Income approach to real property valuation: a new model

by S.A. Smolyak, Ph.D
Professor, The Central Economics and Mathematics Institute of the Russian
Academy of Science


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Abstract

We propose a new model for the valuation of income-producing real properties based on the principle of stability and an un-orthodox application of discounted cash flow analysis. The model takes into account the effect of the value of land on the value of the buildings erected upon it, and does not require long-term forecasting of income.