Freehold valuations: the relationship between implicit and explicit DCF methods

Abstract

Purpose

Proposes to elucidate the relationship between implicit and explicit discounted cash flow (DCF) methods in freehold valuations.

Design/methodology/approach

Sets out a calculation of annual growth with respect to a rack‐rented property.

Findings

Finds that the advantage of the DCF model is that it makes the assumptions underpinning the valuation explicit.

Originality/value

This shows how the valuer is allowed to analyse the market and to answer not only the question of the price of the property but also the question of whether it is worth that price.

Citation

French, N. (2006), "Freehold valuations: the relationship between implicit and explicit DCF methods", Journal of Property Investment & Finance, Vol. 24 No. 1, pp. 87-91. https://doi.org/10.1108/14635780610642999