Income Risk in Property Valuation for Loan Security Purposes

Nawrocka Ewelina ()
Additional contact information
Nawrocka Ewelina: Department of Investment and Real Estate, University of Gdansk

Real Estate Management and Valuation, 2018, vol. 26, issue 2, 12-22

Abstract: Under the provisions of the standard Valuation to Secure Debt made by the Polish Federation of Valuers’ Associations, in preparing the appraisal report for this purpose, the valuer, among other things, is “obligated to identify risk areas related to the property concerned, including the anticipated changes in the property market and the risk related to how the property is assessed by investors”. The article discusses the assessment of the risk of incomes generated by a commercial property which is to constitute loan security. Factors influencing the variability of incomes taken into consideration in the income approach to property valuation are subject to detailed analysis. The article analyses the assessment of the risk of earning income different from that expected from the property constituting loan security with the use of statistical measures. The main purpose of the article is to propose the application of statistical measures for income risk assessment. Auxiliary goals are listing the factors which influence the variability of incomes in property valuation and characteristic features of modern office space in the Polish Tricity (i.e. Gdansk, Sopot, Gdynia) near the Baltic Sea, with the analysis of rents and vacancies. The article analyzes data from the Tricity property market over the period 2009 – 2016.

Keywords: risk; income; commercial property; valuation; loan (search for similar items in EconPapers)
JEL-codes: C49 E30 R33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/remav-2018-0012 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:remava:v:26:y:2018:i:2:p:12-22:n:2

DOI: 10.2478/remav-2018-0012

Access Statistics for this article

Real Estate Management and Valuation is currently edited by Sabina Zrobek

More articles in Real Estate Management and Valuation from Sciendo
Bibliographic data for series maintained by Peter Golla ().