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Reversionary properties - valuation methods revisited

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  • Nick French

Abstract

In the last 40 years the UK valuation profession has relied heavily upon the ìhardcoreîù or ìlayerîù method for valuing reversionary properties (under and/or over rented). This approach is not used elsewhere in the world and, prior to the rent freeze of the 1970s in the UK, it wasnít a principal method in the UK. However, valuers today, particularly in London, use this method exclusively despite it producing erroneous answers in certain cases (over-rented; non normal cash flows). It is the opinion of this paper that the UK property market is now so different from the market that prevailed when this model was introduced that it no longer has a place in the valuersí armoury of methods to use. This paper looks at a number of case study examples and offers other (more appropriate) options for valuing reversionary interests.

Suggested Citation

  • Nick French, 2012. "Reversionary properties - valuation methods revisited," ERES eres2012_011, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2012_011
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2012-011
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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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