Redefining Net Operating Income in a shared economy environment

Sviatlana Engerstam and Henry Gonza Muyingo

ERES from European Real Estate Society (ERES)

Abstract: Shared economy brings new challenges to business model development on the commercial property market. This implies that property owners and operators are continuously developing new forms of rental contracts and new ways of managing investment properties. There is a growing need for a closer understanding of the challenges this entails in the valuation of such properties. Traditional models of valuation based on long-term contracts or flexible leases need modification to cater for the dynamic changes witnessed in the operation and management of investment properties. This study provides an analysis of existing forms of rental contracts and rental strategies for the properties that operate in a shared economy environment like co-working spaces and a discussion of the major components of revenue and cost for such properties as well as the value generating process. The purpose of the study is to redefine different concepts used in property valuation in relation to risk and value with the aim of providing a more reliable way of property valuation that takes into account the aspects of a shared economy. The qualitative study that is primarily based on interviews with property owners and operators indicates a need to revise the definition of net operating income used for valuation of the properties operated in a shared economy environment.

Keywords: co-working; net operating income; shared economy; Valuation (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
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