The purpose of this paper is twofold: first, to suggest a modified sales comparison model that is scalable and adaptable to value under conditions of certainty and uncertainty…
Abstract
Purpose
The purpose of this paper is twofold: first, to suggest a modified sales comparison model that is scalable and adaptable to value under conditions of certainty and uncertainty. The model can potentially be applied to residential property, non-residential property and large item plant and machinery in determining the value, rental or capitalisation rate. The second purpose is to address practitioner and end user bias, which if unaddressed can lead to potentially inconsistent valuation results.
Design/methodology/approach
Literature was reviewed on decision theory, specifically cognitive limitations, heuristics and biases. A qualitative approach is followed in the paper although the output of the proposed model itself is quantitative.
Findings
The paper argues that practitioners and end users alike tend to avoid advanced statistical techniques when valuing under conditions of certainty, while advanced statistical techniques would not be possible under conditions of uncertainty. In addition, practitioners can, due to the representative heuristic, be over-confident in their ability, skill or knowledge when performing valuations under conditions of certainty. When valuing under conditions of uncertainty, practitioners tend to avoid simple rule models as they consider the process too unique to be standardised. The combined effect is inconsistent valuation results unless it can potentially be addressed through an integrated and modified sales comparison model that takes into account varying degrees of certainty and uncertainty.
Practical implications
The proposed modified sales comparison model is an integrated model that can be adopted by practitioners in valuing residential, non-residential and large plant and machinery. It can potentially be used to value under conditions of certainty and uncertainty and improve valuation consistency. End users such as mortgage lenders and investors can benefit from the adoption of this model.
Originality/value
The aim of this paper is to propose an integrated and modified sales comparison model for valuing under conditions of certainty, normal uncertainty and abnormal uncertainty. The integrated model can value based on direct comparison under conditions of certainty and uncertainty while addressing the in practice avoidance of advanced statistical techniques and the implications of the representative heuristic and halo effect as cognitive biases on valuation consistency.
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The purpose of this paper is to compare the value outcomes of the cost approach to the DCF profits method when valuing specialised property under different scenarios as a test for…
Abstract
Purpose
The purpose of this paper is to compare the value outcomes of the cost approach to the DCF profits method when valuing specialised property under different scenarios as a test for choice of method or model uncertainty; and to quantify valuation uncertainty under each scenario and to argue for an increasing adoption of the profits method of valuation.
Design/methodology/approach
A qualitative case study approach was used to analyse four physical valuations performed in practice under four specific scenarios, namely, a business-as-usual scenario, an underperforming business scenario, an expanding capacity scenario and a combined business-as-usual funding a start-up joint venture scenario.
Findings
The cost approach relative to the DCF profits approach consistently under-values specialised property under business-as-usual and business expanding scenarios while it over-values in instances of underperforming business scenario.
Practical implications
Financial institutions that predominantly uses or accepts the cost approach for valuing specialised property should consider adopting the DCF profits approach as the default approach when valuing for mortgage lending purposes. Business owners of specialised properties should contract practitioners knowledgeable and skilled in the application of the DCF profits method.
Originality/value
This paper quantifies choice of method or model uncertainty of four different scenarios of specialised properties where both the cost approach and DCF profits methods of valuation were employed. It suggests the adoption of the DCF profits method as the default method of valuation for specialised property.
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The purpose of this paper is twofold: primary, to argue that the profits method, specifically a discounted cash flow (DCF)-based profits method, should be the preferred method of…
Abstract
Purpose
The purpose of this paper is twofold: primary, to argue that the profits method, specifically a discounted cash flow (DCF)-based profits method, should be the preferred method of valuation when valuing specialised property. Secondary, to make technical recommendations in the application of the method.
Design/methodology/approach
Literature was reviewed on the theory of the profits method as well as physical valuations performed in practice. Improvements for the profits method are suggested from the review of six valuations conducted in South Africa in the specialised property sectors. A qualitative approach is followed in the research as broad principles are extracted from the valuation reports as implications and improvements for the profits method.
Findings
The profits method is more flexible and sophisticated than the cost approach in taking into account systematic and unsystematic risk. The profits method is more accurate than the cost approach in delivering a true reflection of the value of specialised property for any purpose but specifically for mortgage lending purposes and reduces the credit exposure risk of financial institutions. It also decreases pricing inefficiencies to be exploited by buyers and sellers.
Practical implications
Three improvements to the profits method are suggested. First, revenue could be forecasted based on a probability-weighted approach. Second, a modified capitalisation rate is suggested to the capitalisation rate formula in the calculation of G. Third, a market rental aggregation anchoring and judgement-based approach is suggested as rationale for determining the hypothetical rental split.
Originality/value
There seems to be a general lack in literature on the profits method of valuation and its application to specialised properties, specifically a DCF-based approach, with this paper being a technical contribution to the body of knowledge on this topic.
The purpose of this paper is threefold: the primary purpose is to suggest a real estate paradigm spectrum to act as reference for the contextualisation of observed market…
Abstract
Purpose
The purpose of this paper is threefold: the primary purpose is to suggest a real estate paradigm spectrum to act as reference for the contextualisation of observed market phenomenon in system terms; the secondary purpose is for the spectrum to contextualise the efficacy of real estate and valuation theory, methods and techniques; and the tertiary purpose is to propose a confidence score for reporting uncertainty to the end user of a valuation report.
Design/methodology/approach
Literature was reviewed on the concepts of risk and uncertainty, rationality and several systems thinking domains.
Findings
The framework can provide context to observed market phenomenon and distinguishes between agency and mechanism in contributing to conditions of certainty and uncertainty. The argument followed in this paper is that it is necessary to contextualise the efficacy of real estate and valuation theory, methods and models under conditions of certainty, normal uncertainty and abnormal uncertainty. The characteristics of conditions can be used as basis to develop new theory and practical application or modify existing.
Practical implications
Real estate economic theory can be organised in terms of the spectrum and the framework can potentially identify where further research is required and the requirements it must meet as measured against the characteristics of the framework. Current valuation methods and models can continue to be used when valuing under conditions of certainty, however, modifications to methods and models are required to account for complexity when valuing under conditions of normal uncertainty and abnormal uncertainty. The confidence score included in this paper can also be used to report the conditions of certainty/uncertainty under which the valuation was performed.
Originality/value
This paper aims to set the basis for new theoretical and practical developments of insights into real estate economic and valuation theory, methods and models while also contributing to the reporting of uncertainty through the proposed confidence score.
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Cassandra Pillay and Jeroen van den Bergh
This paper aims to clarify the relationship between climate change, its negative impacts on human health and its role in catalysing public engagement for climate policies. It aims…
Abstract
Purpose
This paper aims to clarify the relationship between climate change, its negative impacts on human health and its role in catalysing public engagement for climate policies. It aims to increase public support for climate-mitigation strategies by showing the medical case for negative climate-induced health impacts, the economic burden it entails and the public response to climate change that may be expected when health frames are used.
Design/methodology/approach
The paper reviews medical, economic and behavioural studies focusing on climate-induced health impacts, its economic costs and its potential for catalysing public engagement for climate policy.
Findings
The paper provides empirical insights about the various direct and indirect effects of climate change on human health which includes both physical impacts (infectious and non-infectious diseases) and non-physical impacts (mental disorders and reduced labour productivity). Extreme events such as storms, floods and droughts further seriously affect the health of many people, as they restrict food production and water supply. Economic damage costs of climate-induced health impacts are underestimated. Together, natural science, medical and economic studies warrant giving more attention to health in public debates on climate change. The more so as evidence of behavioural studies suggests that the use of health frames reinforces public concern for climate issues.
Originality/value
This paper argues that climate-induced health impacts and their economic costs should be given more serious attention in discussions about climate-mitigation strategies. They can augment public support for climate policy.
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Employees’ readiness to relocate abroad plays a crucial role for the success or failure of expatriate assignments. Hence, companies should consider employees’ international…
Abstract
Purpose
Employees’ readiness to relocate abroad plays a crucial role for the success or failure of expatriate assignments. Hence, companies should consider employees’ international relocation mobility readiness (IRMR) when selecting candidates for international postings. However, past research has conceptualized and measured IRMR heterogeneously, hampering the interpretation and comparability of IRMR research results. Hence, the purpose of this paper is to provide a new conceptualization of IRMR and to give recommendations for its measurement.
Design/methodology/approach
Based on the business, psychological and sociological literature, this paper reviews and categorizes how IRMR has been conceptualized and measured. To structure the findings, a directed content analysis was applied. The sample comprises 88 journal articles.
Findings
The results reveal that studies seldom provide a conceptualization of IRMR. While the authors often find a misfit between the studies’ explicit conceptualization and the actual measurement of IRMR, most scales actually measure willingness (i.e. usually a predictor of risky and spontaneous behavior).
Research limitations/implications
Based on the results and the Rubicon model of action phases (Heckhausen and Gollwitzer, 1987), the authors recommend future research to conceptualize IRMR as a dynamic multidimensional construct, covering the different phases of an individual’s decision to relocate internationally. Future, IRMR measurements should also cover the complexity of IRMR, e.g. regarding specific location characteristics.
Practical implications
Companies should consider the whole decision-making process regarding IRMR to apply specific measures at the best possible time.
Originality/value
This paper investigates IRMR scales according to their scientific validity and hence provides the basic ground for future scale development studies.
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Annchen Mielmann, Carina Bothma, A Hugo and Celia J Hugo
A lack of available literature exists about sensory data on lucerne (which is mainly used for animal feed) as an underutilised protein source for human consumption in South Africa…
Abstract
Purpose
A lack of available literature exists about sensory data on lucerne (which is mainly used for animal feed) as an underutilised protein source for human consumption in South Africa (SA). Developing tasteless lucerne products is meaningless. Therefore, the purpose of this paper is to determine the descriptive sensory profile and consumers’ acceptability of lucerne.
Design/methodology/approach
Three lucerne cultivars and one spinach beet (Beta vulgaris var. cicla L.) cultivar were used: first, to determine sensory descriptive attributes by generic descriptive analysis; and second, to determine consumers’ acceptance of lucerne, which were evaluated for degree of liking for aroma, taste, mouthfeel and overall acceptability with a nine-point hedonic scale. Principal component analysis of attributes for all the lucerne cultivars was applied to identify any factors differentiating between these cultivars.
Findings
“SA Standard” showed the lowest value, of the lucerne samples, for fibrous appearance, chewy and fibrous mouthfeel, bitter taste and bitter and metallic aftertaste. “SA Standard” was the most acceptable lucerne cultivar, indicating its application in future studies to profile new emerging cultivars.
Originality/value
No sensory analysis studies have been performed on South African lucerne cultivars to determine their sensory acceptability. These cultivars could have potential for food nutritionists, food scientists and food product developers and the commercial market.