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2016 | vol. 24, iss. 3 | 16--26
Tytuł artykułu

A Modified Model to Estimate Building Rental Multipiers Accounting for Advalorem Operating Expenses

Autorzy
Warianty tytułu
Języki publikacji
EN
Abstrakty
EN
To develop ideas on building element valuation contained in the first article on the subject published in REMV, we propose an elaboration of the approach accounting for ad valorem expenses incidental to property management, such as land taxes, income/capital gains tax, and insurance premium costs; all such costs, being of an ad valorem nature in the first instance, cause circularity in the logic of the model, which, however, is not intractable under the proposed approach. The resulting formulas for carrying out practical estimation of building rental multipliers and, in consequence, of building values, turn out to be somewhat modified, and we demonstrate the sensitivity of the developed approach to the impact of these ad valorem factors. On the other hand, it is demonstrated that (accounting for) building depreciation charges, which should seemingly be included among the considered ad valorem factors, cancel out and do not have any impact on the resulting estimates. However, treating the depreciation of buildings in quantifiable economic terms as a reduction in derivable operating benefits over time (instead of mere physical indications, such as age), we also demonstrate that the approach has implications for estimating the economic service lives of buildings and can be practical when used in conjunction with the market-related approach to valuation - from which the requisite model inputs can be extracted as shown in the final part of the paper. (original abstract)
Rocznik
Strony
16--26
Opis fizyczny
Twórcy
autor
  • Russia Academy of Science (RAS), Russia
Bibliografia
  • Brown, R.G., 2005, Private Real Estate Investment: Data Analysis and Decision-Making, Elsevier Academic Press, pp. 82-90.
  • Conner P., Liang Y., 2005, Income and Cap Rate Effects on Property Appreciation, The Journal of Portfolio Management, Fall Special Issue.
  • Gribovsky S.V., Ivanova E.N., Lvov D.S., Medvedeva O.E., 2003, Real Estate Valuation, Interreklama Publishers, Moscow, 2003 (in Russian).
  • IVSC, 2007, The International Valuation Standards 2007, The International Valuation Standards Council (IVSC). London 2007.
  • IAAO, 2003, The Standard on Automated Valuation Models. Approved in September 2003. www.iaao.org
  • Kamke E., 1948, Differentialgleichungen, Lösungsmetoden und Lösungen, Band II, Partielle Differentialgleichungen erster Ordnung für eine gesuchte Funktion, Academische Verlagsgesellschaft, Leipzig, 1948 (in German).
  • Lee, H. S., Corgel, J. B., Shin, S., 2014, Estimating Net Operating Income Growth for Modeling U.S. Apartment Property Capitalization Rates. Journal of Real Estate Portfolio Management, 20(1), 67-78. Available on-line at: http://scholarship.sha.cornell.edu/articles/578/
  • Leyfer L.A., 2006, Direct Capitalization Method. Generalized Inwood Model, in Voprosy Otsenki, No. 3, 2006, pp. 15-20 (the article is also available online at http://www.labrate.ru/leifer/lev_leifer_article-model_inwood.htm) (in Russian).
  • Sayce S., Smith J., Cooper R., Venmore-Roland P., 2006, Real Estate Appraisal: From Value to Worth, Blackwell Publishing Ltd.
  • Smolyak S.A, 2008, Problems and Paradoxes in the Valuation of Machinery and Equipment, RIO MAOC, Moscow (in Russian).
  • Smolyak S.A., 2012, Models for Estimating Depreciation in Plants, Machinery, and Equipment: Analysis and Proposals, Journal of Property Tax Assessment & Administration, Vol. 9, Issue 3, 2012. pp. 47-86.
  • Smolyak S. A., 2016, A Model to Decompose Property Rental Multipiers with Regard to the Division Between Land and Building Elements, Real Estate Management and Valuation, Vol. 24, No. 1, pp. 51-63.
  • Winnick L, 1952, Long-run Changes in the Valuation of Real Estate by Gross Rents, The Appraisal Journal, October 1952, pp. 484-498.
  • Yisheng YU, 2004, The Variation of Capitalization Rates Across Submarkets Within the Same Metropolitan Area, MIT Thesis Paper, http://dspace.mit.edu/bitstream/handle/1721.1/26731/59759952-MIT.pdf?sequence=2.
Typ dokumentu
Bibliografia
Identyfikatory
Identyfikator YADDA
bwmeta1.element.ekon-element-000171441562

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