Valuation Schools and the Evolution of the Income Approach. An Evaluation of Change Trends

Kucharska-Stasiak Ewa ()
Additional contact information
Kucharska-Stasiak Ewa: Department of Investment and Real Estate, University of Lodz

Real Estate Management and Valuation, 2019, vol. 27, issue 2, 66-76

Abstract: The income approach is the subject of debates conducted by academics and practitioners as one of the most controversial approaches in valuation practice. It is also somewhat differently understood by the three historically shaped valuation schools (US, British and German). This article compares the main assumptions underpinning the income approach’s investment method between the three schools in order to: 1) determine why the assumptions change and in what direction; 2) assess the advantages and disadvantages of explicit cash flows; and 3) evaluate the advisability of incorporating explicit cash flows into Polish valuation methodology. A thesis is formulated that, in Poland, the investment method should use implicit cash flows for estimating the market value of properties. There is a need to include explicit cash flow in university programs, but their use should be limited to valuations undertaken to determine the investment value of a property or the market value of portfolio properties, as well as valuations carried out for the purposes of financial reporting as required by EU legislation (MSSF 13 and MSR 40).The article was prepared based on the review and analysis of the relevant literature.

Keywords: real property valuation; valuation standards; income approach (search for similar items in EconPapers)
JEL-codes: D46 R30 R33 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/remav-2019-0016 (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:27:y:2019:i:2:p:66-76:n:6

DOI: 10.2478/remav-2019-0016

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 ().