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The Valuation Approaches

The Valuation Approaches. Ing. David Slavata, Ph.D Property Valuation. The Approaches. Comaparative Investment – traditional Investment – DCF Residual Profits Cost based. The Approaches. Investment Comparative Cost - based. The Investment Approach.

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The Valuation Approaches

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  1. The Valuation Approaches Ing. David Slavata, Ph.D PropertyValuation

  2. TheApproaches • Comaparative • Investment – traditional • Investment – DCF • Residual • Profits • Costbased

  3. TheApproaches • Investment • Comparative • Cost - based

  4. TheInvestmentApproach • Assamption: itisnecessary to indicatethe positive (net) income. • Typicalforestates to rent • Rentalbuildings • Administrativebuildings • Ruralland • Garages • Forests

  5. Methods • Perpetualannuity • Discounted cash flow • Discounted cash flowforthe limited period • Discounted cash flowwithvariablerateofcapitalization • Etc….

  6. PerpetualAnnuity PV1 = NI / R PV1……………. PresentValue NI……………… Net Income R………………. RateofCapitalisation

  7. Neverending positive income • Constant positive incomeforneverending period • Constantrateofcapitalisation in neverending period

  8. Discounted Cash Flow • PV2 = SUM (t=1…n) CFt/(1+R)t + SP/(1+R)n • PV2….. Presentvalue • CF….…. Cash flow • SP….…. Sellingprice • R………. Rateofcapitalisation • n…….… Period

  9. Variable CF in theyears • Variablerateofcapitalisation • Limited period • Withdiscountedsellingprice • Withoutdiscountedsellingprice

  10. TheComparativeapproach • Assamption: Itisnecessary to indicateat least one sold estate (comparative) and the second appreciatedestate. • Homogenues • Indicationofsmalldiferences • Timeliness • Market presence

  11. Samples • Flats • Familyhouses • Land forbuilding • Ruralland • Cottages

  12. Comparativemethods • Direct comparative • Usingofcoefficients

  13. Direct comparative CVA1 = SPB + D CVA1………….. Comparativevalueof A SPB…………….. Sellingpriceof B D…………………. Differences in EUR

  14. Coefficients CVA2 = SPB x a CVA2……….Comparativevalueof A SPB………….Sellingpriceof B a………………Thedifferences in hundreths

  15. CostBased • Assamption: itcanbeusedmostlyforvaluatingofbuildings, whereitispossible to indicatethecostofconstruction • Heterogenues • No market

  16. Samples • Buildingsofchurches • Destroyedbuildings • Technicalinfrastructure

  17. Methods • Contractors • Accounting • Technical and economicalindicators (DRC)

  18. Depreciatedreplacementcost DRC = RC – D DRC………….Depreciatedreplacementcostsofbuilding RC…………….Replacementscostsofbuilding D………………Depreciation

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