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Practical Issues in the Valuation of Real Properties with Special Reference to Income Approach and Financial Reporting Purpose


  • Veronika Ilsjan

    () (School of Economics and Business Administration, Tallinn University of Technology)

  • Kaia Kask

    () (School of Economics and Business Administration, University of Tartu)


During the past few years there have been many changes in financial reporting rules in EU countries. One significant change from the real estate point of view has taken place in balance sheet, where property investment account is switched to the asset side of the balance sheet, separate from the property, plant and equipment. Since 2005, all companies listed in the stock market have the obligation to apply International Accounting Standards/International Financial Reporting Standards (IFRS) in their everyday practice. At the same time, more and more researchers have pointed to the problem of valuation accuracy and to the uncertainty of the valuation product. The aim of the paper is to explore practical problems in implementing the income approach in the valua≠tion for financial reporting purposes in Estonia. To achieve the aim of the paper, the authors conducted a survey, sending out a comprehensive questionnaire to all certified general appraisers (GA). The survey findings show that the valuation for accounting purposes is topical mainly in major cities in Estonia. The valuersí behaviour refers to overconfidence in their actions together with above-average self-esteem, which is not supported by actual survey results. However, one of the main reasons here is that some theoretical regulations in standards are too general and need some specification to harmonise appraisersí behaviour in practice.

Suggested Citation

  • Veronika Ilsjan & Kaia Kask, 2005. "Practical Issues in the Valuation of Real Properties with Special Reference to Income Approach and Financial Reporting Purpose," Working Papers 132, Tallinn School of Economics and Business Administration, Tallinn University of Technology.
  • Handle: RePEc:ttu:wpaper:132
    Note: This research was conducted with support from the Estonian Science Foundation (project No. 5286).

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    References listed on IDEAS

    1. Veronika Ilsjan, 2003. "Current issues in real property appraisal in Estonia," ERES eres2003_309, European Real Estate Society (ERES).
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    Cited by:

    1. Liis Ojam‰e, 2007. "Appraising and Brokering in Estonian Housing Market: Different Forms and Norms of Professionalisation," Working Papers 157, Tallinn School of Economics and Business Administration, Tallinn University of Technology.

    More about this item


    real estate appraisal; appraiser behaviour; uncertainty in valuation; valuation for valuation reporting; income approach;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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