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The use of appraisals in portfolio valuation and index construction

The use of appraisals in portfolio valuation and index construction Provides a review of basic appraisal and statistical principles combined with a simple numerical simulation. Suggests two main directions in which the appraisal profession should move. First, because public stock exchanges tend to be more informationally efficient than private property markets, appraisal accuracy can be improved by making increased quantitative use of the information in the share prices of publicly‐traded property companies. Second, it must be recognized that the valuation techniques which are optimal for individual property appraisal are suboptimal for the mass appraisal of aggregate portfolios or indexes of property market values. Suggests that regression‐based techniques based purely on transaction prices may be superior for this latter function. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Property Valuation and Investment Emerald Publishing

The use of appraisals in portfolio valuation and index construction

Journal of Property Valuation and Investment , Volume 15 (5): 25 – Dec 1, 1997

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Publisher
Emerald Publishing
Copyright
Copyright © 1997 MCB UP Ltd. All rights reserved.
ISSN
0960-2712
DOI
10.1108/14635789710189191
Publisher site
See Article on Publisher Site

Abstract

Provides a review of basic appraisal and statistical principles combined with a simple numerical simulation. Suggests two main directions in which the appraisal profession should move. First, because public stock exchanges tend to be more informationally efficient than private property markets, appraisal accuracy can be improved by making increased quantitative use of the information in the share prices of publicly‐traded property companies. Second, it must be recognized that the valuation techniques which are optimal for individual property appraisal are suboptimal for the mass appraisal of aggregate portfolios or indexes of property market values. Suggests that regression‐based techniques based purely on transaction prices may be superior for this latter function.

Journal

Journal of Property Valuation and InvestmentEmerald Publishing

Published: Dec 1, 1997

Keywords: Investment; Investment property portfolio; REITs; Risk; Statistics; USA

References