Abstract:
Estimating the market value of real estate is a process that forms the basis for assessing the value of a property intended for sale, primarily for sale purposes. This difficult task is undertaken by real estate appraisers, who, based on strict regulations, make forecasts and issue a verdict on the property's value. This forecast is subject to negotiation and dispute between the parties. In most cases, valuations are performed using a comparative approach, employing the paired comparison method, which is relatively simple and poses few challenges, provided there is a database of actual transactions involving comparable properties. Estimating the market value of real estate using the income approach is the least discussed. The literature on the subject tends to avoid this issue, and there are no examples that can be used in the real estate appraiser's practice. With this in mind, this study aims to present a methodology for estimating the market value of residential properties using the income approach, assuming that residential properties generate or have the potential to generate income for their owners, at least in the form of rent. In this study, the application of the income approach is presented in an innovative methodology, assuming a state of military threat related to the war in Ukraine.
The main goal of this article is to present a non-standard methodology for estimating the market value of real estate using the income approach in the face of military threats. The research problem in this article is formulated as follows: Can a situation of military threat to a neighboring country influence the conditions for determining the market value of real estate? The research hypothesis of this study is formulated as follows: residential properties are profit-generating assets for their owners and should be valued as income-generating properties, taking into account the threat risk aspect and geopolitical instability.
The study included a secondary analysis of literature sources and legislative data in Poland and the European Union – this method allowed for the analysis of available data on generating profits from business activities conducted on residential properties, as well as a case study method, which allowed for the analysis of methods of determining the market value of residential properties in conditions of military threats.
In the final part of the study, the material was synthesized and conclusions and recommendations were developed regarding the use of the income approach to the valuation of residential properties under conditions of uncertainty reflecting the state of threat.
