Deriving market prices for forestland properties from comparables. Issue 4 (20th August 2018)

• Record Type: Journal Article
• Authors: Eerikäinen, Kalle; Venho, Mika
• Is Part Of: Property management. Volume 36:Issue 4(2018)
• Page Start: 423
• Page End: 445
• Publication Date: 2018-08-20
• Subjects: Asset valuation -- Appraisal; Real estate management -- Periodicals; Real property -- Great Britain -- Periodicals; 333.5068
• DOI: 10.1108/PM-07-2017-0043
• Languages: English
• ISSNs: 0263-7472

Abstract

Abstract : Purpose: The purpose of this paper is to construct a market price predictor (MPP) for forestland properties by applying a sales comparison approach (SCA) with several value-related characteristics obtainable from the property-specific sales line declarations. Design/methodology/approach: An SCA-based predictor was designed for appraising and valuing forestland properties with varying quantitative features that impact their overall value. Using a two-stage classification procedure, representative reference sales (i.e. comparables) are objectively and commensurately selected for the subject using location and forest characteristics as classifiers. Findings: The new SCA-based MPP is a stable and reliable tool applicable for pricing forestland properties in any location when data from comparables are available. Research limitations/implications: A systematic and spatio-temporally continuous data collection procedure is a prerequisite for obtaining appropriate data for the SCA-based appraisal and valuation techniques, including the MPP model presented in this study. Practical implications: The MPP model is suitable for the practical appraisal and valuation of forestland properties. Social implications: It is expected that by applying the MPP model for the appraisal and valuation of forestland properties, positive societal contributions will be achieved through the intensification of the forestland property market. Originality/value: The MPP model provides an objective alternative to the adding-value technique, which is the most commonly applied tool to appraise forestland properties in Finland. It is also offers an assumption-free alternative to the income approach.