business, School of Expertness and Valuation, Okružní 517/10, 37001 České Budějovice, Czech Republic

Sustainability, 2020, vol. 12, issue 18, 1-13

Abstract: The reconstruction of buildings generally prolongs their useful life, increases their utility value, and last but not least, leads to an increase in their value. These assumptions only apply if an independent third party reaches the same conclusion together with the owner. However, the undesirable effect of the reconstruction of a building may be a decrease in its value. The aim of this contribution is to determine the change in value of an older sample building assessed in the included case study as a result of its reconstruction. Valuation methods are applied, which, as it turns out, reveal the inaccuracy of the subjective view of the person who reconstructed the building. The resulting change in the value of the sample building is discussed from the point of view of the applied valuation methods and other value-creating aspects (subjective view of the owner on the value of the building, historical value of the building, etc.). The contribution concludes with recommendations for maximizing the increase in value of a property through its reconstruction so as to eliminate the risk of a decrease in its value.

Keywords: property value; reconstruction; historical value (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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