Peter Wyatt is a Chartered Valuation Surveyor and Professor of Real Estate Appraisal in the Department of Real Estate & Planning at the Henley Business School, University of Reading, UK. He has developed and delivered national and international university programmes at all levels and led national, European, and international real estate research projects. His recent work with UK Government investigated the theory and practice of development viability appraisal in planning policy, and current work with the UN is focusing on the valuation of unregistered land.

• Preface xiSECTION A VALUATION PRINCIPLES 11 Property Rights and Property Value 31.1 Property rights 31.1.1 Tenure 41.1.2 Property rights in England 61.2 Property value 81.2.1 Extent of property rights 91.2.2 Security of property rights 111.2.3 Physical and geographical characteristics 131.3 Property valuation 131.3.1 Market transactions 141.3.2 Investment decisions 151.3.3 Compensation 151.3.4 Land and property taxation 161.3.5 Accounting, lending and insurance 16Note 18References 182 The Economics of Property Value 192.1 Introduction 192.2 Land as a resource 192.3 Supply and demand, markets and equilibrium price determination 212.4 The property market and price determination 222.4.1 The property market 222.4.2 Price determination in the land market 232.4.3 Price determination in the property (land and buildings)market 262.5 Location and land use 292.6 Economics of property development 362.6.1 Type and density of development 362.6.2 Timing of development 382.7 Non-marketconcepts of value 40Notes 42References 423 Property Markets 453.1 Introduction 453.2 Property markets 463.2.1 Occupier market 473.2.2 Investment market 593.2.3 Development market 633.3 Property markets interaction 69Note 72References 724 Valuation Mathematics 754.1 Introduction 754.2 The time value of money 764.3 Single-suminvestments 774.4 Multi-periodinvestments 784.4.1 Level annuities 784.4.2 From a level annuity to a growth annuity 824.5 Timing of receipts 834.6 Yields 844.7 Rates of return 85Notes 90References 915 Valuation Process and Governance 1015.1 Valuation process 1015.1.1 Confirm instruction and agree terms of engagement 1015.1.2 Inspect the property 1035.1.3 Gather and analyse comparable evidence 1045.1.4 Establish basis of value 1065.1.5 Make assumptions and special assumptions asappropriate 1095.1.6 Select valuation approach(es) and method(s) andundertake the valuation 1105.1.7 Produce a valuation report 1105.2 Valuation governance 1125.2.1 Standards of conduct 1135.2.2 Valuation process standards 1155.2.3 International valuation standards 1155.2.4 National valuation standards 1165.3 Valuation systems 1175.3.1 Information systems 1195.3.2 Valuation capacity 1215.3.3 Professional valuers associations 1225.4 Conclusion 125Notes 127References 127SECTION B VALUATION APPROACHES AND METHODS 1296 Market Approach 1316.1 Introduction 1316.2 The comparison method 1326.2.1 Collect comparable evidence of market transactions 1326.2.2 Identification of value-significantcharacteristics 1346.2.3 Adjustment of value-significantcharacteristics 1396.3 Hedonic regression method 1506.3.1 Simple linear regression 1516.3.2 Multiple linear regression 156Notes 168References 1687 Income Approach 1737.1 Introduction 1737.2 Income capitalisation method 1747.2.1 Perpetual annuities (freeholds) 1757.2.2 Annuities with a term certain (leaseholds) 1797.3 Discounted cash-flow method 1837.3.1 A discounted Cash-Flow valuation model 1847.3.2 Perpetual annuities 1907.3.3 Annuities with a term certain 1937.4 Profits method 1957.4.1 Method 196Notes 204References 2048 Cost Approach 2358.1 Introduction 2358.2 Replacement cost method 2368.2.1 Replacement cost 2368.2.2 Depreciation 2378.2.3 Land value 2408.2.4 Application of the replacement cost method 2428.2.5 Issues arising from the application of the replacementcost method 2438.3 Residual method 2458.3.1 Basic residual technique 2468.3.2 Basic residual profit appraisal 2548.3.3 Discounted cash-flowTechnique 255Notes 260References 260SECTION C VALUATION APPLICATION 2719 Valuation of Investment Property 2739.1 Introduction 2739.2 Analysis of rents 2749.2.1 Rental lease incentives 2749.2.2 Capital lease incentives 2779.2.3 ‘Surrendered’ leases 2809.2.4 Repairs, insurance, and ground rents 2819.2.5 Rent-review pattern 2839.3 Analysis of yields 2849.3.1 Equivalent yield 2849.3.2 Weighted average unexpired lease term 2859.4 Market valuation of investment property 2859.4.1 Voids and break options 2859.4.2 Statutory considerations 2889.4.3 Over-rented properties 2949.4.4 Turnover leases 2969.4.5 Long lease investments 2999.4.6 Synergistic value 2999.5 Investment valuation of investment property 3029.5.1 Inputs and assumptions 3039.5.2 Investment valuation using a discounted cash flow 306References 31110 Valuation of Development Property 35910.1 Introduction 35910.2 Market valuation of development property 35910.2.1 Comparison method 36110.2.2 Residual method 36210.3 Investment valuation of development property 36910.3.1 Estimating the investment value of development property 36910.3.2 Financial appraisals of development property 372References 38111 Valuations for Financial Statements and for Secured Lending 40111.1 Valuing property for financial statements 40111.1.1 Basis of reporting measurement 40211.1.2 Property categorisation 40311.1.3 Basis of value 40511.1.4 Valuation 40711.1.5 Other issues 41111.1.6 Example valuations 41311.2 Valuing property for secured lending purposes 41511.2.1 Professional standards and guidance 41611.2.2 Valuation methods for loan security valuations 42011.2.3 Example valuation 42011.2.4 Reinstatement cost assessment 424Note 424References 42412 Valuations for Land and Property Taxation 44912.1 Introduction 44912.2 A land tax or a land and property tax? 45012.3 Types of land and property taxes 45212.3.1 Occupation taxes 45312.3.2 Transfer and wealth taxes 45512.3.3 Betterment taxation 45512.4 Land and property taxation in england and wales 45612.4.1 Occupation taxes 45712.4.2 Transfer and wealth taxes 46612.4.3 Betterment taxation in England 469Notes 472References 47213 Valuations for Expropriation 47713.1 Introduction 47713.2 Valuation for expropriation 47813.2.1 Valuing property rights that are to be taken or extinguished 47813.2.2 Valuing retained property rights 47913.2.3 Valuing compensation for disturbance 47913.2.4 Valuing customary and informal land for expropriation purposes 48013.2.5 Expropriation and non-market value 48113.3 Valuations for compulsory purchase and planning compensation in England 48213.3.1 Legal background 48213.3.2 Compensation for land2 taken (compulsorily acquired) 48313.3.3 Identifying the planning position 48613.3.4 Compensation for severance and injurious affection 48713.3.5 Compensation for disturbance and other losses 49113.4 Planning compensation in England 49313.4.1 Revocation, modification and discontinuance orders 49313.4.2 Purchase notices 49313.4.3 Blight compensation 494Notes 494References 49514 Valuation Variance, Risk and Optionality 49914.1 Introduction 49914.2 Valuation accuracy and valuation variance 50014.3 Analysing risk 50214.3.1 Sensitivity analysis 50314.3.2 Scenario modelling 50414.3.3 Simulation 50614.4 Flexibility and options 51114.5 Uncertainty 513References 515Appendix A: Land Uses and Valuation Methods 525Glossary 529Index 000