An Estimate of the Land Incidence on a Property Value

An estimate of the land incidence on a property value has scarce scientific significance in valuation assessments. In fact, the Italian appraisal tradition considers a property as a whole due to the close complementarity existing between its parts. However, the concept of ìcomplementary valueî is wellñknown in investments evaluations, where the complementary ratio indicates the incidence of the land cost on the development total costs and expected yields. The component approach has become of active interest in Italy as a consequence of the harmonization process undertaken by the EU through International Accounting Standards. Companies involved in IAS accounting have to break up their instrumental tangible assets (IAS 16) in accordance with their respective useful existence and incidence cost on the total value, revaluing them at a fair value, in place of their historic cost, in order to attribute the Income Statement the sole long-term running expenses inherent to the buildings. The non depreciable land cannot be amortized. This study intends to individualize a methodological approach to the land incidence estimation. With respect to its application, especially within the Italian framework, this operation poses many transversal issues to the accounting, estimate and fiscal disciplines. This paper proposes a critical analysis of the EVS 2003 evaluation criteria, underlining how the assets value, far from being allocated through a market oriented approach, is rather inspired by income capitalization or mixed techniques. The aim of the research is to show, by way of an example, the caseñstudy of Bologna Expo District.