What is it about?
We find out what affects the value of land in the value of building located on it
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Why is it important?
In contrast to the Gordon model, we consider that the building has a limited useful life which depends on the land value and its growth rate. For the building valuation we use non-traditional version of the famous DCF method. Therefore, the calculation is not based on long-term forecasting of incomes and land value.
Perspectives
It seems that the alternative version of the DCF method has a sufficiently wide field of application. Previously, we used it for machinery and equipment items valuation.
Mr Sergey A Smolyak
Central Economica and Mathematics Institute Russian Academy of Sciences
Read the Original
This page is a summary of: A Model to Decompose Property Rental Multipiers with Regard to the Division Between Land and Building Elements, January 2016, De Gruyter,
DOI: 10.1515/remav-2016-0005.
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