Free ebooks ==> www.Ebook777.com The structure of the book has been substantially revised Part A introduces the key microeconomic principles, focussing on land as a resource, production functions, supply and demand and price determination The locational aspect of real estate is also introduced Macroeconomic considerations are categorised by the main market sectors (and their function); the market for land (development), for space (occupation) and for money (investment) The economic context is set and the author then explains why property valuations are required and discusses the main determinants of value and how they might be identified The mathematics required to financially quantify value determinants are also introduced Part B of the book describes the methods of valuation; Part C applies these methods to the valuation of a range of property types for a wide variety of purposes; and Part D covers investment and development appraisal The author introduces valuation activities from a broad economic perspective, setting valuation in its business finance context and combining its academic and practical roots Changes in this Second Edition include: • less daunting economics • expanded companion website with PowerPoint slides for lecturers and self-test Questions & Answers for students: see www.wiley.com/go/wyattpropertyvaluation • up-to-date case studies and sample valuations • reference to the newly-published Red Book (the valuer’s bible) This book’s companion website is at www.wiley.com/go/wyattpropertyvaluation and offers invaluable resources for each chapter: • PowerPoint slides for lecturers • Self-test questions and answers for students second edition peter wyatt wyatt the author: Peter Wyatt, Senior Lecturer & Director of Undergraduate Programmes Real Estate & Planning, Henley Business School, the University of Reading has developed and delivered national and international university programmes at all levels, has published widely in leading real estate journals and has published two text books Dr Wyatt is involved with and has lead national, European and international real estate research projects On-going work with UK Government is investigating the theory and practice of development viability appraisal in planning policy, focusing on the issue of development value and planning gain property valuation second edition Property Valuation with its user-friendly format, using tried-and-tested teaching and learning devices and a clear writing style, remains the core text for students on real estate, estate management and land economy degree courses, as well as for fast-track conversion courses for non-cognate graduates property valuation This new edition of the ‘all in one’ textbook for the postgraduate study of valuation on real estate courses retains its focus on the valuation and appraisal of commercial and industrial property across investment, development and occupier markets It is structured from the client perspective and covers single-asset pricing, risk and return issues ISBN 978-1-119-96865-8 781119 968658 www.Ebook777.com Wyatt_Property_9781119968658_pb.indd 15/04/2013 10:18 Free ebooks ==> www.Ebook777.com Property Valuation www.Ebook777.com This book’s companion website is at www.wiley.com/go/ wyattpropertyvaluation and offers invaluable resources for each chapter: • PowerPoint slides for lecturers • Self-test questions and answers for students Free ebooks ==> www.Ebook777.com Property Valuation Second Edition Peter Wyatt School of Real Estate & Planning Henley Business School, University of Reading A John Wiley & Sons, Ltd., Publication www.Ebook777.com This edition first published 2013 © 2013 John Wiley & Sons, Ltd Registered office John Wiley & Sons, Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom Editorial offices 9600 Garsington Road, Oxford, OX4 2DQ, United Kingdom The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please see our website at www.wiley.com/wiley-blackwell The right of the author to be identified as the author of this work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by the UK Copyright, Designs and Patents Act 1988, without the prior permission of the publisher Designations used by companies to distinguish their products are often claimed as trademarks All brand names and product names used in this book are trade names, service marks, trademarks or registered trademarks of their respective owners The publisher is not associated with any product or vendor mentioned in this book Limit of Liability/Disclaimer of Warranty: While the publisher and author(s) have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom If professional advice or other expert assistance is required, the services of a competent professional should be sought Library of Congress Cataloging-in-Publication Data Wyatt, Peter, 1968– [Property valuation in an economic context] Property valuation / Peter Wyatt pages cm Includes bibliographical references and index ISBN 978-1-119-96865-8 (cloth) 1. Commercial real estate–Valuation–Great Britain. 2. Real estate investment–Great Britain. I. Title HD1393.58.G7W93 2013 333.33′8720941–dc23 2013005191 A catalogue record for this book is available from the British Library Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books Cover design by Meaden Creative Cover image courtesy of iStockPhoto Set in 10/12pt Sabon by SPi Publisher Services, Pondicherry, India 1 2013 Free ebooks ==> www.Ebook777.com To Jemma, Sam and Tom www.Ebook777.com Free ebooks ==> www.Ebook777.com Contents Prefacexiii Acknowledgementsxv PART A PROPERTY VALUE AND PROPERTY VALUATION 1 Microeconomic Concepts 1.1 Supply and demand, markets and equilibrium price determination 1.2 The property market and price determination 1.2.1 Rent for land 1.2.2 Land use rents 1.2.3 Land use intensity 12 1.3 Location and land use 14 1.4 The economics of property development 22 1.4.1 Type and density of property development 22 1.4.2 The timing of redevelopment 25 Notes28 References29 2 Macroeconomic Considerations 31 2.1 The commercial property market 31 2.2 Property occupation 33 2.3 Property investment 34 2.4 Property development 43 2.5 Property and the wider economy 44 References48 3 What is Property Valuation 3.1 Introduction 3.2 The need for valuations 3.2.1 Types of property to be valued 3.2.2 Bases of value www.Ebook777.com 49 49 50 52 57 viii Contents 3.3 Determinants of value 60 3.3.1 Property-specific factors 60 3.3.2 Market-related factors 66 3.4 Valuation procedures 69 3.4.1 Terms of engagement 71 3.4.2 Inspections and investigations 71 3.4.3 Valuation report 73 3.5 Measurement 73 Appendix – Inspection checklist 76 Notes81 References81 4 Valuation Mathematics 83 4.1 Introduction 83 4.2 The time value of money 84 4.2.1 Single period investments 85 4.2.2 Multi-period investments 86 4.2.3 Tax 93 4.3 Yields and rates of return 94 4.3.1 Yields 95 4.3.2 Rates of return 96 4.3.3 Yields and rates of return 98 References99 PART B VALUATION METHODS 101 5 Comparison Method 103 5.1 Introduction 103 5.2 Sources of data 104 5.3 Comparison metrics 106 5.3.1 Relative value of retail ground floor ‘zones’ 107 5.4 Comparison adjustment 110 References114 6 Investment Method 115 6.1 Introduction 115 6.2 All-risks yield (ARY) methods 117 6.2.1 Valuation of rack-rented freehold property investments 117 6.2.2 Valuation of reversionary freehold property investments 119 6.2.3 Valuation of leasehold property investments 127 6.2.4 Example: ARY Investment method 134 6.3 Discounted cash-flow (DCF) methods 135 6.3.1 A discounted cash-flow valuation model 136 6.3.2 Applying the DCF valuation model 142 Notes157 References157 Further reading 158 ... commercial property market 31 2.2 Property occupation 33 2.3 Property investment 34 2.4 Property development 43 2.5 Property and the wider economy 44 References48 3 What is Property Valuation ... Considerations What is Property Valuation Valuation Mathematics Part A Property Value and Property Valuation 31 49 83 The legal ownership of land and buildings, collectively referred to as property throughout... payment for their use and Property Valuation, Second Edition Peter Wyatt © 2013 John Wiley & Sons, Ltd Published 2013 by John Wiley & Sons, Ltd www.Ebook777.com Property Valuation Part A some land