Leasehold Investment Valuations

Angus P. J. McIntosh and Stephen G. Sykes

Chapter 10 in A Guide to Institutional Property Investment, 1985, pp 208-218 from Palgrave Macmillan

Abstract: Abstract It is a curious fact of property valuation that freehold and leasehold interests are treated as requiring different approaches. Of course, a freehold valuation capitalises the anticipated income stream in perpetuity, whilst a leasehold valuation deals with a terminable (finite) cash flow. However, this basic difference between the two situations should not lead to any divergence in the valuation techniques applied. After all, a freehold interest may simply be regarded as equivalent to a leasehold with an infinite term. It is not so much the mathematical formulations used to convert the traditional freehold models into leasehold models which are the problem, but really the extraordinary manner in which the models are then applied.

Keywords: Valuation Model; Capitalisation Rate; Discount Cash Flow; Rental Income; Rental Growth (search for similar items in EconPapers)
Date: 1985
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DOI: 10.1007/978-1-349-07154-8_10

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