Abstract:

A precise and justified assessment of assets plays an important role for successful investments in the real estate market. A significant influence on the result of the market cost is provided by the capitalisation ratio, which is used in the direct capitalisation method and to determine the cost of reversion in the method of discounting cash flows. The article considers the hypothesis about the possibility of predicting the capitalisation ratio, which is topical for reducing uncertainty in making managerial decisions. Authors developed a model that allows effectively predict the capitalisation ratio. The study has the inspection of the received model using objects of office real estate of St. Petersburg and a simulation modelling. Moreover, the article has comparison of the market capitalisation ratio of St. Petersburg and other major cities of the world. Next, the study analysed the influence of the chosen model technique of calculating the capitalisation ratio on the result of the valuation with a review of the main advantages and disadvantages of such model techniques. In order to determine the validity of using model techniques for real estate appraisal the cost of a hypothetical office building based on retrospective data of the St. Petersburg market in accordance with each model was calculated. The study presents comparison of the obtained results with a real dynamic row of the cost. In addition, it provides an alternative model for the calculation of value within the income approach to valuation, which gives results that are more accurate. The results of the study are the model for predicting the capitalisation ratio with a probability of 95% and recommendations for the effective use of model techniques for calculating the capitalisation ratio.