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FEDERAL AGENCY FOR EDUCATION
SEI HPE "MOSCOW STATE UNIVERSITY OF SERVICE"
Faculty: "Institute of Regional Economics and Municipal Administration"
Department: "State and municipal management"
course project.
Topic: Improving real estate valuation methods.
Discipline: Management of municipal real estate.
Completed by a student
Groups GRDS 3-2
Shevchuk M.V.
Accepted by teacher
Dubovik M.V.
Introduction…………………………………………………………………….3
I Theoretical part
1.1 Classification of real estate……………………………..5
1.2 Methodology for evaluating residential real estate…………………..6
1.3 Housing Market………………………………………………………………9
1.4 Real estate securities market……………………………..13
1.5 Mortgage………………………………………………………………..15
II Analytical part
2.1 Modern principles of real estate market analysis……………18
2.2 Real estate market research………………………………....20
2.3 Methods for assessing the market value of real estate……………...26
2.4 Features of different types of assessment……………………………...34
2.5 The influence of environmental factors on the cost……………...36
III Practical part
3.1 Practical application of the method of comparative sales………..39
3.2 Investment risks and real estate market statistics……………44
Conclusion………………………………………………………………...47
References………………………………………………………….50
Introduction.
The term “real estate” has appeared in Russian legislation since the time of Peter I. However, in the current legislative acts, a clear distinction has not yet been made between movable and immovable property.
Immovable things (real estate, real estate) include land plots, subsoil plots, isolated water bodies and everything that is firmly connected with the land, that is, objects that cannot be moved without disproportionate damage to their purpose, including forests, perennial plantations, buildings , buildings. Immovable things also include aircraft and sea vessels subject to state registration, inland navigation vessels, and space objects. Other property may also be classified as immovable by law. So, for example, the enterprise as a whole as a property complex is also recognized as real estate.
In accordance with the first part of the Civil Code of the Russian Federation, the enterprise is considered not as a subject, but directly as an object of civil rights.
The enterprise as a whole or part of it may be the object of sale, pledge, lease and other transactions related to the establishment, change and termination of rights in rem. An enterprise can also be inherited.
The structure of the enterprise as a property complex includes all types of property intended for its activities, including land plots, buildings, structures, equipment, inventory, raw materials, products, rights of claim, debts, as well as rights to designations that individualize the enterprise, its products, work and services (company name, trademarks, service marks), and other exclusive rights, unless otherwise provided by law or contract.
The state body carrying out the state registration of real estate is obliged to provide information on the registration made by it and the registered rights to real estate objects to any person. This rule will certainly significantly reduce the risk of improper transactions with real estate for participants in civil transactions.
Various forms of ownership: private, ownership of joint stock companies, local, municipal and, finally, federal. It is very difficult to determine the effectiveness of one form or another - it all depends on specific situations.
In general, the housing market is much more developed than other segments. And this is understandable. There is already a certain legislative base here that regulates the processes of housing privatization, obtaining land for the construction of cottages, and so on.
The market for non-residential premises is represented mainly by once purchased or reconstructed premises, converted into offices. But in the course of privatization, more and more objects appear that are rented out for a long-term lease or sold at auctions by property funds, i.e. local authorities. At the second stage of privatization, the real estate market will be replenished with industrial facilities and, to an even greater extent, trade and service facilities.
After the introduction of the right of private ownership of real estate and privatization in the Russian Federation, the state ceased to be the sole owner of the vast majority of real estate, which served as the beginning of the formation of the real estate market.
I Theoretical part
1.1 Classification of real estate objects.
Real estate appraisal is of interest, first of all, for categories of objects that are actively circulating on the market as an independent product. Currently in Russia it is:
apartments and rooms
premises and buildings for offices and shops
suburban residential buildings with land plots (cottages and summer cottages)
vacant land plots intended for development or for other purposes (in the short term)
Warehouse and production facilities.
In addition, real estate objects, as a rule, are part of the property complex of enterprises and organizations (in particular, those being privatized) and significantly affect their value. There are other categories of real estate, the market of which has not yet formed.
A variety of conditions and their combinations affect the assessment of an object. We give an example of signs of classification.
1. Origin
· Natural (natural) objects.
· Artificial objects (buildings).
2. Appointment
Vacant land plots (for development or other purposes)
· Natural complexes (deposits) for their exploitation.
· The buildings
For housing.
For the office.
For trade and the sphere of paid services.
For industry.
· Other.
3. Scale
· Land masses.
· Separate land plots.
· Complexes of buildings and structures.
· Multi-apartment residential building.
Residential house single-family (mansion, cottage)
Section (entrance).
· Floor in section.
· Apartment.
· Room.
· Summer cottage.
· A complex of administrative buildings.
· Building.
· Premises or parts of buildings (sections, floors).
4. Ready to use
· Finished objects.
Requiring reconstruction or major repairs.
Requiring completion of construction.
1.2 Methodology for evaluating residential real estate.
Practical experience indicates that for small residential real estate it is advisable to carry out valuations according to a simplified procedure, which can be based only on the method of comparing market sales. The sales comparison approach to valuation is based on a direct comparison of the property being valued with other properties that have been sold or listed for sale. Buyers often base their judgments of value primarily on properties for sale. Appraisers also use this information along with information about properties sold or leased. This approach is based on the principle of substitution, which states that if there are several goods or services of similar suitability, the one with the lowest price is most in demand and has the widest distribution. In the case of housing, this means that if it can be seen on the market (which it usually does), then its value is usually set at the cost of acquiring a home of equal attractiveness, which will not take much time to replace.
Mass real estate valuation is a special approach to a simplified valuation of a large group of homogeneous objects (apartments). Such an assessment is carried out according to a certain methodology: for the assessed object, the corresponding set of values of a fixed set of its parameters is determined, and then, according to the rules that are unchanged for all objects, the value of its assessment is formed.
Mass evaluation has its own special applications. An example of such an assessment is the assessment of apartments “according to the Bureau of Technical Inventory (BTI)” based on the cost approach. It is performed by a government agency and is used to determine taxes and fees. However, the BTI valuation does not focus on market value. Therefore, no market information is required to build it.
The distinction between the concepts of actual selling price and market value should be emphasized. The prices are divided into the seller's price, the buyer's price and the selling price.
The seller's price is the amount that he receives as a result of the transaction. The buyer's price is the total sum of all costs for the purchase of an apartment. The selling price is the amount of money that the buyer gives to the seller for the apartment.
They differ in the amount of payment for the services of intermediaries and the costs of processing the transaction. An intermediary may or may not be available to both the buyer of the apartment and the seller. The transaction may or may not be insured. The costs of processing a transaction can be distributed among its participants in different ways. Therefore, the selling price characterizes the apartment as such, and the prices of the buyer and seller are highly dependent on the terms of the transaction. As a rule, if the seller has an intermediary, then his payment is deducted from the selling price and reduces the seller's price, and vice versa, the buyer's payment for the services of his intermediary increases the buyer's price in relation to the selling price. Similarly, these prices are affected by the transaction processing fee. Thus, the price of the seller and the buyer can vary significantly (up to 15% or more). But the selling price minimally depends on their specific features of the mechanism for selling and processing the transaction and is determined by the specifics of the apartment itself. Therefore, it is advisable to model the dependence of the selling price on many parameters of the apartment.
According to its definition, the market value of a property depends on those factors that determine the average or more likely price of its sale in the market under normal conditions of the transaction.
At the first level of classification, they can be subdivided into objective and subjective factors.
When determining the market value, objective factors are considered. As for subjective factors, they are associated with the behavior of a particular buyer, seller or intermediary when concluding a transaction, in part not directly determined by its economic conditions (temperament, awareness, honesty, patience, gullibility, personal likes and dislikes, etc.).
Objective factors are mainly economic determining, ultimately, the average price level of specific transactions.
Economic factors can be subdivided into macroeconomic and microeconomic. The first include factors related to the general market conjuncture: the initial level of security of demand for real estate in the region; volumes and structure of new construction and reconstruction; migration factors; legal and economic conditions of transactions; level and dynamics of inflation; dollar exchange rate and its dynamics. In our conditions, the following long-term factors can also be indicated as part of the group of economic factors:
· differences in the dynamics of prices for goods and services, as well as wage conditions that affect the scale of accumulation of funds and the amount of deferred demand;
· the pace and scale of the formation of a new social stratum, which have the opportunity to invest in real estate;
development of the mortgage system;
· Development of a system of foreign representations in the region.
Microeconomic factors characterize the objective parameters of specific transactions. Of these, those that describe the object of the transaction (apartment) are especially important. Factors related to the nature of the transaction and payment terms are also significant. The main procedures for processing transactions and their payment have been worked out. Therefore, when mass appraisal of the market value of apartments, one can and should focus on the typical (average) nature of the transaction, consider this factor constant and not take it into account when assessing the market value of apartments. Then the market value (average price) of an apartment, estimated on a fixed date, is determined by its parameters (characteristics) as a use value.
1.3 Housing market.
The potential scale of this market is enormous. At least 90 percent of housing in any, as they say, civilized country is bought today in installments.
The housing market in Russia acquired a particularly large scale as a result of the privatization of apartments. Free, as in Moscow, or preferential, as in other cities, the transfer of apartments to private ownership has created new opportunities for owners to operate with this type of real estate.
At the same time, forms of buying and selling apartments and other types of housing have also developed. Among these forms, the purchase of apartments by installments is becoming more common. It should be noted that in the West, almost all real estate owned by the population is burdened with debts, the need to pay the cost of housing in installments. In Russia, as a result of privatization, every citizen became the owner of immovable assets (apartments, garden and country plots) that were not burdened with debts. Therefore, Russian citizens are in a much better position in this respect than citizens of other countries.
At the same time, all this will be supplemented by the newly opened possibilities for acquiring housing on credit. Briefly, the scheme is as follows.
The apartment itself serves as material security for lending. Until the loan is repaid, the buyer is legally only its tenant. The buyer immediately lays out the first installment - about 30 percent; the remaining 70 are paid by the bank with which the corresponding agreement is concluded with the real estate company.
The bank or its subsidiary collects documents, executes the purchase and sale transaction, makes settlements with the seller, etc. Therefore, the size of the commission, for example, in Moscow reaches 13 percent of the market price of an apartment. These costs are justified if the transaction is executed with the participation of reliable organizations, since the housing market has acquired a certain criminal connotation in recent months.
A large number of criminal situations arise due to the presence of “left” dollars in almost every transaction, which are transferred from hand to hand after the completion of the official registration procedure.
“Left” dollars is, as a rule, the difference between the market price of an apartment and the amount in which it was assessed by the BTI. Therefore, one does not need to be an expert to understand: to eliminate the "leftists" one has to choose one of two paths: either the conservative path - to bring the evaluation practice of the BTI closer to the real conditions of the market; or a radical way - to abandon this practice and switch to other forms of control over the application price of real estate.
The ever-increasing ratios are bringing BTI valuations closer to market prices by leaps and bounds.
All possible taxes have already been deducted from the income for which an apartment (or other property that can later be sold) was bought by a citizen. Therefore, from any point of view, the sale of property cannot be considered a fact of obtaining additional income; it is only a change in the form of property owned by a citizen. And levying tax on the amount of such a change is a secondary charge of tax on the same income.
The market redistribution of apartments made it possible to improve the use of the housing stock, stimulated the resettlement of part of the communal apartments, and made it possible to partially solve the housing problem.
On the whole, the housing problem not only persists, but is intensifying. This is facilitated by the constant influx of refugees and forced emigrants from neighboring countries into Russia.
Use of apartments for non-residential purposes.
After the privatization of a significant share of the residential sector in cities, the problem of using owned apartments for other than their intended purpose has become more acute.
Of course, the use of residential premises owned by citizens and legal entities for non-residential purposes - to accommodate offices, offices, workshops, computer centers, etc. - by no means contributes to solving the housing problem, since a significant part of the living space is withdrawn from the citywide fund. However, ways to deal with this limit the freedom of the owner and are often illegal.
Even if the housing inspectorate or the militia manages to establish the fact of misuse of the apartment and, having formalized it accordingly, presents it to the court, the judges have no legal grounds to satisfy such a claim. In accordance with Art. 6 of the Law “On the Fundamentals of Federal Housing Policy”, the owner of real estate in the housing sector has the right, in the manner prescribed by law, to own, use and dispose of it, including leasing, renting, pledging, in whole and in parts, etc. if the current norms, housing and other rights and freedoms of other citizens, as well as public interests are not violated. Among the obligations of the owner when using residential premises, established by Art. 4 of the same law, there is no such obligation as the use of residential premises for their intended purpose. True, Art. 7 of the Housing Code of the RSFSR, which establishes that residential buildings and residential premises are intended for permanent residence of citizens.
But in the best case, taking into account this article, on the basis of Art. 48 of the Civil Code of the RSFSR, only a residential lease agreement can be invalidated as not complying with the requirements of the law. But on this basis, it is not possible to terminate the agreement on the transfer of ownership of housing, since not a single legislative act (and this should be only a law, and not a mayor's order or a government decree) contains such a legal basis.
The lack of a clear regulatory framework leads to the fact that even the judiciary is sometimes unable to figure out who and on what grounds has the rights to a particular object. However, the stable demand for offices, retail and warehouse space, as well as the high cost of such property, which guarantees considerable commissions, attract a large number of intermediary structures. If in 2000 only 42 percent of those surveyed were engaged in transactions with non-residential premises, by now this figure has increased to 70 percent.
1.4 Real estate securities market.
The segment of the real estate market is the most underdeveloped. This reflects both the lag of the entire stock market and the insufficient involvement of real estate itself in the commercial turnover. Participants in the real estate market still prefer direct investment. Narrow and range of securities associated with the use and sale of real estate.
First of all, the indisputable advantage of housing bonds is their accumulative nature. They make it possible to gradually accumulate the necessary amount of them to buy an apartment, being a certificate of the right to the footage of housing indicated in the face value.
The denomination of bonds in relation to the footage of real apartments allows at any time to stop at the level of living space and comfort, which will be recognized as sufficient or maximum possible. Although it should be recognized that this positive property of housing bonds is somewhat limited by the fact that they give the right to purchase only newly commissioned housing. A rather limited standard of construction and the specifics of new development areas can significantly narrow the circle of those wishing to purchase bonds to solve their housing problems, and this is precisely their main value. If it were possible to purchase municipal housing with the help of bonds in any district of the city, of any level of comfort and “age”, then their attractiveness would increase significantly. This could ensure an increase in the competitiveness of housing bonds in relation to other means of payment (currency) that are considered sufficiently reliable.
Another undoubted advantage of housing bonds is their anti-inflationary nature: the ability to save money in one way or another from depreciation. Therefore, monthly housing bond price quotes should, at the very least, track inflation. Meanwhile, the mechanism of monthly quotations, provided for by the projected form of issue, is able to absorb only general macroeconomic fluctuations, and significant in time scales, but not current changes in the housing market.
The possibility of changing quotes depending on the timing of obtaining housing when bonds are redeemed, say, within the range of 1 to 6 months, could significantly increase both the attractiveness of this stock market instrument and the degree of its liquidity.
Property valuation. Market valuation methods help to maximize the profitability of real estate, this new resource that businesses and citizens have at their disposal. This assessment becomes necessary already when the owners of land and real estate want to mortgage them to obtain a loan. Without a proper assessment, count on attracting additional investments, including foreign ones.
At the first stage of privatization, when creating joint ventures, such assessments were either not made at all, or were made just by eye. The investor himself determined the price. When it concerned serious objects, Western appraisal firms were involved, which in most cases carried out appraisals in favor of foreign investors, underestimating the real market value of our assets.
Evaluation is also necessary for the secondary issue of shares of privatized enterprises seeking to increase their authorized capital by an amount supported by real material resources. It is the real prospectus that will allow investors to avoid mistakes when setting stock prices. An appraisal is also required in the division of property, in determining the best commercial use of land and real estate, and in all other transactions related to real estate.
Analysis of the prospects for increasing the value of real estate and its commercial use should be based on a strict economic calculation, an accurate and professional assessment of the actual market value of the property. An appraisal is the opinion of a specialist or a group of experts, usually professional appraisers, on the value of a real estate object based on knowledge, experience, using strictly defined approaches, principles and methods, as well as procedural and ethical standards.
Market value refers to the most likely price that a property will sell in a competitive and open market, given all the conditions necessary to make a fair deal.
These conditions are:
1. The buyer and the seller act on the basis of typical, standard motives. The deal is not forced on either side.
2. Both parties have full information to make decisions and act in the best interests of their interests.
3. The object has been put on the open market for a sufficient time, and the optimal moment has been chosen for the transaction.
4. Payment is made in cash or agreed financial terms comparable to cash payment.
5. The transaction price reflects normal conditions and does not include discounts, rebates or special credits by any of the parties associated with the transaction.
6. The object is in normal demand and has a utility recognized in the market.
7. The object is quite scarce, in other words, there is a limited supply that creates a competitive market.
8. The object is endowed with the properties of alienability and is capable of being passed from hand to hand.
1.5 Mortgage.
Mortgage means issuing a loan secured by real estate. The classic mortgage object is a land plot. Mortgage opens the possibility to provide buildings, structures, residential houses, separate apartments as collateral.
Mortgage loans are generally inexpensive, mortgage banks' margins are low, and profits are made from large volumes of loans placed. These banks also attract funds at low interest rates, but due to their very high reliability, the mortgage bonds they place are in steady demand.
There are four entities operating in the mortgage loan market:
1. a borrower seeking to acquire possibly the best real estate;
2. a bank that seeks to obtain the highest possible profit by limiting the risk of a mortgage;
3. an investor who seeks to maximize profits by investing in mortgages;
4. the government, which must create the legal and economic conditions for the functioning of the mortgage lending system.
Mortgage lending facilities should ensure the availability of credit for the borrower, as well as the profitability of lending.
There are several varieties of credit mechanisms that allow, to a greater or lesser extent, to bypass the rather high level of inflation that exists in the country.
The first mechanism is fixed rate lending.
The second mechanism is based on loans with a rate adjusted to the price level in the country, when the loan rate is reviewed periodically (about once a quarter) depending on changes in the price level.
The third mechanism - lending with adjustable deferred payments - was developed by one of the institutions of the US economy specifically for use in Russian conditions. Its essence is that the borrower must pay no more than 30 percent of income on the principal debt or loan. The initial payout is relatively low and increases over time. This allows you to postpone the payment of the main part of the debt to a later date. The principle of this mechanism is that two interest rates are calculated, one of which is called “contract” and is used to calculate the amount of debt, and the second is “payment”, to calculate monthly payments. These rates are not equal.
The Law of the Russian Federation “On Pledge” establishes a general principle regarding the registration of mortgages. It must be registered with the same government agency that is responsible for registering the rights to mortgaged property. From this principle follows the assumption that mortgages on residential premises should be registered by departments of housing privatization.
“Mortgage” agreements relating to buildings and structures located on land must be registered in the “land list” of the territory in which the property is located, which can also currently be interpreted as registration by local land committees, although at the time the law entered into force it could mean local councils.
The mechanism for the sale of pledged property is established by the legislator as a common one for both immovable and movable property.
By virtue of Art. 350 of the Civil Code of the Russian Federation, the sale (sale) of the pledged property, which is foreclosed in accordance with the law, is carried out by sale at a public auction in the manner prescribed by the procedural legislation, unless a different procedure is established by law.
The requirement to sell the pledged property through a public auction is imperative, and if one follows the concept of the pledge rules, then it cannot be circumvented. But if the pledgee still wants to acquire the property that is the subject of pledge, into ownership without a public auction procedure and it is supported by the pledger, then this can be done in accordance with Art. 409 of the Civil Code of the Russian Federation. The article allows for the conclusion of a compensation agreement between the parties, where the creditor states the obligations of the debtor as terminated, and the latter, in return for fulfilling his obligation, provides compensation, that is, in our case, the pledgor transfers real estate to the pledgee.
II Analytical part
2.1 Modern principles of real estate market analysis.
The success of a business in a market economy is largely determined by the quality of information on the basis of which responsible financial decisions are made. That is why the collection and analytical processing of information, including market information, is today both the subject of a separate study from a scientific and methodological point of view, and the subject of an independent business.
The most illustrative illustration of the above is the example of information support for doing business in the stock market. Scientific theories and schools that have been repeatedly awarded Nobel Prizes have been created and continue to improve, many works on technical and fundamental analysis have been written, which have become handbooks for stock market specialists. The worldwide practice of deep testing the knowledge of analysts for their admission to work with information on the securities market is considered normal. And this is despite the fact that in the stock market, in comparison with other markets, the regularities of a perfect market in terms of the awareness of participants should be most clearly identified.
The real estate market, unlike the stock market, is more than far from perfect in many respects, which determines the features of its study. On the one hand, analysts are faced with difficulties, and sometimes the impossibility of correct and unambiguous formalization of economic relationships in the real estate market. On the other hand, it is obvious that there is no prospect of transferring analysis technologies used in other markets to the real estate market in their pure form, since these technologies are adapted for use in a different market environment. In view of the foregoing, high-quality analytical work in the real estate market seems to be a highly complex subject that requires the analyst, in addition to deep theoretical knowledge of real estate economics, constant practice and creative search in research that forms professional intuition.
Studying almost a century of history of the functioning of real estate markets in the developed countries of the world, one can come to the conclusion that insufficient attention paid to the quality of analytical work is one of the main causes of most major crises in the real estate markets. A typical example is the crisis in the US real estate market in the late 80s and early 90s. According to experts, excessive and indiscriminate investment in new construction has led to a glut of the market and, accordingly, lack of market demand for a large number of projects for which loans were issued. This situation was based on unrealistic market expectations stemming from the wrong structure of incentives in the analysis, weak analysis methodology and incomplete data characterizing the current conditions. The structure of incentives that guided developers, appraisers and credit organizations was deformed by the interest of some to receive loans, others to justify obtaining a loan, and still others to allocate their funds. At the same time, all parties solved their problems at the expense of unjustifiably optimistic expectations.
The use of weak analysis methodology, expressed in inadequate assumptions and procedures, in interaction with insufficiently high-quality data from local markets, as a rule, resulted in unsound market research and, accordingly, investment decisions based on them. As a result of the crisis, credit institutions have developed a stable syndrome of distrust in general to any projects and market research in particular. And this, in turn, led to the understanding that real estate market analysts in their work should be guided by some general principles that are necessary (but not sufficient) to obtain accurate conclusions and results. On the other hand, there is an urgent need for understandable and easily identifiable criteria that determine the compliance of market research with the category of validity.
Considering the prospects for the development of the real estate market in Russia, we can assume that the absence of potential crises is an overly optimistic scenario. However, the consequences of such crises may be less significant if already today, at the stage of active market development, some general principles and principles are formulated and implemented in everyday practice.
requirements for analytical studies, on the basis of which investment decisions will be made.
Not only the threat of crises, but also current daily problems - increasing competition, reduced opportunities for short-term super-profits, the start of long-term and capital-intensive commercial real estate development projects, the entry of foreign investors into the market with high requirements for justifying decisions, etc. - objectively testify to the fact that the importance of qualitative analysis in the real estate markets of Russia will become increasingly important in the near future.
2.2 Research of the real estate market for the purpose of substantiating investment decisions.
The ultimate goal of any study of the type under consideration is to measure the ratio of supply and demand for a specific type of product in the real estate market at a specific (usually future) point in time.
The special characteristics of real estate as a commodity, along with the special place of real estate in a market economy, form a fairly wide range of socio-economic information necessary for positioning this product on the market. Current and retrospective macroeconomic characteristics of the national and regional economy, socio-demographic indicators of the regional and local markets, parameters of the regional and local real estate markets - these are just the general areas in which it is necessary to conduct research.
Principle 1. Only information that can really determine the future productivity of the investee should be selected for analysis.
When following this principle, the main difficulty for the analyst is the lack of standard rules or unambiguous recommendations on which to form the initial information. It is here that the analyst must show all his knowledge, professional intuition, creativity and practical experience. Moreover, it is here that the basis for the consistency of the study as a whole is laid.
Principle 2: All current and prospective data on which the study is based should be used to quantify the performance of the real estate investment project under consideration.
However, even carefully selected information that is directly related to the subject of assessment is, figuratively speaking, a “bunch of bricks” from which the analyst must lay down a solid foundation for analytical research in accordance with all the rules of building art. And here you can not do without a strong solution that connects the individual elements into a single monolith.
Principle 3. All individual blocks of information selected to justify an investment decision should be interconnected by a clear logical scheme, culminating in a forecast of future market conditions and the corresponding productivity of the project under consideration. The description of the logic circuit must be presented explicitly.
A positive perception by the customer of a report with the results of a market research, in which there is no logical scheme, can only be if:
a) the analyst takes advantage of the client's ignorance, or
b) the customer is initially favorable to the results.
On the other hand, the construction of a convincing and obvious logical scheme is a demonstration of the highest professional skill of the analyst.
Continuing the reasoning about the need to build a logical scheme of research, let's consider another principle that specifies the content of market analysis.
Principle 4. The content of the market analysis should be reduced to a discussion of the factors that make up the main ratios for determining the performance of a commercial property.
In accordance with this principle, the analyst in the course of the study must formulate the main relationships that determine the performance of the commercial facility, and then identify the hierarchy of parameters-arguments, the functions of which are the factors included in the main expression for performance.
Let us illustrate a practical approach to the implementation of this principle using the following simplified example.
Let the criterion for the performance of the project under consideration be the net operating income (NOI) in a specific period of the future. Then, by definition, the main expression for determining performance will have the following form:
NOI=PGI-V&L+M-FE-VE where
PGI - potential gross income,
V&L - losses from underutilization and defaults.
M I - other income.
FE - fixed operating expenses,
VE - variable operating expenses.
Consider the procedure for identifying the parameters that determine the expected values of the main factors.
Potential gross income is determined by the value of the rental rate, which in turn is a function of the current rental rate, as well as trends in the ratio of market supply and demand over time.
The projected occupancy of a property is a function of the cumulative market capacity, demand parameters, market absorption rate, and the growth of the real estate absorption area. For projects, the projected load determines two indicators - the level of load and the time schedule for absorption by the market to this level.
The growth of the real estate absorption area is determined either by the growth in the number of jobs (employment rate) or by the growth of the population. In turn, the expansion of the absorption area leads to the need for new real estate.
It should be noted that the growth of employment and population growth in one case can be directly related, for example, when new jobs are opened and the influx of new able-bodied people. In another case, population growth can grow without an increase in employment, for example, due to an increase in incoming pensioners or an increase in the birth rate. Qualitative analysis involves the use of several sources of information that provide historical trends and range growth projections, followed by data comparison. Segmentation of range growth is also mandatory, eg by age group, sex, family size, etc. The absence of these positions in the study should be attributed to the inconsistent choice of data for use in the analysis.
Demand parameters are determined by such specific indicators as the area (office or production) per workplace, spending on purchases per capita, the number of apartments or houses per capita, etc. With the help of demand parameters, the amount of required real estate is calculated, which corresponds to the growth in the area of real estate consumption. For example, by applying average spending per purchase to population growth, retail sales are predicted to increase, and thus the need for additional retail space. When analyzing the housing market, population growth segmented by age, income, size or family composition is converted into segmented demand. A sound analysis of demand parameters involves the study of historical trends, the current state and forecasting their likely value in the future. Moreover, a consistent analysis measures the change in demand not only due to new range gains, but also due to changes in the existing population and employment structure. For example, during economic upswings, growing companies require large areas, and changes in the demographic situation towards an increase in people of retirement age will require an appropriate type of housing.
The signs of the inconsistency of the analysis of demand parameters should include, first of all, taking into account constant values, which, as a rule, are characteristic of the moment of analysis, as well as ignoring changes in existing population and employment structures.
The absorption rate, also referred to as the market penetration rate, is the share of total market demand that the project under consideration is expected to absorb in competition with other projects. After the analyst has estimated the total increase in potential demand, it is necessary to determine the critical parameter for the project - the share of total demand that the project in question can probably claim.
Theoretically, the absorption coefficient is a complex function of many factors. In the first approximation, it can be defined as the ratio of the area of the object being evaluated to the total area (including the area of the object) of the competitive offer at the time of its introduction to the market. Such an approach, at a minimum, should be present in every market research that claims to be valid.
It should be noted that when determining the absorption coefficient, the most important conditions are the detailed segmentation of demand and competitive supply. At the same time, one should not lose sight of the duration of competing projects started in the implementation, the volume and duration of projects being prepared for implementation. The first sign of a failed study here is the use of any "average" data.
Losses due to market-wide discounts and incentives to renters are also a factor that should not be overlooked when forecasting potential gross income.
Other revenues, while typically a small part of revenue, still need to be projected to reflect the likely preferences of potential consumers in light of their perceptions of lifestyle, level of service, and per capita spending to reach that level, etc. .d.
Fixed and variable costs are traditionally considered more certain in forecasting. However, such a formulation of the question for the conditions of Russia is only partially valid. For example, taxes on real estate (today these are property taxes, taxes on land) and rent for land, due to legislative unsettledness, can present unexpected “surprises” to a potential investor in the future. Therefore, a consistent market research should include variant forecasting of these positions.
A similar situation is observed with most of the variable costs. An analysis of the public utilities market, most of which are provided by natural monopolies, an unstable tariff policy, requires a quantitative justification of the indicators taken into account. At the same time, it is important to use market information on the expenditure of resources obtained on the basis of indications of control and measuring equipment. In the absence of market analogues in terms of resource consumption, it is more preferable to calculate them according to standards, rather than using invoices issued by utility resource providers.
2.3 Methods for assessing the market value of real estate.
There are three main methods for assessing the market value of real estate:
1. comparison method
2. cost method
3. income capitalization method.
The main valuation method is the method of comparative sales analysis (SAP). This method is applicable when there is a market for land and real estate, there are real sales, when it is the market that forms prices, and the task of appraisers is to analyze this market, compare similar sales and thus obtain the value of the property being valued. The method is based on a comparison of the object offered for sale with market analogues. It finds the greatest use in the West (90 percent of cases). However, this work requires an already established market for land and real estate.
The sales comparison method is used if there is sufficient reliable market information on purchase and sale transactions of objects similar to the one being valued. In this case, the criterion for choosing objects of comparison is the similar best and most efficient use.
The SAP method can also be referred to as the direct sales comparison approach, the sales comparison method, or the market information market method.
The sequence of application of the SAP method is as follows:
1. Recent sales of comparable properties in the relevant market are highlighted. Sources of information are: the appraiser's own dossier, the Internet, an electronic database, real estate firms, real estate brokers' dossiers, archives of credit institutions (mortgage banks), insurance companies, construction and investment companies, territorial departments for insolvency and bankruptcy, territorial departments of the State Property Committee, etc. .
An important point when using the SAP method is the coordination of the results of the comparison of the property being valued. Arithmetic averaging of received data is not allowed. The accepted procedure is to study each result and make a judgment about the extent of its comparability with the property being valued. The smaller the number and magnitude of the amendments to be made, the more weight this sale has in the process of finalizing the approval.
As units of comparison, meters are taken that are traditionally established in the local market. To evaluate the same object, several units of comparison can be applied simultaneously.
The elements of comparison include the characteristics of real estate and transactions that cause changes in real estate prices. Items that must be accounted for include:
the composition of the transferred property rights;
conditions for financing the purchase and sale transaction;
· terms of sale;
time of sale
· location;
· physical characteristics;
economic characteristics;
the nature of the use;
non-property components of value.
2. Verification of information about transactions: confirmation of the transaction by one of the main participants (buyer or seller) or an agent of a real estate company; identifying the terms of the sale.
If there is a sufficient amount of reliable market information, it is allowed to use methods of mathematical statistics to determine the value by comparing sales.
3. Adjustment of the value of comparable properties.
Adjustment can be made in three main forms: in terms of money, percentage, general grouping.
Sales price adjustments for comparable properties are made in the following order:
· First of all, adjustments are made related to the terms of the transaction and the state of the market, which are carried out by applying each subsequent adjustment to the previous result;
· Secondarily, adjustments relating directly to the property are made by applying those adjustments to the result obtained after adjusting for market conditions, in any order.
To determine the amount of adjustments, depending on the availability and reliability of market information, quantitative and qualitative methods are used. Justification of the adjustments taken into account is mandatory. The final decision on the value of the result determined by the sales comparison method is made on the basis of an analysis of the adjusted sales prices of the objects of comparison that are most similar to the object of assessment.
The cost method is practically not applicable to land. It can be used only in exceptional cases of valuation of the land inseparably from the improvements made on it. It is believed that land is permanent and not expendable, and the cost method is used to evaluate man-made objects. When assessed by this method, the value of land is added to the cost of improvements (buildings, structures), and the land is valued separately by other methods.
The cost method of real estate valuation is implemented in the following sequence:
Determining the value of a piece of land;
determination of the replacement or replacement cost of buildings and structures;
Determining the amount of accumulated wear and tear of buildings and structures;
· Determining the market value of real estate using the cost method, as the sum of the value of a plot of land and the replacement or replacement value of buildings and structures minus accumulated depreciation.
The choice of the method adopted for the calculation of the cost of new construction of improvements should be appropriately justified. The use of replacement cost is appropriate in cases where it is difficult to determine the cost of erecting an exact copy of the building due to outdated types of building structures and construction methods used to create the subject property.
Costs corresponding to replacement or replacement value for real estate valuation purposes are calculated as the sum of direct costs, indirect costs and profits of the entrepreneur.
Direct costs include the following costs directly related to construction:
cost of materials, products and equipment;
wages of construction workers;
cost of construction machines and mechanisms;
· the cost of temporary buildings and structures, safety measures, transport and storage costs and other costs that are normatively accepted in the local market;
profit and overhead costs of the contractor.
Indirect costs include costs associated with the construction of a building, but not included in the cost of construction and installation works.
cost of design, technical supervision, geodetic control;
payment for consultations, legal, accounting and auditing services;
the cost of construction financing;
administrative and other expenses of the developer.
The amount of indirect costs is determined taking into account the tariffs prevailing in the market for works and services for these positions.
The profit of the entrepreneur is the prevailing market norm that encourages the entrepreneur to invest in a construction project. The amount of profit is determined by the method of expert assessments based on market information.
The use of the cost method is necessary when analyzing new construction; reconstruction of buildings; assessment for tax purposes; to identify excess income in real estate valuation; when assessed for insurance purposes; assessment of the consequences of natural disasters; assessment of special buildings and structures.
Under the conditions of transition to market conditions, the cost method is decisive in the assessment, since the application of other methods requires extensive market information, which is not available due to an undeveloped market. However, it should always be remembered that construction costs are only the basis of market value and most often they are either more or less than it.
For example, the market value of a luxury hotel located in an unfortunate location (on the outskirts of the city) will be less than the value determined by the cost method. In turn, the market value of the gas station complex at a certain stage may be more than the construction costs.
In the conditions of the market formation, when there is a reorientation of production to new technologies, it may seem that the property has no value at all. For example, if an enterprise produces products that no one needs and its production areas cannot be reconstructed for new production, then the market value of such real estate tends to zero. The use of the costly method in this case will lead to the wrong orientation of potential buyers.
At present, in Russia, this moment is often taken into account in the case of incorrect valuation of fixed assets of enterprises, since their revaluation is carried out mainly according to the cost method, and the appraiser should remember that the book value of fixed assets of enterprises does not correspond to their market value.
The next valuation method, which is applicable specifically for Russia, is the valuation method based on the analysis of the most efficient use of real estate, and this analysis is associated with determining the type of use that will bring the owner the maximum income, i.e. income capitalization method.
The method of capitalization of income in assessing the market value of real estate is implemented in the following sequence:
forecasting future income;
capitalization of future income.
The future income generated by the property is divided into two types: income from operating (operational) activities as a result of commercial rental relationships and income from reversion.
Income from operating (operational) activities is forecasted by drawing up a reconstructed (hypothetical) income statement. Reversion income is projected:
direct appointment of the absolute value of the reversion;
Appointment of a relative change in the value of real estate for the period of ownership;
· using the terminal capitalization coefficient.
Capitalization of future income into present value can be performed:
the method of direct capitalization;
The method of capitalization according to the rate of return.
The initial premise of the direct capitalization method is the constancy and infinity of capitalized income. In the direct capitalization method, the present value of a future stream of income is defined as the ratio of the annual income attributable to an ownership or interest to the capitalization ratio for that ownership or interest.
To calculate the value of full ownership, the determination of the total capitalization ratio is made on the basis of market data. Depending on the availability of initial information, apply:
Comparative sales analysis
calculation using the debt coverage ratio;
equipment of the investment group.
The initial premise of the method of capitalization according to the rate of return is the limited period of receipt of income. In the rate of return capitalization method, the conversion of a finite number of future cash flows into present value is performed at a specific value of the rate of return corresponding to the risk of investing in this type of real estate.
When calculating the present value without taking into account the terms of financing, the capitalization method according to the rate of return is formalized either in the form of an analysis of discounted cash flows, or in the form of capitalization calculation models.
The discount rate used in the analysis of discounted cash flows and taking into account both systematic and non-systematic risks is determined by:
The method of selection from market data on sales of similar objects;
Method of alternative investments in the financial market;
Real estate market monitoring method.
Recently, the demand for the services of appraisers and their professional training in Russia has begun to grow rapidly. This is also due to recent events in the financial sector, when attempts to create a mechanism for lending through credit insurance failed: banks lost a lot on fake insurance. In the case of real estate, which is taken as collateral by the bank when issuing a loan, losses are almost impossible. Thus, real estate and capital markets become inseparable components of the economy as a whole.
Naturally, banks showed great interest in such operations. And all of them need a qualified real estate appraisal, carrying out insurance at the real value of real estate.
Evaluation is also necessary within the framework of regional tax policy. All over the world, the basis of the local taxation system is the property tax, due to this tax, about 70 percent of the local budget is formed. Of course, with the development of the market itself, with the appearance of real values, it is possible to switch to a taxation system that would stimulate the development of the real estate market and at the same time ensure replenishment
local budgets. This also explains the unconditional interest in the assessment shown by local administrations.
The cost of professional appraisal services varies greatly depending on the types of objects being appraised, the complexity of the work and, of course, on which specialists are involved in the appraisal. Typically, the cost of services is measured either in hours multiplied by the hourly rate, or depends on the size of the object, but is never tied to its cost.
2.4 Features of various types of assessment.
Valuation for the purposes of buying or selling and classifying real estate.
When valuing real estate to be bought or sold on the open market, market value or realizable value is used as the basis of valuation for all classes and categories of real estate. At the same time, for specialized real estate, in most cases, the cost method based on market data will be the determining method for calculating the cost.
When valuing real estate for sale during a limited period of time, when real estate is put up for sale on the open market in a timeframe that is significantly less than the adequate marketing period for this type of property, the limited realizable value is used as the basis for valuation for all classes and categories of real estate.
The purpose of the valuation work and the characteristics of the property being valued are of decisive importance for the selection of an appropriate valuation basis.
In general, the classification of the main purposes for which real estate is assessed is as follows:
1. Valuation for buying or selling;
2. Valuation for sale within a limited period of time;
3. Valuation of land and buildings for their use as secured loan obligations;
4. Evaluation for the preparation of accounting and financial statements;
5. Evaluation for inclusion in the prospectuses of the Funds, exchanges;
6. Evaluation to resolve issues in the merger and acquisition of the company;
7. Valuation for pension funds, insurance companies, real estate trust funds.
In practice, there may be other purposes of valuation, and their wording and, accordingly, possible bases of valuation should be agreed between the client and the appraiser.
After clarifying the purpose of the valuation, it should be established to which class and category the property being valued belongs.
For evaluation purposes, two classes of property are distinguished:
· Specialized
Non-specialized
Specialized property is one that, by virtue of its special nature, is rarely, if ever, sold on the open market to continue its existing use by a single owner, unless it is sold as part of the using business.
Examples of specialized property are:
1. Museums, libraries and other similar premises that belong to the public sector;
2. Hospitals, specialized medical facilities, and leisure centers that are not in competitive market demand from other entities wishing to use these types of properties in the area;
3. Schools, colleges, universities and research institutes for which there is no competitive market demand from other organizations;
4. Standard property in special geographical areas and in places remote from the main centers of business located there for the purpose of production or business.
Non-specialized property is all types of property except that which falls under the definition of specialized property. In other words, it is one for which there is a general demand, with or without possible modernization, and which is usually bought, sold or rented on the open market in order to be used for existing or similar purposes, either as an unoccupied property for single ownership, or (regardless of whether she is employed or free) as an investment or for development.
When valuing real estate occupied by the owner for use in the activities of an enterprise (business), the following is used as the basis of valuation:
· market value at existing use - for non-specialized real estate, including real estate valued on the basis of its commercial potential.
· Residual replacement value - for specialized real estate.
Non-specialized and specialized property, in turn, are classified into categories depending on the purpose of ownership. A similar classification principle is used both for evaluation purposes and for other purposes.
2.5 Influence of environmental factors on cost.
Environmental factors, both unfavorable and favorable, are included in the set of factors commonly considered in assessments. Certain factors affect a particular type of property and will directly affect the appraiser's calculations, where they must be taken into account in relation to market data obtained from comparable and unaffected properties. In other cases, all real estate in any region will be affected by these factors.
Relevant environmental and pollution factors generally include the following categories:
natural factors such as radon or methane, air pollution or noise;
· technogenic pollution factors as a result of production activities in the past or present on the given land, or as a result of ingress from neighboring sites;
pollution factors in the form of electromagnetic and other fields;
pollution factors when using materials from recycled materials.
All classes of real estate are susceptible to the effects of environmental factors on value, but real estate offered for sale or as collateral for loans is particularly sensitive to these factors.
Works on the environmental audit of real estate are not included in the real estate valuation work. In cases where the appraiser has reason to believe that environmental factors may significantly affect the value, he should inform the client about the need to engage a professional environmental expert.
The appraiser should inform the environmental expert of the context of his study, including the current and potential future use of the site, which will be expressed in terms of value based on best and most efficient use. In general, the environmental expert should answer the following questions:
Whether the source of pollution or hazard can be successfully and economically removed;
· if the pollution or hazard cannot be completely eliminated, can it be isolated or sealed off to make the property fit for that use for a certain, even limited, period;
• whether it is possible to mitigate the impacts of the pollution or hazard in any way;
· what is the most effective means of pollution control and means of its regulation;
In cases where it is possible to eliminate the source or eliminate the consequences of pollution, the assessment can be made taking into account the corresponding estimated costs of such liquidation or elimination.
III Practical part.
3.1 Practical application of the method of comparative sales.
At the end of 2000, cottage construction began in the Podolsk region. Low-rise residential complexes - rows of semi-detached cottages that have common walls with the same type of neighboring houses. The word "condominium", denoting property created and equipped by the labors of like-minded neighbors, is not very popular. Therefore, to designate dwellings that are exotic for us, built on the principle of “common walls and roof - your own yard”, the English word “town house” has taken root in Russian everyday life.
Yet, for example, the market value of the cottage using the method of comparative sales.
The total area is 120 sq.m., the cottage has 6 rooms, 3 bedrooms, a bathroom, a shower room, a finished basement. There is no garage as of the valuation date. Plot area - 1000 sq.m.
For the analysis, we will use data on five sales of comparable properties in the same area.
Table number 1.
| Object №1 | Object №2 | Object №3 | Object №4 | Object №5 | |||
| Selling price | 65000 | 78000 | 56000 | 70000 | 54000 | ||
| Ownership | complete | complete | complete | complete | complete | ||
| Conditions fi- funding | non-market, the price is overpriced by 3000 | non-market, the price is overpriced by 8000 | market | market | market | ||
| Terms of sale | market | market | market | market | market | ||
| Market conditions (time) | 2 weeks | 6 weeks | 1 year | 1 year | 1 year | ||
| House area | 120 sq.m. | 145 sq.m. | 120 sq.m. | 145 sq.m. | 120 sq.m. | ||
| Land area | 10000 sq.m | 12000 sq.m | 10000 sq.m | 12000 sq.m | 10000 sq.m | ||
| Number of rooms | 6 | 7 | 6 | 7 | 6 | ||
| Number of bedrooms | 3 | 3 | 3 | 3 | 3 | ||
| Bath | 1 | 1 | 1 | 1 | 1 | ||
| Shower | 1 | 1 | 1 | 1 | 1 | ||
| Basement | not finished | not finished | not finished | not finished | finished | ||
| Garage | There is | There is | There is | There is | No | ||
As can be seen from the initial data, the objects of comparison differ from those being assessed in terms of financing, time of sale and physical characteristics.
The amount of adjustment for financing conditions is determined by comparing the sale price of objects with market and non-market financing. In this case, loan payments are discounted at the market% rate. In our example, the adjustment values are defined as 3000 for object No. 1 and 8000 for object No. 2.
Since all comparable properties have market terms of sale, no adjustment for terms of sale is required.
To adjust for market conditions (time of sale), it is necessary to select objects that differ only in this element. In our case, object No. 1 and No. 3 differ only in the terms of financing and the time of sale. Adjusting the selling price
object No. 1 on the terms of financing, you can determine the adjustment for the time of sale:
(62000 - 56000) / 156000 = 0.1.i.e. market prices will rise by 10% per year.
Thus, all comparable properties are brought into the same conditions for financing and sale time, which creates a single base for making adjustments for the remaining elements of comparison.
In a number of objects of comparison, differences in size are represented by a different number of rooms and different areas of the house and plot. Moreover, a plot of 12000 sq.m. corresponds to a house with an area of 145 sq.m. with 7 rooms and a plot of 10000sq.m. corresponds to a house with an area of 120 sq.m. with 6 rooms. Hence, the size adjustment from the comparison of objects No. 1 and No. 2 has the following form:
70000 – 62000 = 8000.
The adjustment for the presence of a garage is derived from a comparison of objects No. 3 and No. 5:
61600 – 59400 = 2200.
The adjustment for the completed basement is determined from a comparison of objects No. 2 and No. 4:
77000 – 70000 = 7000.
The results of the adjustments made are shown in Table No. 2
Table number 2.
| Object №1 | Object №2 | Object №3 | Object №4 | Object №5 | |
| Selling price | 65000 | 78000 | 56000 | 70000 | 54000 |
| Transfer of ownership veins | complete | complete | complete | complete | complete |
| Legal correction. | 65000 | 78000 | 56000 | 70000 | 54000 |
| Financing conditions. | not market | not market | not market | not market | market |
| Adjustment for the terms of the financers. | - 3000 | - 8000 | 0 | 0 | 0 |
| Adjusted Price | 62000 | 70000 | 56000 | 70000 | 54000 |
| Terms of a transaction | commercial | commercial | commercial | commercial | commercial |
| Adjustment on the terms of the deal | 0 | 0 | 0 | 0 | 0 |
| Market Adjusted Price | 2 weeks | 6 weeks | 1 year | 1 year | 1 year |
| Market Adjustment | +10 % | +10 % | +10 % | +10 % | +10 % |
| Adjusted price | 62000 | 70000 | 61600 | 77000 | 59400 |
| Location | similar | similar | similar | similar | similar |
| Size | 120sq.m. | 145sq.m. | 120sq.m. | 145sq.m. | 120sq.m. |
| Size adjustment | 0 | - 8000 | 0 | - 8000 | 0 |
| Garage | There is | There is | There is | There is | No |
| Correction for the presence of a garage | - 2200 | - 2200 | - 2200 | - 2200 | 0 |
| Completed basement | No | No | No | Yes | No |
| Basement adjustment | + 7000 | + 7000 | + 7000 | 0 | + 7000 |
| Adjusted price | 66800 | 66800 | 66400 | 66800 | 66400 |
| Total net correction | 1800 | 11200 | 10400 | 3200 | 12400 |
| Same in % | 3 | 14 | 19 | 5 | 23 |
| From the sale price, the total gross correction | 11200 | 25200 | 14800 | 17200 | 12400 |
| From sale price | 19 | 32 | 26 | 25 | 23 |
For each object of comparison, an adjusted price was obtained. In accordance with the conditions of the problem, it is required, based on the data of adjusted sales prices, to derive the value of the market value.
The justification for deriving a single indicator of market value is to give each member of a series of adjusted sales prices a weighting factor, taking into account the degree of difference between the objects of comparison and the objects of assessment. At the same time, it should be taken into
attention to the range of sales price dispersion, the total % of adjustments taken in absolute terms, the total % of adjustments, defined as the difference between positive and negative adjustments, and any other data.
In this example, we have an almost very narrow range of sales prices - from 66400 to 66800. However, the sale price with smaller adjustments is assigned a larger share - for object No. 5, the number of adjustments = 2. In addition, the sum of the total gross adjustment for object No. 5 is also almost the smallest. Therefore, the sale price of object No. 5 - 66400 was taken as the market value of the object of comparison.
3.2 Investment risks and real estate market statistics.
Real estate market statistics usually contain information on rental rates and profitability. For data comparability, the information refers only to first-class objects. It is believed that such facilities meet the highest requirements for location, equipment, communications, planning solutions, etc., and rental rates are determined in the same standards for measuring and distributing costs between the owner and the tenant for maintenance, repairs, insurance, etc. .
Information on rental rates is considered available. For its unification, only verification of the mentioned adequacy is required. Information about profitability indicators is more difficult to prepare. Since there are not so many purchase and sale transactions, they take into account previously completed transactions, integrate data on various objects, take into account time gaps, inflation and other processes. Profitability indicators also carry information about regional risks, and the expert principle prevails here. Therefore, statistics is one of the specializations in the real estate markets.
The activation of business and investment in the region is necessarily accompanied by activation in the office market, an increase in demand, occupancy and rental rates. At the same time, new construction and modernization of offices is stimulated, followed by service departments, shopping malls, leisure centers, etc. Such processes are now characteristic of the largest business centers: the traditional financial capitals of America and the Old World, the rapidly growing capitals of Southeast Asia, China and India. An analysis of rental business statistics points to a number of interesting phenomena. For example:
Data on rental rates are significantly more dynamic than data on yields; the dynamics of rental rates is characterized by a certain fluctuation, reflecting (albeit with shifts) the general processes of ups and downs; changes in indicators of office and retail real estate may not coincide in time and magnitude; improvements in the market situation are reflected in the growth of rental rates and, less often, in the decline in profitability indicators (due to their noticeably less dynamic); an asymmetric picture also takes place when the market situation worsens;
The values of profitability indicators are better (lower), the more reliable and stable the regional economy, and the social situation. The leaders of the stable rental business are London, Paris and Frankfurt, where the area of change in profitability is in the area of 5-6%;
Changes in indicators for Eastern European capitals are less dynamic; this can be explained both by smaller volumes of markets, fewer transactions, and, apparently, by less interest of Western experts and business circles in these markets; profitability indicators for Eastern European capitals are stable - 2-3 times higher than those for Western capitals. And in the period after the August 1998 crisis, the profitability indicators in Moscow were 4 or more times worse. And this was not only due to a real fall in the value of real estate, but rather as a result of an expert assessment of the state of instability and increased business risks in the region;
Additional analytical information is proposed to be obtained using the calculated indicator of the specific capitalized value (UCS) - as an estimate of the cost of some average unit of the commercial area of the leased object.
Such an assessment, along with a prompt response to fluctuations in rental rates, carries expert opinions about the success and risks of a business.
Initial information - rent statistics for European cities - can be found in Western publications (for example, in the monthly "EuroProperty"). We will choose as representative objects: Frankfurt, London and Paris - the centers of the most stable business, St. Petersburg, Prague and Warsaw - the centers of the transitional economy with the most risky (in Europe) indicators of the rental business.
Rental office business.
The observation period 01.99-08.00 for the Western capitals showed in general the progress of the rental office business. We note the absolute stability of the yield for London (5.00-5.50%) and the improvement in the yield for Frankfurt (from 5.75 to 4.90-5.50%) and Paris (from 6.25-6.75 to 5.50-6.00%). For the Eastern European capitals, the same period is characterized by a deterioration in performance. An analysis of the calculated data of the UKS allowed, in addition, to bring into line the external discrepancy in the logic of rental rates (their excess in St. Petersburg and Warsaw until mid-1999 over the rates in Paris and Frankfurt). As a result, the low rates of UKS at high rental rates do not yet allow optimistic expectations of investment growth.
Rental business.
The observation period 05.99-08.00 for the western capitals is characterized by a general deterioration in indicators (which is clearly seen with the help of the UKS). This suggests that there may be sufficiently long periods of market activity, after which the sale of acquired retail space will not bring real income at all.
For Eastern European capitals, the observation period of 05.99-08.00 is associated with the passage of a period of long-term stagnation and, possibly, the beginning of an exit from it (an improvement in the dynamics of indicators was noted, although the gap in the indicators of the UKS in comparison with Western capitals seems to be gigantic - almost an order of magnitude). Therefore, for the time being, we should limit ourselves to the statement that there may be quite long periods in the retail space markets when investments in the acquisition of retail real estate in Eastern European capitals can bring a noticeable positive effect, including during periods of recession in Western markets. This can serve as a good argument when looking for ways to "inter-regional" diversification of the real estate portfolio.
Conclusion.
Completion of the period of formation of the real estate market is characterized by a transition from extensive to intensive development. It is obvious that in the near future the market will not see such a rapid growth in the number of transactions as in the first half of the 1990s. Moreover, during a certain period, the housing market can only stabilize the number of transactions. It is also quite possible to increase the level of prices, especially in the secondary market. But at the same time, prices for elite housing not only did not decrease, but even increased, which indicates the prospects for new high-quality housing construction. The heads of firms also note the aggravation of competition in the market. Most of them are inclined to believe that if 1995 was characterized by a moderate degree of competition, then in 2001 it became high and will remain so.
Stabilization of the number of transactions and prices in the secondary housing market is a consequence, first of all, of macroeconomic factors, the main of which is the maintenance of a low level of income among the bulk of the population. The initial rapid growth of demand in the market, as a result of the emergence of a layer of people with high incomes in the country, is now almost over. And today a new differentiation is taking place within this stratum – the singling out of a stratum with ultra-high incomes. Due to this differentiation, the demand for luxury housing has increased. However, in absolute terms, the potential of this layer is very limited. A serious expansion of demand is possible either due to an increase in the level of income and the formation of a wide middle class capable of becoming the main supplier of buyers, or due to active stimulation of demand, both by the state and by the professional participants in the real estate market themselves. At the same time, some increase in demand in the future is quite possible under the influence of the inevitable release of money into the economy in the coming months to unravel the crisis of non-payments and in connection with the repayment of wage arrears and debts on government orders. Part of this money will also come to the real estate market, but they will obviously not change the situation fundamentally, although the number of applications for purchase under the influence of this factor will rise by several points.
It can also be assumed that due to the inevitable and significant increase in tariffs for utilities, it is quite possible to increase supply in the secondary housing market.
Moreover, if the surge in supply in the secondary market in 1991-1993. was caused by a rapid rise in prices, now sellers will proceed not so much from the possibility of a very significant increase in income through the sale of housing, but from the need to reduce the cost of its maintenance, and hence - to agree to lower prices. This, in turn, may also slightly increase demand, and hence the turnover of real estate firms.
At the same time, this stabilization will not remove the general problem - the residential real estate market will experience a shortage of demand in the foreseeable future, which can significantly reduce income from the traditional real estate firms' activity of providing services for the purchase and sale of real estate.
Under these conditions, it is necessary to significantly expand the range of services provided by the company to the client: banking, transport services, notary services, the possibility of repair work, the provision of installment payments, etc., increased attention to advertising, possibly a reduction in commissions. All these tools can play a significant role in attracting customers, but their possibilities are still limited. If for individual firms these techniques are able to provide the necessary volume of turnover, then, obviously, in general they will not solve the problem of developing the real estate business. Only the expansion of demand in the market will radically solve this problem, and in modern conditions this is possible only through the active participation of the state through the creation of a mortgage lending system - the creation of federal and regional mortgage lending agencies, support for the secondary mortgage market, the provision of state guarantees to banks when they issue mortgage loans. loans.
Consistent development of the real estate market in Russia naturally led to the next stage, characterized by an abrupt increase in the requirements for the quality of justification of investment decisions. Both abroad and in Russia, real estate market participants are coming to understand that the reliability of business plans, investment projects, etc., which are, in fact, a standard set of simple formulas, depends entirely on the validity of market research, the results of which are used in the formulas . In other words, the most significant and significant indicator of the viability of an investment project in the real estate market is the viability of the market research, on the basis of which this decision is made.
Bibliography:
1. Balabanov I.T. "Real Estate Economics", St. Petersburg 2000.
2. Goremykin V.A. Real Estate Economics: Textbook. - 2nd ed., revised. And extra. - M .: Publishing and bookselling center "Marketing", 2002
3. Kupchin A.N., Novikov B.D. real estate market: state and development trends. - Tutorial. M.: 1995.
4. Maksimov S.N. "Fundamentals of entrepreneurial activity in the real estate market", St. Petersburg. 2000.
5. Novikov B.D. Market and valuation of real estate in Russia. - M .: "Exam", 2000.
6. Khamin D., Yurkov D. “The real estate market through the eyes of realtors” // Economics and life, 1997
Other materials
Part of the above proposal seems to be insufficiently reasoned; its second part is about the legal disappearance of the building as an object of civil rights, since the original immovable thing was not just a thing, but a composite thing with a more complex system level and type of elemental ...
Russia until 2005. // http:www.sbrf.ru/concept/2005 c 00.htm
INTRODUCTION
One of the most important resources of enterprises, organizations requiring effective management is real estate - land, buildings, structures and premises.
Real estate, on the one hand, is taxed, on the other hand, it can bring significant profit due to its efficient use. Without exaggeration, we can say that real estate can both contribute to the prosperity of an enterprise, and vice versa, its inefficient use leads to decline. In this regard, the development of a real estate management system is of particular importance in order to meet the needs of owners in obtaining the maximum income from their assets or in achieving another positive effect. To achieve a positive result, it is necessary to constantly monitor the use of real estate and find the most effective ways to manage it.
Effective property management is essential for the development of both the real estate market and the economy as a whole. In a market economy, real estate is an asset that connects the huge financial resources of market participants and ways to achieve the desired results.
In order to make decisions on the effective management of real estate, an enterprise must be based on a well-thought-out system for recording and using real estate, based on reliable and easily accessible information presented in various ways.
The relevance of the research topic lies in the fact that the Russian real estate market is not yet fully formed and does not have a strictly structured legal framework. An effective real estate management system will satisfy the needs of the market to the maximum extent, maximize budget revenues, increase liquidity and market value of objects.
The purpose of this work is to assess the effectiveness of real estate management in the city of Kazan and develop measures to improve it.
Consider the classification of real estate markets;
Explain the essence and economic role of real estate management;
Consider indicators for evaluating the effectiveness of property management;
Conduct an assessment of the effectiveness of the management of residential and office real estate;
Make proposals for improving the assessment of the effectiveness of property management.
The object of the study is the real estate market of the city of Kazan.
The subject of the study is a system for evaluating the effectiveness of real estate management.
The basis for writing this work is the legislative and regulatory documents in force on the territory of the Russian Federation, as well as special literature on the topic under study of the work of domestic and foreign economists involved in the study of issues of assessing the effectiveness of real estate management, the legislation of the Russian Federation, textbooks and literature of such authors as Kharlamov A. S, Buryak V.Yu., Raizberg B.A., Grinenko S.V., as well as the materials of the actual research conducted in Kazan for 2013-2014.
The first chapter examines the theory and practice of evaluating the effectiveness of real estate management. The second chapter evaluates and analyzes the effectiveness of real estate management on the example of residential and office real estate and formulates proposals for improving the assessment of the effectiveness of real estate management.
1. THEORETICAL AND MOTODOLOGICAL ASPECTS OF ASSESSING THE EFFICIENCY OF REAL ESTATE MANAGEMENT
1.1 CLASSIFICATION OF REAL ESTATE MARKETS
There are many definitions of the real estate market. All of them to some extent reflect the essence of the real estate market, however, some have striking differences from each other. In this thesis, the most simple, understandable and complete definitions are chosen, according to the author.
The real estate market is a system of arrangements by which buyers and sellers come together to determine a specific price at which an exchange of a specific commodity such as real estate can take place.
The real estate market is a sphere of capital investment in real estate and a system of economic relations arising from real estate transactions. These relationships appear between investors in the sale and purchase of real estate, mortgage, delivery of real estate in trust, rent, lease.
The real estate market is a mechanism by which the interests and rights of buyers and sellers are combined, real estate prices are set.
The real estate market and the level of its development can be characterized through the development of the national economy. In the development of the Russian real estate market, it is customary to single out several of the following stages.
The first and most turbulent period of development of the real estate market experienced in the early 90s. The opening and development of enterprises occurred due to the fact that demand was far ahead of supply, and as a result, incomes were very high. The starting point of this stage can be considered a permit for the privatization of apartments and, accordingly, the opportunity that has appeared for people to sell and buy apartments on their own. It was then that a significant number of businessmen and wealthy people appeared who wanted to improve their living conditions in a newly discovered way. That is, not the expectation of free municipal housing, not complex exchange schemes, but simply the direct purchase of apartments, which at that time were privatized relatively few. There were few sellers of apartments, but there were already enough buyers.
At the second stage, the law introduces its corrections to the problem, namely, the first regulations appear that regulate real estate activities in Russia. This period is characterized by the provision of significant benefits, which, while maintaining a good market environment, made it possible to receive good incomes, and attracted new entrepreneurs to this segment of the market. Housing prices began to rise, but in contrast to this, apartments became much more difficult to sell, and buyers became more picky. In particular, the sale with installment payment, the provision of loans secured by security, appeared and became widespread. Some firms began to work under non-standard contracts, undertaking an obligation to sell the client's apartment within a certain period.
The third stage is again characterized by an excess of demand over supply, a tightening of the legal framework, and intense competition in the market, which together led to a drop in sellers' income. Small enterprises simply go bankrupt, medium and even large ones are on the verge of ruin. By the beginning of 1996, a natural decline in the cost of apartments began. The number of apartments offered for sale was increasing, while the number of potential buyers, on the contrary, was going down.
From the second half of 1999, a new stage in the development of the Russian real estate market after the August crisis of 1998 began - the stage of ending price reductions, the beginning of stabilization and some recovery. This took place against the backdrop of a favorable development of macroeconomic indicators in the country and, in particular, low (compared to autumn 1998) inflation rates, a smooth and limited devaluation of the ruble against the dollar.
Consequently, the real estate market, as it follows from the theory of a market economy, is cyclical, therefore it went through a recession stage, reached stabilization, and a new rise was expected ahead, including some price growth.
Real estate occupies a central place in any social structure, simultaneously performing two important functions: the means of production and the subject of personal consumption for living, recreation, cultural activities, etc. The economic and legal regulation by the state of various spheres of society and material production is closely connected with real estate objects, hence the following features of the real estate market.
Table 1.1.1 Features of the real estate market
|
Characteristic |
||
|
Localization |
Absolute immobility Great dependence of price on location |
|
|
Type of competition |
imperfect, oligopoly Few buyers and sellers The uniqueness of each object Price controls are limited Entering the market requires significant capital |
|
|
Elasticity of offers |
Low, with an increase in demand and prices, supply increases little Demand can be very volatile |
|
|
Degree of openness |
Transactions are private Public information, often incomplete and inaccurate |
|
|
Product competitiveness |
Largely determined by the external environment, the influence of the neighborhood The specificity of individual preferences of buyers |
|
|
Zoning conditions |
Regulated by civil and land legislation, taking into account water, forestry, environmental and other special rights Great interdependence of private and other forms of ownership |
|
|
Registration of transactions |
legal difficulties, Limitations and conditions |
|
|
Price |
includes the value of the object and associated rights |
Regional real estate markets can have significant differences among themselves. This is due to many subjective reasons, such as economic or natural conditions, as well as the regional legal framework, which is formed by local governments.
The real estate market has a branched structure and can be divided according to various criteria, for example, according to those presented in table 1.1.2.
Table 1.1.2 Classification of real estate markets
|
Classification sign |
Market types |
|
|
Object type |
Land, buildings, structures, enterprises, premises, perennial plantings, rights in rem, other objects |
|
|
Geographic (territorial) |
Local, city, regional, national, world |
|
|
Functional purpose |
Industrial premises, residential, non-industrial buildings and premises |
|
|
Degree of readiness for operation |
Existing facilities, construction in progress, new construction |
|
|
Participant type |
Individual sellers and buyers, resellers, municipalities, commercial organizations |
|
|
Type of transactions |
Purchase and sale, lease, mortgage, rights in rem |
|
|
Industry affiliation |
Industrial facilities, agricultural facilities, public buildings, others |
|
|
Type of ownership |
State and municipal facilities, private |
|
|
Transaction method |
Primary and secondary, organized and unorganized, exchange and over-the-counter, traditional and computerized |
As we can see from Table 1.1.2, there are quite a few types of real estate markets, the segmentation of which depends on the requested criterion.
For example, depending on the structure, the real estate market is divided into:
housing market;
Commercial real estate market;
Land market.
Each of the market segments can also be divided into specialized submarkets. Thus, the industrial real estate market can be subdivided into markets for industrial enterprises, the building of research institutes, or the housing market for primary and secondary housing, with and without finishing, from owners and from the state, and so on.
The differentiation of real estate markets is also associated with many economic, environmental, social and government factors, and, directly, with the functions that it performs:
Establishment of equilibrium prices at which effective demand corresponds to the volume of real estate supply;
Regulatory function, with the help of which resources are distributed among the spheres of the economy, its effective structure is formed, and public interests are satisfied;
Commercial function, which consists in organizing the movement of capital and making a profit;
Sanitation function, expressed in the cleansing of the economy from weak, uncompetitive and inefficient elements;
Stimulating function, which consists in the development of competition and the use of scientific, technical and managerial innovations in the pursuit of profit in the creation and use of real estate;
A social function, manifested in the growth of the activity of the population, striving to become owners of apartments, as well as other capital and prestigious objects.
Conclusion: real estate is the most durable commodity of all existing, ensuring the reliability of investments, although its value can both increase and decrease over time, under the influence of various factors. The real estate market received an impetus for development, in line with the development of the country's national economy. It is divided into segments based on the purpose of real estate and its attractiveness to various market participants. Also, each independent segment is further subdivided into many submarkets, so it is difficult to single out and generalize the most significant features for classification, since each market participant has his own most acceptable criteria for choosing a segment within which he is interested to enter into market relations.
1.2 ESSENCE AND ECONOMIC ROLE OF REAL ESTATE MANAGEMENT
Real estate is property (real estate), the management of which can be structured at the following levels:
Federal real estate management;
Real estate management of subjects of the Russian Federation;
Management of municipal real estate;
Real estate management of enterprises and organizations;
Management of individual properties.
The concept of "property management" is interpreted in two senses: broad and narrow.
In a broad sense, real estate management, as a rule, is understood as entrepreneurial activity for the performance of all work related to the execution of any powers of the owner of real estate permitted by civil law. For example, in accordance with the life cycle of real estate, the following rights are allowed for owners:
1. intention;
2. design;
3. manufacturing (erection, construction);
4. appeal;
5. use (service);
6. maintenance, operation, repair;
7. overhaul, modernization, reconstruction and restoration;
8. reprofiling;
9. recycling.
A narrow interpretation of real estate management reads as follows: “Real estate management is the implementation of a complex of operations for the operation of buildings and structures (maintaining them in working order, repairing, providing services, determining the conditions for renting out space, collecting rent, and so on) in order to most effectively use real estate."
Real estate is also understood as real estate, namely, we are talking about property management, that is, real estate management includes the management of all ensuing rights to real estate. The property under management is presented as a unity of legal, economic and physical characteristics.
In our opinion, it follows from this that management is primarily intended to ensure maximum efficiency in the use of real estate in accordance with the interests of the owner.
Real estate management is an activity in its field related to the definition of goals and setting tasks for planning, organizing, executing and controlling the useful, efficient use of real estate.
We believe that management activity is multifaceted in its essence and nature, coordinating the goals and objectives of owners, users, service companies and all subjects in one way or another connected with real estate.
In a market economy, real estate management is carried out in accordance with the law of supply and demand.
In addition to market conditions, tangible factors in real estate management are the legislation regulating it and the activities of various official bodies and institutions.
Real estate management can be internal and external:
Internal real estate management is the activity of a real estate market entity, regulated by its own regulatory documents (code, charter, regulations, rules, contracts, instructions, etc.).
External real estate management is the activity of state structures aimed at creating a regulatory framework and monitoring compliance by all subjects of the real estate market with established norms and rules.
Real estate management activities are carried out primarily in the three most significant aspects - legal, economic and technical. The legal aspect of real estate management is the most rational use, distribution and combination of rights to real estate.
The economic aspect of real estate management is implemented through the management of income and expenses generated during the operation of real estate. In other words, the manager has the right to fully and independently, within the framework of the law, control and regulate the income and expenditure part of real estate ownership, as well as operate it at his own discretion.
The technical aspect of control is to maintain the control object in a healthy state in accordance with its functional purpose.
Real estate management is a comprehensive approach to improving and maintaining the condition of an object, organizing and predicting its development, the way it is operated in accordance with its intended purpose. The concept of real estate management also includes, first of all, such actions as renting out and managing office buildings, that is, real estate management as a means of attracting investments. On the other hand, property management can also be viewed as an investment itself. Based on the foregoing, we have identified the following goals for managing the real estate market:
Implementation of the constitutional rights of citizens to real estate and obligations associated with its possession;
Establishment in the market of a certain procedure and conditions for the work of its participants;
Protection of participants from dishonesty, fraud and criminal organizations and individuals;
Ensuring free pricing of real estate objects in accordance with supply and demand;
Creation of conditions for investments, stimulating entrepreneurial activity in the sphere of production;
Fair taxation of real estate and real estate market participants.
To achieve these goals, in our opinion, it is necessary:
1. to form a complete register of state real estate (balance of real estate), containing quantitative, cost, technical and legal characteristics of real estate objects;
2. clearly delineate and coordinate the powers of all state authorities involved in the process of real estate management;
3. to form objects of management, excluding the possibility of disposing of one part of the object without the other in cases where they form a single whole (as a rule, these are land plots and buildings and structures located on them);
4. ensure the unconditional application of the market valuation mechanism when using real estate;
5. create conditions for attracting investments in the real sector of the economy by maximizing the involvement of real estate in civil circulation;
6. regulate the issues of state acquisition of real estate objects, including by defining the goals for the achievement of which the acquisition of these objects is carried out;
7. to use for effective real estate management a mechanism for reimbursement of expenses for real estate management (including inventory and valuation), similar to civil law, since the state, when using its real estate, participates in civil circulation on an equal basis with its other participants;
8. change the existing mechanism for the sale of real estate, as it allows the acquisition of objects at low prices;
9. Establish for all constituent entities of the Russian Federation a unified procedure for making decisions on the use of federal real estate (primarily in relation to leased objects), ensuring prompt decision-making;
10. provide professional training for civil servants managing federal real estate.
An object of management in the field of real estate is an immovable thing or a set of immovable things, considered as a single object from the point of view of organizing the most effective management of them, taking into account the costs of maintenance and management.
Summing up the above, we can say that real estate management is certainly a complex and multifaceted process, which includes many different factors and aspects. The management mechanism contains not only the rights and obligations of the owner of the property, but is also subject to state intervention, including the reinforcement of the management of the legislative framework.
1.3 REAL ESTATE MANAGEMENT PERFORMANCE INDICATORS
To implement the procedure for evaluating the effectiveness of real estate management, various approaches and indicators are used. In theory, there are no clearly defined indicators by which it is possible to determine the degree of efficiency of real estate management, since in practice any chosen indicator may not be effective for a single enterprise, and the experience of a single enterprise may not be applicable for larger distribution.
However, it is customary to consider the approach of evaluating the effectiveness of financial indicators. Indeed, if a company is the owner, for example, of an administrative building and its business is to rent out the premises, then this approach will not be difficult, since all the necessary information is on hand, whether on the one hand the cost of staff, repairs and equipment buildings, maintaining communications in good condition, and on the other hand, the amount of payments received from tenants is clearly defined.
Table 1.3.1 Analysis of the main technical and economic indicators of the enterprise NCF "Audit and Evaluation"
|
Indicators |
Absolute deviation, thousand rubles |
Growth rate, % |
|||
|
Net revenue, thousand rubles |
|||||
|
Cost of services, thousand rubles |
|||||
|
Gross profit, thousand rubles |
|||||
|
Selling and administrative expenses, thousand rubles |
|||||
|
Profit from sales, thousand rubles |
|||||
|
Profit before tax, thousand rubles |
|||||
|
Net profit, thousand rubles |
|||||
|
Average annual cost of fixed assets, thousand rubles |
|||||
|
Average number of employees, persons |
|||||
|
Labor productivity, thousand rubles/person |
|||||
|
Profitability of production, % |
3 percentage points |
||||
|
Return on sales, % |
4 percentage points |
||||
|
Return on assets rub per 1 rub |
But if the company is a large owner of industrial real estate, the problem arises of obtaining the full information required to assess the effectiveness of real estate management. The financial statements do not show such factors as:
Market promotion of a new product;
Potential opportunities of the company;
The interest of employees in the success of the company;
Customer loyalty, etc.
Although such non-material indicators are reflected and rightfully occupy their niche in assessing the effectiveness of real estate management.
From the point of view of economics, the fundamental principle "efficiency - the ratio of results to costs" does not always allow for a correct assessment of efficiency. This is due to several factors:
Features of the information age, namely its essential features - the increasing role and importance of the information resource, intangible assets;
The complication of economic life - an increase in the degree of its openness, globalization, competition;
Changing the content of results and costs, and, accordingly, the difficulty in determining their values;
The rapid development of the system of values and, consequently, the change in the system of indicators, characteristics and indicators, which together reflect the effectiveness of activities.
B.A. Reizberg and V.Yu. Buryak, considering the issues of efficiency in relation to state property, note that “a specific methodology for assessing the economic, social, functional efficiency of managing a certain class, group of property objects of state property, which varies in relation to the estimated method of using the property complex, is designed to make it possible to establish the value, magnitude performance indicators. But these indicators do not have a universal character, they largely depend on the object of assessment, the purpose and nature of the application of this object. As a result, the conclusion is made "it should be recognized as impossible to create a single universal methodology for evaluating effectiveness" .
With the exception of the traditional approach, among modern approaches, they also single out the most promising system of balanced scorecards (BSC) developed by R. Kaplan and D. Norton. They singled out the four most important components in evaluating efficiency: financial activities, relations with consumers, organization of internal business processes, training and development of personnel. The essence of the BSC is to achieve a balance between the number of internal and external, objective and subjective indicators. Another advantage of this approach is that this system, according to the authors, is quite flexible and "creative" regarding its implementation in any production.
Taking into account the provisions of the general concept and strategy that the company adheres to, the accumulated experience in methodological support for performance assessment, it can determine specific performance indicators for assessing real estate management based on the BSC (see Appendix 1).
The most important detail for creating a BSC are, as in the traditional approach, two financial results: cost reduction and income increase. Based on this, we can include in the BSC such indicators that, provided they are consistently achieved, allow us to most fully assess the effectiveness. We can introduce such indicators at any level within the BSC.
Based on Appendix 1, we can identify several performance indicators for real estate management. These indicators include each separately from four components. All indicators are considered, comments are given in the tables below.
Table 1.3.2 Criteria for the effectiveness of real estate management (financial component)
Table 1.3.3 Criteria for the effectiveness of real estate management (client component)
|
Strategic Initiatives |
Performance indicators |
|
|
Provision of additional services |
1. Program for determining the demand for additional services and their relevance; |
|
|
2.Organization of contractual work in order to provide additional services; 3. Development of criteria for assessing the quality of services provided |
||
|
Improvement of work with clients |
1. Saving existing customers and ensuring their interest in continuing cooperation; 2. Development of a mechanism for the qualitative and operational study of incoming proposals for various projects. |
|
|
Formation of the image of a "corporate citizen" |
1. Program for media coverage of the social role of the company (social programs, paid taxes, etc.) 2. A program aimed at developing in the minds of people an understanding of the importance of the activities performed by the company, their interest in this activity; 3. Carrying out activities aimed at improving the environmental situation at the company's facilities |
Table 1.3.4 Criteria for the effectiveness of real estate management (component of business processes)
|
Strategic Initiatives |
Performance indicators |
|
|
Orientation in the use of real estate to a combination of interests of the company and customers |
1. Providing a favorable offer for customers; 2. Carrying out polling activities in order to find out what changes dealers would like in the company's activities; 3. Determination of services and goods "discharged" to end consumers; 4. The program of monitoring and meeting the demand of consumers, their wishes. |
|
|
Improving the actual management activities |
1. Change and optimization of the internal structure of the company; 2.Social development program; 3. Improvement of accounting forms |
|
|
Intensification of the use of real estate |
1. Active introduction of saving technologies; 2. Determination of real estate objects to be repaired; 3.Determination of the company's costs for the maintenance of real estate; 4.Programme to streamline the costs of maintaining real estate and reduce them |
|
|
Innovations in property management |
1. Ensuring prompt application |
|
|
denial of promising innovations; 2. The program of operational development of innovations in the field of real estate, determining their effectiveness and expediency of implementation |
Below is a description of the criteria for the effectiveness of real estate management, constituting a block of growth and learning.
Table 1.3.5 Performance Criteria for Real Estate Management (Learning and Growth)
|
Strategic Initiatives |
Performance indicators |
|
|
Staff training in modern management techniques |
1. Correspondence of the level of knowledge of the employee to the work performed; 2. Determining the knowledge and specialties that employees should be trained in; 3. Program for further monitoring of the level of knowledge of employees |
|
|
Access to information resources |
1. Introduction of new technologies; 2.Creation of places for visual information about the results achieved and new tasks in the subdivisions |
|
|
Creation of conditions for personnel activity |
1. Active participation of each employee in the activities of the company; 2. The program of social protection of workers |
|
|
Reward system for achieving set goals |
1. Establishing the dependence of remuneration on performance results; 2. Definition of performance indicators for departments and individual employees 3. Informing the team about the achievements of colleagues. |
In other words, analyzing Appendix 1, in our opinion, we can say that the real estate management system is:
The degree to which the company's goals are achieved when using various limited resources, including real estate;
The degree to which the goals of real estate management as a business process with the lowest costs are achieved;
The ability of the real estate management system to meet the evolving needs for real estate, taking into account its rational and economical use;
The ability of managerial influences to ensure the reproduction of consumer properties of real estate of the required quality at the lowest cost.
Within the framework of individual corporations, the following properties are assigned to the control for assessing the effectiveness of property management:
1. Sustainability of the strategic direction of functioning;
2. A clear vision of the future;
3. Diversification of management decisions;
4. The effect of interrelated actions;
5. Constancy and variety of changes;
6. Ability to perceive innovative technologies.
On the other hand, in our country they almost do not comply with the criteria and recommendations outlined above in the tables.
So, summarizing the above, we can say that there are no generally accepted indicators for evaluating the effectiveness of the use of real estate, however, there are several generalized approaches to address this issue. One of the approaches is based only on the financial result of the activity of an enterprise, organization, corporation, while the second one includes several stages, at each of which certain criteria are selected for evaluating efficiency. On the other hand, the head of any organization is relatively free to make a decision on performance evaluation and can create a certain system of indicators for himself, according to which he will be guided in order to achieve certain goals of the corporation.
residential office real estate appraisal
2. ANALYSIS OF THE EFFICIENCY OF REAL ESTATE MANAGEMENT IN KAZAN
2.1 ASSESSING THE PERFORMANCE OF RESIDENTIAL PROPERTY MANAGEMENT
To assess the effectiveness of residential real estate management, the author identified the following, the most significant indicators and criteria in his opinion:
The total area of residential premises put into operation in 2014;
The price of residential real estate;
Estimated sale price dynamics;
The influence of external factors on residential property
The first half of 2014 was marked by important events in the country's economy, which also affected the housing market of the Republic of Tatarstan: the depreciation of the ruble, the imposition of sanctions by the West and socio-demographic factors, on the one hand, and a large selection of offers from developers, along with lower mortgage rates, with another.
In the wake of increased demand, developers actively erected housing. So, at the beginning of July, more than 1.2 million sq. m of housing - almost 51% of the annual target. By the end of the first half of the year, Kazan took first place among the cities of the Volga Federal District in terms of commissioned housing: in total, more than 508 thousand square meters were commissioned. m.
In 2014, the percentage of buying apartments in new buildings increased - about 40% of transactions in Kazan are carried out with the involvement of mortgage funds. Mortgages tend to be taken out over the long term, so borrowers are wise to choose newer homes.
Rosreestr's data for the Republic of Tatarstan testify: in the six months of 2014, 45.3 thousand contracts were registered in the republic, which is 11% more than in the same period last year. Of these, 65% - housing, 22% - land, 13% - non-residential premises.
The increased demand also spurred prices on the market: in the first half of the year, real estate prices in the city grew faster than usual (within 6-8% in the first six months in the primary market).
According to the "Real Estate Server of Kazan and the Republic of Tatarstan", the average cost per square meter by July 2014 amounted to 67.5 thousand rubles in the secondary housing market, 50.7 thousand rubles in the primary housing market, and in particular in the current situation on In the real estate market of Kazan, the leaders-developers are Unistroy, YIT Kazan, Ak Bars Real Estate, Tatstroyinvest, and they put forward the following prices for their real estate:
Table 2.1.1 Comparative analysis of housing projects in Kazan for the second half of 2014
|
Developer |
Deadline |
Apartment area |
Price, million rubles |
||
|
LCD "Emerald City" (Privolzhsky district) |
"Unistroy" |
1st half of 2014 |
|||
|
LCD "Sovremennik" (Novo-Savinovsky district) |
YIT Kazan |
IV quarter 2014 |
|||
|
LCD "Svetlaya Dolina" (Sovetsky district) |
Ak Bars Real Estate |
IV quarter 2014 |
|||
|
Residential complex "Rainbow" (Kirovskiy district) |
"Tatstroyinvest" |
III quarter 2014 |
The cost of apartments is usually affected by location: the so-called Khrushchev in the Vakhitovsky district will be much more expensive than the same apartment in the Aviastroitelny or Kirovsky district. In addition, the cost is affected by the general condition of the apartment, the number of storeys and the material from which the house is built. In remote areas of the city, stalinkas and dormitories can stand idle for months waiting for their buyer.
One-room Khrushchev with an area of 32 square meters. m in Kazan today cost from 1.9 million to 2.25 million rubles, Leningrad (34 sq. m) - from 2.2 to 2.8 million, "odnushki" of the Moscow project (30 sq. m) - from 2.15 to 2.35 million.
A two-room Khrushchev building (43 sq. m) is estimated at 2.2-2.7 million rubles, a Leningrad one (51 sq. m) - from 3 to 3.5 million, a Moscow project - from 2.4 to 3 million. three-room apartments prices are as follows: Khrushchev (56 sq. m) - 2.7-3.3 million rubles, Leningrad (65 sq. m) - 3.4-3.8 million.
It should also be noted that the housing stock of the republic at the end of 2014. numbered 1618 thousand apartments (including houses that are privately owned by citizens), of which 1130.9 thousand apartments (69.9%) are located in apartment buildings. The average size of one apartment is 56.5 sq.m of total area. The general housing stock is invariably overwhelmingly privately owned.
The housing market in 2014 was actively developing in the sector of purchasing housing with the help of mortgages. About half of the registered real estate transactions were mortgage lending, which gave impetus to the intensive development of the residential construction branch, which some developers did not fail to take advantage of.
In order to predict the development of the housing market in Kazan for 2015, let us consider the dynamics of prices for renting and buying housing.
Table 2.1.2 Dynamics of prices for renting a one-room apartment in Kazan in 2011-2014
Based on the tables above, the author has compiled three forecasts for the development of the housing market: optimistic, moderate and pessimistic. The optimistic forecast was based on the fact that rent inflation will be comparable to consumer inflation, which is projected at 10% in 2015 . On this basis, we assume that the level of growth in the cost of renting apartments will be at the level of 10% per year.
A moderate forecast is an average level of growth between an optimistic and a pessimistic forecast, by which the cost of renting and buying an apartment in 2015 will decrease by 10% per year.
The pessimistic forecast was made on the basis of the reasoning that if we take into account the crisis of 2008-2009, when similar processes took place (the factor of the cost of money and their impact on the price of residential real estate, as well as the fall of the ruble), the cost of renting and buying an apartment fell by 30%.
Table 2.1.4 Moderate forecast for renting and buying an apartment with the help of mortgage lending in Kazan for 2015
|
Forecast(-10%) |
Forecast(-10%) |
The moderate forecast says that renting and buying an apartment with the help of mortgage lending will fall by an average of 10% from the previous year.
Table 2.1.5 Optimistic forecast for renting and buying an apartment with the help of mortgage lending in Kazan for 2015
|
rub./kV m. |
RUB/ sq.m |
|||||
|
Forecast (+10%) |
Forecast (+10%) |
The optimistic forecast assumes an increase in rent and mortgage payments by 10%, taking into account inflation.
Table 2.1.6 Pessimistic forecast for renting and buying an apartment with the help of mortgage lending in Kazan for 2015
|
Forecast(-30%) |
Forecast(-30%) |
According to a pessimistic forecast, rent and mortgage lending should fall by 30% next year.
Based on the forecasts and tables, as well as the considered dynamics of the purchase price and the dynamics of the rental price, we can say that prices in the housing rental market next year will be extremely unstable and will presumably range from 12,700 thousand rubles to 15 600 thousand rubles, and on the purchase market with the help of mortgage lending from 45,000 thousand rubles. up to 70,576 thousand rubles.
According to the author, a pessimistic forecast should be considered the most likely scenario for the development of events. From the above comparative analysis, it can be seen that prices in the housing market are extremely volatile due to the following reasons:
1.) the impact of Western sanctions;
Western sanctions came into effect at a time when Russia had the highest pace and volume of housing construction, the largest number of mortgage loans taken by individuals and the most affordable interest rates on them.
The consequences of sanctions on the real estate market can be divided into two categories: what happened and what is expected.
Among the events worth noting:
1. Foreign investors postpone the implementation of development projects in Russia (in various market segments) until the situation in Ukraine is resolved.
2. Banks analyze incoming new development projects more carefully.
3. Real estate as an asset (especially residential real estate - apartments in the primary and secondary markets) has increased its attractiveness for private investors.
Regarding the expected consequences of sanctions on the real estate market, we can say the following:
1. Banks are expected to increase interest rates on consumer and mortgage loans due to an increase in the cost of funds in the market. At the same time, a number of banks can independently limit the activity of mortgage borrowers by setting artificially high interest rates.
2. Decrease in the volume of financing of investment development projects by banks may cause a decrease in the volume of new construction in 2015.
3. The rental housing market may lose an audience consisting of foreigners working in Russia under a contract or in Western companies, whose activity may significantly decrease during the period of sanctions. (The author will also note that at the same time, opposite processes can occur in the rental housing market: if the value of real estate falls, then banks will have to increase interest rates on mortgage loans. This will significantly reduce the purchasing power of citizens, which will lead to an increase in the number tenants).
4. The largest Russian banks are more likely to continue lending to development projects that are at the active / final stage of construction readiness.
2.) the influence of the currency factor;
The first approach: the impact of the exchange rate on the housing market.
An important element of economic relations associated with the acquisition of housing is the exchange rate. The exchange rate has an impact on various indicators that connect the buyer and seller in the housing market. The exchange rate is the ratio of two monetary units in the foreign exchange market, which is formed depending on the supply and demand of a particular currency, as well as on a number of other factors.
Depending on the ratio of supply and demand of a particular currency, the exchange rate is most often determined, which is why it cannot be a constant value, since demand and supply in the foreign exchange market are constantly changing.
The second approach: the impact of housing prices on the national currency.
There is a direct relationship between the price of real estate and the exchange rate of the national currency; when the value of real estate falls, the exchange rate of the national currency also decreases. This dependence is due to the fact that, as a rule, a decrease in the cost of housing indicates unfavorable processes in the economy - an increase in unemployment, a decrease in the purchasing power of the population. All this leads to a decrease in demand for real estate.
Based on the above, in the current real estate market conditions, the first approach will be more reflected. The second is the most probable given the stable development of the economy.
3.) the influence of socio-demographic factors.
It is generally accepted that the formation of needs in the market cannot be controlled. However, needs arise and change according to certain patterns, an important part of which is the mentality, way of life of the population. Of these, we consider in more detail the following most important, in the opinion of the author, factors:
1. The number of inhabitants of a settlement has a significant impact on the structure of consumption, primarily due to a higher level of income in large settlements.
2. Consumer behavior is also influenced by situational criteria. Currently, these include the work of the state aimed at stimulating the development of housing construction by increasing the availability of various social programs, in particular:
Maternity capital (program valid until 2016 inclusive);
military mortgage;
Social mortgage;
Mortgage under the Young Family program, etc.
3. In the summer of 2014, the state made changes to the rules for mortgage lending. On July 25, Law No. 169-FZ “On Amendments to Articles 31 and 61 of the Federal Law “On Mortgage (Pledge of Real Estate)” came into force. The changes in the law contain two important points. First, banks will be able to insure their financial risks in case they need to foreclose on the collateral and its value is less than the amount of the debt. The second - the availability of such insurance (from the bank or from the borrower) exempts the borrower from subsequent payments on the loan. The same happens in case of bankruptcy of the insurer that issued such insurance.
Summing up the foregoing, we believe it can be said that the imposition of sanctions will certainly have a negative impact on all areas of the Russian economy. Regarding the housing market, it should be noted that due to sanctions, mortgage lending rates are rising and this segment of the housing market will lose a significant number of consumers. But against this background, the rental market, on the contrary, is able to increase its area of distribution. Thus, that part of the population that previously planned to purchase housing on a mortgage may abandon this idea in favor of a rental mechanism, i.e. it will be more profitable to rent housing at relatively stable prices (the projected rental price is from 10,000 to 15,600 rubles / month, depending on the nature of the forecast) than to apply for a mortgage in conditions of currency instability (for example, as of March 24, 2015, the ratio of the dollar to the ruble is 1/58, 28, and on 03/14/2015 it was 1/61.32)
Now there is a sharp rise in the entire housing market as a whole, this is due to the fact that, due to the appreciation of the dollar, people tend to sell their money in real estate, but this trend cannot be long-term and promising, because. Consumers are forced to take such actions by constant tension over the exchange rate, which can ultimately lead to inflation or, moreover, to the collapse of the Russian monetary system.
The socio-demographic factor, of course, does not have such a big impact on the real estate market as, for example, the currency factor, but without them, the housing market, in principle, cannot exist as such, since the speed, construction volumes, mortgages, rent, etc. are determined precisely on the basis of an analysis of various, mostly non-economic factors. The birth rate, population, average income of a person, the number of young families and other social indicators - these are the most common ideas about the real estate market and the country's development potential.
In general, the residential real estate market is a combination of many economic and non-economic factors, which, either individually or in combination, provide an idea of the economic situation in a particular market segment.
The three forecasts presented by the author reflect the economic essence of the influence of various factors on the mechanisms of housing acquisition. In the conditions of an unstable economic situation in the country, it is impossible to speak with full confidence about the effectiveness or inefficiency of real estate management, however, as studies have shown, the segment of the real estate market - the housing market, remains the most fundamental in relation to other elements of the economy and due to the funds raised, it can relatively maneuver smoothly between the changing external environment.
2.2 ASSESSING THE PERFORMANCE OF OFFICE PROPERTY MANAGEMENT
In the commercial real estate market, namely in the office real estate segment, in our opinion, three directional sectors have formed:
The first sector - includes prestigious offices that meet international standards for administrative premises. From here we can conclude that the rent in such premises is often very high. This becomes the main reason why some Russian entrepreneurs rent first-class offices abroad at more affordable prices.
In the second sector, we included offices that are located in well-finished and equipped premises, and recently the practice of buying out large apartments with subsequent high-quality repairs has become popular. Here, rental payments are quite acceptable for successfully operating companies. There is a constant active demand in this sector.
As the third sector, we defined premises in the buildings of the municipal and departmental non-residential fund, state enterprises (mainly scientific institutions), cooperative and private enterprises. These are premises without finishing and repair, and other related services. Rents here are usually not high at all.
In our opinion, freedom of entrepreneurship leads to the creation of more and more new business structures, which, first of all, will need premises for their functioning, which means that the office space market has more than a good development prospect.
Rice. 2.2.1 The ratio of classes of business centers in Kazan at the end of 2014
The Kazan office real estate market includes high-quality business centers of all three classes: A, B, and C. As of the end of 2014, the city's provision with high-quality office real estate is 183 sq. m. m per 1,000 inhabitants.
Category B offices are similar in most characteristics to class A offices, however, they are not as prestigious, have a less favorable location, and not as wide a range of services as class A offices. Practice shows - in the category of class B, sometimes offices of the highest category pass. This happens, for example, after several years of intensive use. The factor of quality standards also plays an important role here. Technologies are in constant dynamics, so what used to be "the latest" is gradually moving into the category of "new".
The total supply of office space in the city of Kazan is over 410,000 sq.m. Of these, about 210 thousand square meters. m refers to a quality proposal.
As it is right, in big cities, the demand for high-quality office space remains stable. The vast majority of business centers of class "A" in Kazan has almost 100% occupancy, namely, such business centers as: "Business Center Suvar Plaza", "Korston", "Business Park Idea". Class "B" objects also have a fairly high occupancy rate, it ranges from 85% to 90%. Speaking about the demand for office premises, we should mention the fact that recently there has been a tendency to shift business activity to the outskirts of Kazan. This is most influenced by such factors as: insufficient transport accessibility (traffic jams), lack of parking spaces or their payment.
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After carrying out this research work, the following proposals for improving the residential real estate market have been identified. Often a large role in the formation of the cost of 1 square. m. of living space has a direct influence on the realtor buyer or seller. Dishonesty and the use of personal interests of employees of intermediary organizations leads to an artificial increase in prices for residential real estate. Thus, the secondary housing market often simply goes beyond the control of local governments, as it is under the jurisdiction of real estate companies. And only a small percentage of the proposed apartments in the secondary housing market under the influence of the city administration. Drawing a conclusion from the above, I would like to say that in the conditions of the financial crisis, in this respect, control is necessary from the side of local governments. This is due to the rather high demand for housing and thus a high percentage of profits from the resale of secondary housing is obtained by small real estate agencies. I would also like to draw the close attention of self-government bodies and its structural divisions to the growth in the cost of housing. Since the real estate market is in the process of recovering from the crisis and housing prices are starting to skyrocket due to high demand. With the tightening of the conditions of auctions for the purchase of land plots for individual residential construction, small companies should be forced out of the market, seeking to make high profits without proper fulfillment of the terms of the contracts. Also, on the way to improving the real estate market in Omsk, it is necessary to improve the regulatory and legal framework. This will lead to a decrease in the rate of growth in prices for residential real estate and to equalize them with the real needs of the market.
On the way to a perfect real estate market, it is necessary to create services that maintain strict control over this type of documentation. The combination of all the above measures will help the real estate market in Omsk to get out of the crisis in the shortest possible time and improve the conditions for controlling the turnover of apartments in this market.
Conclusion
In this graduation project, a deep analysis of the current situation in the secondary housing market in Omsk was carried out. At the same time, the natural and ecological state of the city was studied, as well as social and economic factors that have a direct impact on the formation of secondary housing.
Also studied the capacity of the residential real estate market, supply and demand in the secondary market in the period 2009-2012.
A detailed analysis of the proposals in the secondary housing market was carried out. Possible methods for improving the residential real estate market in the conditions of the economic crisis have been developed. The prospects for the development of the residential real estate market are considered.
The relevance of the study is emphasized by the fact that the future of cities is largely associated with the development of the residential real estate market. Since the residential real estate market i.e. The housing market is one of the most important markets, it has a direct impact on the life of society, so the state of other components of society's life depends on its condition.
The purpose of the graduation project is fully realized. In accordance with the goal, the following tasks were solved:
The scientific and methodological provisions of the marketing of residential real estate in the city of Omsk were studied;
The legislative and regulatory framework for the development of marketing of residential real estate in cities is considered;
The main directions for improving the residential real estate market have been developed;
The conditions for ensuring life safety during evaluation work are considered;
The analysis of environmental decisions in the assessment of factors that pay attention to the nature of the city is carried out.
Introduction
Chapter 1. Theoretical foundations of real estate valuation
1.2 Classification of real estate objects
1.3 Types of property values
1.4 Basic principles of real estate appraisal
1.5 Factors affecting property value
Chapter 2. Valuation of a residential property
2.2 Valuation of residential property using the income approach
2.3 Valuation of residential real estate by comparing sales of analogues
2.4 Property valuation using the cost approach
2.5 Coordination of real estate valuation results
Chapter 3. Suggestions for improving real estate valuation methods
Conclusion
List of used literature and sources
Application
INTRODUCTION
Among the elements of a market economy, a special place is occupied by real estate, which acts as a means of production (land, administrative, industrial, warehouse, retail and other buildings and premises, as well as other structures) and an object or object of consumption (land plots, residential buildings, cottages, apartments, garages).
Real estate is the basis of personal existence for citizens and serves as the basis for economic activity and development of enterprises and organizations of all forms of ownership. In Russia, there is an active formation and development of the real estate market and an increasing number of citizens, enterprises and organizations are involved in real estate transactions.
Thanks to the constructive interaction between the state and appraisers, the process of property appraisal in recent years has become much more civilized compared to the times when an independent appraisal in Russia was just in its infancy. Today, the activities of appraisers are regulated by the relevant federal law and standards in the field of appraisal.
The purpose of the thesis is to develop proposals for improving methods for assessing residential real estate.
To achieve this goal, it is necessary to solve the following tasks:
Describe the essence of housing appraisal;
To characterize methodological approaches to real estate appraisal;
Valuate residential real estate using a cost, comparative and income approach;
Conduct a comparative analysis of the evaluation results;
Develop proposals for improving the methodology for assessing residential real estate.
The object of research in the thesis is the valuation of residential real estate, and the subject of research is the methods and approaches to the valuation of residential real estate.
The methodological basis of the research carried out in the thesis work is the scientific works of domestic and foreign authors in the field of real estate valuation S.V. Gribovsky, E.I. Tarasevich, M.A. Fedotova, D. Fridman.
In the first chapter of the thesis "Methodological position for assessing the value of real estate" disclosed the types of value of real estate, their classification. The factors influencing the value of real estate objects, as well as the basic principles of real estate valuation are considered.
The second chapter "Residential real estate appraisal" presents the results of the appraisal of a real estate object - a two-room apartment located in the Zaeltsovsky district of Novosibirsk - using an income and comparative approach, as well as the results of calculating the salvage value of the property.
The third chapter "Suggestions for improving residential real estate valuation methods" presents the main directions for improving existing approaches to residential real estate valuation.
Chapter 1
1.1 The need for an independent home appraisal
Valuation is the science of applied economic analysis, the main task of which is to establish the most probable price for the sale or purchase of an asset (goods) based on an analysis of the dynamics of the forces of supply and demand for this asset in the relevant market. From a formal point of view, the most probable price is set on the basis of modeling a certain set of demand factors and a set of supply factors.
Currently, real estate valuation activities are regulated by the Federal Law "On valuation activities in the Russian Federation" dated 06.08.98 No. 135 - FZ.
The current situation in the real estate market contributes to the active development of real estate valuation in our country.
The real estate market is currently one of the most dynamic markets in our country, one of the most attractive investment objects. It is becoming very important right now, when the situation in the world is very unstable: experts cannot give accurate forecasts about oil prices, they predict a depreciation of the dollar, - real estate remains practically the only guarantor of the safety of savings.
The main directions of development of the Russian appraisal can be determined based on the list of operations in which it is necessary to evaluate real estate objects. It should be noted that this list is constantly expanding.
An objective assessment of various types of value (market, investment, collateral, insurance, taxable and others) of real estate is necessary:
When buying, selling or renting;
When corporatizing enterprises and redistributing property shares;
To attract new shareholders and additional issue of shares;
When cadastral valuation for the purposes of taxation of real estate objects: buildings and land plots;
For real estate insurance;
When lending secured by real estate;
When making real estate objects as a contribution to the authorized capital of enterprises and organizations;
When developing investment projects and attracting investors, including foreign ones;
Upon liquidation of real estate objects;
When executing inheritance rights, a court sentence;
In other transactions related to the sale of property rights to real estate.
There are three main approaches to property valuation:
Cost method: the cost of complete reproduction or the cost of complete replacement of the property being valued is estimated, then the amount of the estimated depreciation of buildings and structures is subtracted and the value of the land plot is added as free. This approach may be necessary when the valuation of an object for the purposes of property taxation or property seizure requires the separation of the value of buildings and structures from the value of land. It is also used for income tax and accounting purposes: depreciation of buildings and structures is deducted from taxable income. Other situations to apply:
Feasibility study for new construction,
Determination of the option of the best and most efficient use of land,
Update,
Final price negotiation
Buildings for institutional and special purposes,
Purposes of insurance.
Market comparison method: estimating the market value of a property based on recent transactions with similar properties. It is assumed that a rational investor or buyer will not pay more for a particular property than it would cost to acquire another similar property with the same utility.
Income method: the value of a property is determined by the amount, quality and duration of the period of receipt of the benefits that this property is expected to bring in the future.
In Russia, in recent years, the cost method has been widespread in assessing the value of objects. Moreover, its use was declared by the Government when developing property revaluation programs. This led to the fact that the cost of fixed assets, real estate was very underestimated. Now the process of revaluation of such objects is of particular importance, which can be done based on the market method of valuation.
To date, the number of appraisal organizations in the Russian market is significant. As of the end of 2004, more than 9,000 companies and PBOYuL in Russia have state licenses to carry out appraisal activities. Now the market is regulated by the Ministry of Economic Development, but from January 1, 2006, a transition to self-regulation is underway.
At the present stage, the appraisal market is characterized by increasing competition, improving quality, and reducing the cost of services. In particular, the demand for valuation in order to reflect assets in financial statements in accordance with IAS, US GAAP or Russian accounting standards is constantly increasing; assessment of the value of intangible assets to determine the effectiveness of marketing and brand strategies; valuation for the purpose of making purchase and sale transactions, lease of assets, M&A and other transactions for the transfer of ownership and other real rights; valuation for the purposes of insurance, additional issue of shares or buyback of shares during the privatization of state-owned enterprises; appraisal for the purpose of lending secured by property, etc. .
According to the results of a study by the Expert RA rating agency, the most demanded services over the past year and a half were real estate and business valuation services in general. The share of these areas in the overall market structure accounted for 34.3% and 32.1%, respectively.
1.2 Classification of real estate objects
Valuation of real estate is of interest primarily for objects that are actively circulating on the market as an independent product. Currently, in Russia these are apartments and rooms, office premises and office buildings, suburban residential buildings with land plots, free land plots for development and (or) for other purposes. Real estate objects also include mineral deposits, the Russian market of which has not yet been formed. Below we consider the general principles for classifying real estate objects.
The first category of real estate objects. The term “real estate” in our case refers to any product that is rigidly connected to a piece of land, its transfer to another place is impossible without destruction and loss of consumer value. The proposed wording aims to promote a differentiated approach to the assessment of various categories of real estate objects, taking into account their most significant features, features of trade turnover, the structure and scale of markets within which real estate purchase and sale processes take place. Since a variety of conditions and their combinations affect the valuation of a property, the "feature tree" method was used to classify (group). Such a classification (grouping) is multilevel. At each level, it is carried out on its own basis with their possible differences at the same level, but along different “branches”. At the same time, the depth (number of levels) of the classification is greater for those branches on which more representative (in terms of their assessment) objects are located.
Each level has its own name and a set of recommended values for the corresponding classification feature.
1. Origin.
2. Appointment.
3. Scale.
3.1 Land areas.
3.2. Separate land plots.
3.3. Complexes of buildings and structures (cottage settlement, microdistrict, hotel, sanatorium, etc.)
3.3.1. Residential building multi-apartment.
3.3.2. Residential house single-family (mansion, cottage).
3.3.3. Section (entrance).
3.3.4. Floor in section.
3.3.5. Apartment.
3.3.6. Room.
3.3.7. Summer cottage.
3.4. complex of administrative buildings.
3.4.1. Building.
3.4. Premises or parts of buildings (sections, floors).
4. Ready for use.
4.1. Ready.
4.2. Requiring reconstruction or major repairs.
4.3. Requiring completion of construction.
Since the apartment market is currently the most developed sector of the real estate market in Russia, it makes sense to focus on studying this particular sector in order to develop basic methodological approaches to assessing the value of real estate.
In the formed western market, another one is adopted, which differs from the classification of real estate objects proposed above into categories A, B and C.
It is divided into the following classes:
1) Specialized real estate, adapted to the conduct of a specific business and usually sold with the business.
Examples: oil refineries, chemical plants, workshops for the placement of machinery and equipment; buildings that, due to their location, size, construction, are never sold or rented to a third party on the market.
2) Non-specialized real estate - ordinary buildings - shops, offices, factories, warehouses, which are usually sold or rented out.
The classification of real estate objects according to various characteristics (criteria) contributes to a more successful research of the real estate market and facilitates the development and application of methods for estimating the value of various categories of real estate. In the process of classification, separate groups of real estate are distinguished, which determines the possibility of uniform approaches to their valuation.
1.3 Types of property values
At the initial stage of real estate appraisal, the expert appraiser always faces the difficult problem of choosing the type of value for appraisal calculations. This choice depends on many factors (the nature of the object and the evaluation functions) and determines the subsequent choice of the method of valuation of this property. If real estate appraisal is carried out for the purpose of obtaining a mortgage loan (loans secured by real estate property), it is important for the appraiser to have reliable information about the most likely sale price of this real property if the borrower (property owner) does not repay the debt (loan). When assessing real estate for tax purposes in Western countries, the market or replacement value of the property is used, based on the cost of reproduction of the latter. When evaluating objects to be reconstructed, as a rule, the investment value is chosen, i.e. the value of the property for a particular investor.
When evaluating buildings for special purposes, real estate in the "passive" sectors of the real estate market, when there is not enough information to determine the market value, as well as when evaluating for the purposes of real estate insurance, the replacement cost or replacement cost is used.
Market price
In market economic conditions, the most common type of value of real estate is the market value. Market value is the most likely price that a property should achieve in a competitive and open market under all conditions of fair trade, conscious action by the seller and buyer, and without the influence of illegal incentives.
It is understood that in a sale and purchase transaction, the transfer of rights from the seller to the buyer is subject to the following conditions.
1. The motivation of the buyer and the seller are typical, i.e. they operate without undue pressure or extraordinary life circumstances.
2. Both parties are well informed, consulted and act, in their opinion, taking into account their maximum interests.
3. The property was put up for sale on the market for a sufficient amount of time (sufficient for potential buyers to get acquainted with the information about the sale of real estate and make a decision to purchase the property).
4. Payment was made on the terms of financing the deal.
5. The price is normal, not affected by the specific conditions of financing and sale.
The market value of real estate is otherwise called the value in exchange - in contrast to the value in use (or value in use), which reflects the value of the object for a particular owner.
The concept of market value is based on the fact that a typical buyer in the real estate market has the opportunity to choose alternative properties. The market value is objective, independent of the desires of individual participants in the real estate market and reflects the real economic conditions that are developing in this market.
Cost in use (value in use)
Value in use (value in use) reflects the value of a property for a particular owner who is not going to put the property on the real estate market. The assessment of the consumer value of an object is made on the basis of the existing profile of its use and those financial and economic parameters that were observed during the prehistory of the operation of the object and are predicted in the future.
Investment cost
The concept of "investment value", similar to the concept of "value in use", means the value of the property for a specific investor who is going to buy or invest in the property being valued. The calculation of the investment value is made on the basis of the income expected by this investor and the specific rate of their capitalization. The investment value is usually calculated when evaluating an investment project or an income-generating object for a particular investor. This type of value is subjective.
Replacement cost (cost of reproduction of an object)
The replacement cost (the cost of reproducing an object) is determined by the costs in current prices for the construction of an exact copy of the object being evaluated, in its “new” state (without depreciation), using the same architectural solutions, building structures and materials, as well as with the same quality of construction - installation works. In this case, the same obsolescence of the object and the same shortcomings in architectural solutions are reproduced that the evaluated object had.
replacement cost
The replacement cost is determined by the costs in current prices for the construction of a facility that has an estimated equivalent utility, but built in a new architectural style, using modern design standards and progressive materials and structures, as well as modern equipment of the property. Thus, the replacement cost is expressed by the costs of reproducing an exact copy of the object, and the replacement cost is expressed by the costs of creating an object of a functional analogue.
Insurance value
The insured value is calculated on the basis of either the replacement cost or the replacement cost of an object that is at risk of destruction (or destruction). On the basis of the insured value of the object, the sums insured, insurance payments and insurance interest are determined.
Value for tax purposes (taxable value)
The value for the purposes of taxation of the property of legal entities and individuals is determined by expert appraisers accredited for tax inspections based on either the market value or the replacement value of the property, or the appraisal is carried out formally according to the regulatory methodology without the involvement of expert appraisers.
Liquidation value
The salvage value is the net amount of money that the owner of the property can receive when the property is liquidated.
1.4 Basic principles of real estate appraisal
The principles of real estate appraisal can be grouped into the following four groups:
Principles based on perceptions of use;
Principles related to real estate (land, buildings, structures);
Principles related to the market environment;
The principle of the best and most efficient use of the property.
All the considered principles of real estate valuation are interconnected. When evaluating a property, it is necessary, if possible, to take into account all or the main principles of valuation in order to obtain a more reliable and accurate assessment of the value of the property.
User Principles
Principles based on user perceptions include the principles of utility, substitution, and expectation.
The principle of utility is that any property has value only if it is useful to some investor and can be used to implement certain functions or personal needs, for example, the use of real estate as a hotel, cafe, office, museum, etc. .d. Utility is the ability of a property to satisfy a user's needs at a given location and for a given period of time.
The principle of substitution states that a rational (typical) buyer will not pay more for a property than the minimum price charged for another similar property of the same utility. The maximum value of the object being valued is determined by the lowest cost at which another similar object with equivalent utility can be acquired.
The expectation principle is related to the representation of the user of the property and says: the value of the income-generating object is determined by the amount of cash flow expected from the use of the property being valued, as well as the amount expected from its resale. It is important for what period of time the expected income will be received, since the investor's ruble today is worth more than the ruble that will be received tomorrow.
Principles related to the requirements for a land plot, buildings and structures that are located on it
This group includes the following principles:
Residual productivity (productivity) of the land;
marginal productivity (contribution principle);
Balance (principle of proportionality);
Optimal values;
Optimal division of property rights.
The principle of residual productivity of the land.
The principle of residual productivity (or productivity) states that land value is based on its residual productivity (productivity). To understand this position, it is necessary to recognize that any kind of activity, as a rule, requires the presence of four components of production: capital, labor, management and land.
Land is a land plot and natural resources located on it - closed reservoirs, wildlife, vegetation and minerals. The territorial boundaries of a land plot are determined in accordance with the procedure established by the current land legislation, and are formalized by a certificate issued to the owner (or lessee) by state land management authorities. Land is the main factor that provides the space and resources needed for any type of productive activity.
Labor is a set of work on the production of goods (services) and its implementation in the market. This concept does not include management activities.
Capital is money invested in the reproduction of fixed assets and working capital, as well as in other components of production - labor, land and management.
The management of production activities includes the knowledge, skills, entrepreneurial abilities and talent of the management personnel of the enterprise. Successful management allows you to optimize production and maximize profits.
Each component of production (capital, labor, management and land) must be covered from business income. However, since the land is physically immovable, and other components are attracted to it for entrepreneurial activities, labor, capital and management are paid first of all, and the rest of the income is paid to the owner of the land as rent. Such a judgment is consistent with the main provisions of economic theory - land has a "residual value" and a certain value only when there is a residual income after covering the other three components of production. Thus, residual productivity is expressed as income accruing to land, after paying for the costs of labor, capital and management.
The principle of marginal productivity (principle of contribution).
The principle of marginal productivity (or productivity) or the principle of contribution means that as a result of investment, income should be received, remaining after covering costs. With regard to the real estate market, this principle can be interpreted as follows. Often, the cost of repairing an apartment allows you to increase its value, and in amounts that significantly exceed the cost of repairing it. In this case, the principle of marginal productivity or the principle of contribution is realized. The amount of the contribution corresponds to the difference between the price received as a result of the repair of the apartment and the cost of this repair.
The principle of increasing and decreasing returns.
The essence of this principle is that an increase in capital investments in the main components of production causes an increase in the growth rate of profits only up to a certain limit, after which the increase in profits becomes less than the increase in capital investments. This limit corresponds to the maximum value of the property. Any subsequent investment in real estate will not give a proportional increase in profits, and therefore a proportional increase in the value of the property.
Therefore, the appraiser must first analyze the various options for using the land. For example, to perform calculations of profit from the construction of various types of real estate objects or a different number of objects on a given land plot. Only after that he will be able to make the final choice of the type of property for construction on this site. In the process of variant design of various combinations of production components and determination of the maximum profit on this basis, the principle of increasing and decreasing profitability is implemented.
The principle of balance.
The principle of balance (or the principle of proportionality) is formulated as follows: the components of production (or real estate) must be combined with each other in a certain proportion. If the volume of capital investments exceeds the volume of work in a given period of time, for example, in the construction of an object, then there is a “capital freeze” and a decrease in the overall efficiency of the project. A similar situation is possible when at a given moment in time there are not enough funds for the construction of a property, which is well known to investors in new construction. In this regard, the regulatory documents as part of the design documentation for the construction of the facility provide for the development of calendar schedules for the construction of the facility in order to obtain the maximum possible effect from the implementation of the project.
The principle of optimal values.
The principle of optimal values (principle of optimal economic value), given the trends prevailing in the real estate market, a certain (optimal) value of a given type of property is in great demand. An expert appraiser should always keep in mind the principle of optimal values and use it when evaluating real estate of this type.
The principle of optimal division of property rights.
Property rights to a property should be divided and combined in such a way as to increase the total value of the property. The current legislation of the Russian Federation allows the division and sale of property rights separately. Ownership refers to the right to own, use and dispose of property. In addition to the right of ownership, property rights are the right of lifetime inheritable possession, the right of permanent (perpetual) property use, the right of economic possession and the right of operational management, as well as various kinds of easements - the right of limited use of the property. Moreover, the transfer of ownership of property to another person is not a basis for the termination of other property rights, such as lease rights to this property.
The division of property rights to a real estate object can be carried out as follows:
1. Physical separation is the division of a property into parts: basement, floors, etc. For a land plot - the division of rights to the airspace, to the surface of the earth and to its subsoil, the division of the land mass into separate plots.
2. Separation by time of ownership - different types of lease, lifetime ownership, future property rights, etc.
3. Separation of the totality of property rights of ownership - the right of possession, fixed-term or perpetual use, disposal, lifelong (inherited) possession, economic management, operational management and the right to limited use of the property.
4. Sharing of property rights among participants - joint lease, partnership, joint-stock companies, options, trusts, contracts with stipulated terms of sale.
5. Separations by liens - mortgages, tax liens, judicial liens, equity.
The use in the practice of property relations of the above types of separation of the totality of property rights and their optimal combination allows you to increase the value of real estate.
Principles related to the market environment
This group of principles includes the principles of dependence, conformity, supply and demand, competition and the principle of change.
Dependency Principle
The principle of dependence (or the principle of external influence) states: various environmental factors affect the value of a property. These factors - depending on the degree of their influence on a particular object - are divided into main and additional; depending on the sphere of influence - on climatic, geological, regional, social, economic, environmental, demographic, legal, international, urban planning, industry and technical. In turn, economic factors can also be differentiated according to various criteria: financial, regulatory and others. An expert appraiser must remember that in all cases, location is the main factor affecting the value of a property, and the analysis of the value of real estate should begin with it. The main factors also include the proximity of the property to a developed infrastructure (connection with the user's market): roads, shopping and cultural centers, etc., i.е. the evaluator needs to establish how the revenue streams are related to the user market. These two factors - the location of the object and its relationship with the user's market - together make up the concept of "economic location of real estate. This total factor has the greatest impact on the value of the property. The expert appraiser must identify and measure the impact of environmental factors on:
The value of the property being valued and make appropriate adjustments to that value using the sales comparison method;
The amount of cash flow using the income approach;
Cost level when determining replacement cost or replacement cost using the cost approach.
The principle of conformity.
The conformity principle states that a property that does not meet current market standards has a lower value. An expert appraiser must not only know the compliance standards for a given real estate market, but also monitor their development trends in order to anticipate the future value of the property being valued.
The principle of supply and demand.
Demand for a property is a real need for them. Supply is the number of objects available on the real estate market and the limited supply of it.
The essence of the principle of supply and demand is to identify the relationship between the need for a property and the limited supply of it.
Demand for a property is determined by its usefulness (the ability to meet the needs of the user) and availability, but is limited by the solvency of potential consumers. The lower the demand and the higher the supply, the lower the cost of the object. Conversely, if demand and supply are balanced in the real estate market, the market value of the object will stabilize.
Expert appraisers should remember that, as a rule, demand for real estate objects is more subject to fluctuations than supply, since a sharp change in the money supply (for example, as a result of the bankruptcy of financial companies) and emotional moods at the time of a real estate transaction, etc. occur in shorter time periods than the construction of real estate, which creates additional supply on the market. Knowledge of this ability in the ratio of supply and demand allows an expert appraiser to more accurately predict the value of a property.
For residential premises, the ratio of supply and demand depends on the demographic composition of the population, the level of prices for real estate and consumer goods, the intensity of the advertising campaign, new laws and regulations, the cost of loans, property taxation and other factors.
The expert appraiser must predict the ratio of supply and demand for the property being valued, determine the degree of influence of this ratio and all of the above factors on the value of real estate.
The principle of competition.
Competition is rivalry, competition in any kind of activity. All human beings are inherently competitive. Competition or rivalry increases dramatically when it comes to excess profits in some kind of activity. The real estate market is no exception in this respect. If super profits are made in the real estate market (this is a profit that is much higher than the usually formed level of profit in this sector of the market), entrepreneurs tend to get into this market. Increasing competition leads to an increase in supply in the market. If demand does not increase, real estate prices in this case decrease, and the profit of entrepreneurs decreases. Conversely, when competition weakens, supply decreases and, if demand does not decrease, prices for real estate objects and entrepreneurs' profits rise.
Reasonable competition stimulates the improvement of the quality of objects and services in the real estate market, while excessive competition leads to a decrease in profits.
In the absence of competition in the real estate market (and this happens with monopoly competition), the market value of an object cannot be determined, since the market value is formed only in a competitive market.
The principle of change.
Both the property itself (for example, physical wear and tear) and all environmental factors affecting the value of the property are subject to change.
The most characteristic types of changes are the so-called cycles of life. These changes also affect the real estate objects themselves, as well as districts (cities), industries, and society as a whole.
The following main cycles of life are distinguished.
1. Origin (design, construction of an object, formation of an industry, region, etc.).
2. Growth (a period of growth in income from the operation of a real estate object, the rapid development of a district (city), industry, etc.).
3. Stability, equilibrium period (stable income, formed tastes of consumers of real estate objects, formed infrastructure of the area, etc.).
4. Decline (a period of decrease in demand for real estate, a decrease in profits, a decline in production in the industry, etc.).
Taking into account life cycles, an expert appraiser must analyze and predict legislative, demographic, international, scientific and technical, urban and social processes, as well as the reaction of the real estate market to them.
The principle of best and most efficient use
The principle of the highest and best use is formulated as follows: it is the reasonable and possible use of it, providing the highest current value of the object on the effective date of valuation.
Another definition of this principle is also known: it is such an option for using a property, selected among reasonable and possible ones, which leads to the highest value of land. Such a definition of the principle usually refers to the assessment of buildings and structures with significant wear, as well as the assessment of free land.
If the cost of a building (construction) is determined, then when evaluating this type of real estate, one should be guided by the first definition of the principle of the best and most efficient use. In this case, when choosing possible options for using this object, it is possible to exclude the option adopted at the time of assessment, since such use of real estate is limited to a time period until the value of the land plot at its best and most efficient use exceeds the value of the entire property complex (land and buildings) combined with the costs of demolition of the building.
This principle is basic (basic) for the implementation of all three approaches to valuation, and its interpretation is of particular importance in each specific case, as it affects the choice of the type of value. When determining the most probable sale price of a property (the market value of the property), the following interpretation of this principle is most appropriate: “the most likely use of the existing property”, while in determining the investment value, the emphasis in the interpretation is on “the most efficient use of the property”.
Analysis of the best and most efficient use of the property is carried out in two stages: the first analyzes the best and most efficient use of the land, as if it were free, and the second - the best and most efficient use of the building (structure) located on this site .
1.5 Factors affecting property value
As in any other pricing mechanisms, the value of real estate depends on a set of objective and subjective factors, of which only the latter are related to the behavior of a particular seller, buyer and (or) intermediary at the stage of concluding a transaction. Subjective factors include, for example, temperament, knowledge, honesty, patience, personal likes and dislikes of participants in a real estate transaction, etc. Within the framework of my diploma, these factors related to the field of psychology are not considered, and the main attention is paid to objective factors and their influence on the valuation of real estate.
Objective factors are mainly economic, ultimately determining the average price level of specific transactions.
Economic factors are divided into macroeconomic and microeconomic. The first include factors related to the general market situation: the initial level of security of demand for real estate in the region; volumes and structure of new construction and reconstruction; migration factors; legal and economic conditions of transactions (taxes, duties, etc.); level and dynamics of inflation. Macroeconomic factors also include long-term factors: the difference in the dynamics of prices for goods (services) and wage conditions, affecting the scale of accumulation of funds and the amount of deferred demand; the pace and scale of the formation of a new social stratum of "rich people" who have the opportunity to invest in real estate; development of a system of foreign missions in the region, etc.
CHAPTER 2. ASSESSMENT OF THE OBJECT OF RESIDENTIAL REAL ESTATE
2.1 Description of the property
The object of assessment is a separate apartment, consisting of two living rooms.
The purpose of the appraisal is to determine the value of the above property.
The real estate object is understood as the actual object, which is real property, and the legal rights to it.
The act of inspection of the object
Object address: Russia, Novosibirsk, Krasny prospect, 171/2, apt. 27. Owner: Abramenko N.I. BTI certificates No. 78965784. The apartment is privatized.
The object is located along the metro line (on the right bank), the transport network is well developed. To the metro station "Zaeltsovskaya" 10 min. on foot. Nearby are the exhibition center "Siberian Fair", a casino, a nightclub, a hairdresser's, a sports and fitness center, a cultural center "Energy", a cinema "Progress-Kinomir", a 10-minute walk from the Botanical Garden.
The nearest micro market is located 10 minutes walk.
An analysis of the location area allows you to give a high assessment of the labor market in the area in which the object of assessment is located. Proximity to shops, educational institutions is rated satisfactorily. The quality of communal services, as well as services for the protection of public order, is assessed as satisfactory.
Kindergarten, clinic are 5 minutes from home, schools are quite remote (15 - 20 minutes).
Environmental conditions are poor due to the proximity of factories - the Novosibirsk Electrovacuum Plant, the Ekran plant, the plant named after. Lenin, Novosibirsk Semiconductor Plant.
Characteristics of the house.
Wall material - panel. The total number of floors is 5. The height of the floors is 2.2 m. The house is removed from the roadway, located in the yards.
Year of construction - 1975. The general appearance of the building is good.
Water supply - central, heating - central, ventilation - natural, energy supply - central.
Information about the apartment:
Two-room apartment is located on the 2nd floor of the house. The total area of the apartment is 42 sq. m, living area - 28 sq. m (one room - 18 sq.m, the second - 10 sq.m). The kitchen area is 6 square meters. m, the bathroom occupies 3.5 sq.m. The apartment has a balcony, telephone. Windows are oriented to the west. The general view of the apartment is satisfactory.
The layout of the apartment and the scheme of its location in the entrance are presented in Appendix 1.
Thus, the analysis of the location and state of the object in the first approximation allows us to talk about a fairly high cost of the object.
The assessment was made in accordance with the following assumptions:
A special examination of engineering networks was not carried out;
The object of appraisal does not have any hidden defects, including defects in the supporting frame of the building, which could affect its value;
The property complies with all sanitary and environmental standards;
Reliable sources of information were used in the assessment.
2.2 Valuation of residential property using the income approach
Real estate valuation by direct capitalization method
To calculate the capitalization rate for residential property valuation purposes, the simplified Elwood method should be used.
R= Υ - App * (SFS) = CHOD / TS, (1.1)
where R - capitalization rate;
Υ - rate of return on equity;
App - possible increase in the value of property for the period;
SFS is the repayment factor at the rate Υ for the projected holding period;
CHOD - net operating income;
TC is the present value.
Net operating income can be determined using the following formula:
CHOD \u003d EVD - PR, (1.2)
where EI is the effective gross income, which is defined as follows:
EVD \u003d PVD - PP + DD, (1.3)
where PVH is the potential gross income for 1 year, assuming that the object is fully leased,
PP - estimated losses from unemployment opportunities (3%),
DD - other income.
Υ - represents the real income that suits the typical investor.
The fund repayment rate is determined by the following formula:
SFS= i / (l+i)n-1 , (1.4)
where n is the number of periods;
i - discount rate (rate of return on equity).
Using the direct capitalization method, we will determine the cost of a two-room apartment acquired in order to receive rental income with subsequent sale.
Rent - 12000 rubles. / month Possible downtime - 3% Operating costs - 1200 rubles. /month The rate of return on equity is 15%. The tenure is 5 years. The planned cost increase is 40%.
The repayment rate under the indicated conditions will be 0.086:
SFS = 0.15 / (1+ 0.15) 5-1 = 0.086.
Then the capitalization rate will be equal to 0.1583:
R = 0.15 - 0.40 * 0.139 = 0.0944.
The effective gross income calculated by formula (1.3) will be equal to 139680 rubles:
EVD \u003d 12000 * 12 - 12000 * 12 * 0.03 \u003d 139680 rubles.
Net operating income from owning a property under these conditions will be 125,280 rubles:
CHOD \u003d 139680 - 1200 * 12 \u003d 125280 rubles.
The current value of the property can be determined by the formula:
TS = CHOD / R, (1.5)
where R - capitalization rate;
CHOD - net operating income from the ownership of a property.
So, the current value of the assessed residential property will be 1,327,118.6 rubles:
TS \u003d 125280 / 0.0944 \u003d 1327118.6 pyb.
At the next stage of the assessment, we will determine the value of the object by discounting future income.
Discounting future income is a method used to evaluate income-generating real estate objects as a current value, expected future benefits from owning an object.
The future benefits of real estate transactions are as follows:
The frequency of receipt in the form of net operating income during the ownership of the facility;
Reversion - proceeds from the sale of the object after the expiration of the holding period.
The current value of the property is determined as follows:
TS = TS (PPD) + TS (P), (1.6)
where PPD is the frequency of income flows;
Ρ - reversion;
TC is the present value.
The value of an item, calculated using the discounted future earnings method, is the present value of all future cash flows and reversals, taking into account the degree of risk and alternative use cases.
The methodology for calculating the cost according to the proposed method is as follows.
Stage 1. Forecast of future income stream and estimated resale value of the property:
Determining the value of the forecast period;
Determining the frequency of receipt of income.
The net operating income (NOR) is used as the forecast base.
Reversion calculation, i.e. proceeds from the sale of an object, is made taking into account possible changes in the value of the property. Costs associated with sales costs are deducted from the reversion cost.
Stage 2. Discount rate calculation.
The discount rate is a factor used to calculate the present value of an amount of money received in the future.
The discount rate shows the effectiveness of capital investments, taking into account the risk of obtaining the planned amount. The discount rate is chosen as the average rate of return that investors expect to receive on their capital investments in similar properties in a given market.
Since the discount rate directly depends on the risk, it is determined by how high the average investor assesses the level of risk associated with investing money in this property.
Therefore, the higher the level of risk, the higher the discount rate and, accordingly, the present value of future income is less and less than the current value of real estate.
Stage 3. Converting the future value of cash flows to present value using the compound interest technique.
СР = ТС ± Δ = ТС (1 + j), (1.7)
where Δ - increase or decrease in the value of the object;
СР - cost of reversion;
J - the share of changes in the value of the object for the reporting period (0.4).
The current value of the property is calculated using the following formula:
where i - rate of return on equity;
n - forecast period.
Net operating income was calculated above using the direct capitalization method and amounted to 125,280 rubles for the property being valued.
Assume that we will receive income from the operation of a real estate object with a frequency of 1 time per year. In this case, the current value of the property will be 1346178 rubles:
TC = 125280 / (1+ 0.15) + 125280 / (1 + 0.15)2 + 125280 / (1+ 0.15)3 +
125280 / (1+ 0,15)4 + 125280 / (1+ 0,15)5 +
TS * (1+0.4) / (1+0.15)5 =
108939 + 94909 + 82967 + 72416 + 63273 + TS * 0.696
TC = 1346178 rubles.
During the assessment, it is possible to estimate the future value of cash flows from the property.
SR \u003d 1346178 * (1 + 0.4) \u003d 1884649 rubles,
Thus, after 5 years, the appraised apartment can be sold for 1,884,649 rubles.
2.3 Valuation of residential real estate by comparing sales of analogues
The essence of the approach is to compare the property being valued with other properties that have been put up for sale.
The fundamental principle of the comparative approach to real estate valuation is the principle of substitution. It says that if there are several similar properties on the market, a rational buyer will not pay for an object more than the amount that it would cost to acquire another property of similar utility.
Assessment steps:
1. market research;
2. collection and verification of data;
3. analysis and comparison of data;
4. amending;
5. data reconciliation.
Market research is conducted to identify those comparable sales and properties for sale that are similar to the property being valued.
Each sale used as comparable in the appraisal report must be personally verified by the appraiser.
It is necessary to compare each object with the one being evaluated and analyze the differences:
Date of sale;
Physical characteristics;
Location;
Terms of sale.
The next step in the assessment is making adjustments. The essence of this stage is to adjust the selling prices or asking prices for each comparable object in accordance with the existing differences.
Value adjustments change the price of the sold object of the analogue by a certain amount, in which the differences in the characteristics of the object of the analogue and the object being valued are estimated.
Percentage adjustments are used to correct for differences related to transaction time, location, and physical characteristics.
successive amendments. Their peculiarity lies in the fact that, depending on the sequence of making percentage adjustments, a different result can be obtained.
Cumulative corrections are obtained by multiplying all individual corrections. In this case, the sequence is not required.
The final value is a judgment made by the appraiser based on an analysis of all available information. Simple averaging does not always lead to an accurate result, and moreover, it is not always necessary to choose one number as the cost indicator. Using a range of values is more correct.
To apply the method of comparing market analogues, it is necessary to collect data on ten two-room apartments offered for sale in the Zaeltsovsky district (Siberian Fair, Botanical Garden). Data on similar apartments are presented in the table in table 1 in Appendix 2.
Each of the ten presented apartments must be characterized by the coefficients of the cost method and the results summarized in a table.
The ratio of the total and living area of the apartment Ksozh - takes into account the ratio of the total area of the apartment and its living area. It is taken equal to:
0.95 - ratio less than 1.50
1.00 - ratio from 1.50 to 1.66
1.05 - ratio from 1.66 to 2.00
1.10 - over 2.00.
The coefficient of the presence of a balcony or loggia Kbl:
If there is a balcony, this coefficient is 1.00;
In the presence of a loggia - 1.05;
In their absence - 0.95;
if there are two or more balconies or loggias - 1.10.
The Kat floor coefficient in the event that the apartment is located on the first or last floor of the building is 0.90. In all other cases - 1.00.
The isolation coefficient of the Kiz rooms is taken equal to:
1.04 - all rooms are isolated;
0.96 - adjoining rooms in two-room apartments, or more than one walk-through room in 3-6 room apartments;
1.00 - in all other cases.
The availability coefficient of the elevator Cliff is taken equal to:
1.03 - there is an elevator in houses with 5 or less floors;
1.00 - there is an elevator in houses with more than 5 floors, or not in houses with 5 or less floors;
0.97 - there is no elevator in houses with more than 5 floors.
The coefficient of the height of the premises Kvys is equal to:
0.98 - the height of the premises is less than 2.5 m;
1.00 - the height of the premises from 2.50 m to 2.80 m;
1.02 - the height of the premises from 2.80 m to 3.00 m;
1.04 - height of premises from 3.00 to 3.40 m;
1.06 - the height of the premises is over 3.40 m.
The coefficient of availability of the garbage chute K mus is taken equal to:
1.02 - available in houses with less than 5 floors;
0.97 - not in houses with more than 5 floors;
1.00 - in other cases.
Coefficient taking into account the area of \u200b\u200bthe kitchen Kk:
0.95 - with a kitchen area of up to 6 square meters. m;
1.00 - with an area of 6 sq. m to 9 sq. m
1.02 - with an area of 9 sq. m to 12 sq. m;
1.10 - over 12 sq. m.
The values of the coefficients for each property are presented in Table 2 in Appendix 2. The equivalent cost of a two-room apartment, calculated in Table 2, is the cost of a two-room apartment in a five-storey building with a ratio of total and living area from 1.5 to 1.66, with a balcony, on the middle floor, ceiling height more than 2.5 m, without a garbage chute, kitchen area from 6 to 9 m.
Multiplying the arithmetic average cost for ten apartments by the total area of the appraised apartment and dividing by the corrective coefficients for the appraised apartment, we get the real market price of the apartment, which will be 2410714:
54 thousand rubles * 42 / (1.0 * 1.0 * 1.0 * 0.96 * 1.0 * 0.98 * 1.0 * 1.0) =
Thus, as a result of evaluating the property under study by the comparative method, it was found that the market price of a two-room apartment is 2,410,714 rubles.
2.4 Property valuation using the cost approach
According to the cost approach, the value of a property is determined by the amount of resources spent on its reproduction or replacement, taking into account physical and obsolescence.
It is rather difficult to assess the cost of an apartment using the cost approach, since it is quite difficult to estimate the costs of building one apartment, to separate their costs for the construction of a residential building as a whole.
We will evaluate the cost of the object using the cost approach on the assumption that the costs of building a house are distributed in proportion to the total area of apartments. This assumption is conditional, but, nevertheless, it will allow you to get an approximate estimate of the cost of an apartment using a cost approach.
So, it is known that the construction company LLC "Promstroy - D" plans to build a residential building on the street. Airport (in the Zaeltsovsky district of Novosibirsk, in the immediate vicinity of the house where the appraisal is located). LLC "Promstroy - D" received the right to design and build this house on a plot with a total area of 3 thousand 298 square meters. m. The appraisal of the market value of the land plot and the cost of building a residential building by order of the investor was carried out by Praktika LLC. According to the pre-project documentation, the total usable area of apartments in a 5-storey building will be 3,262 sq. m. m. The residential building will include 75 apartments.
According to the experts of Praktika LLC, the cost of building a house will amount to 10 million 640 thousand rubles. In this case, the construction costs of 1 sq. m. of the total area will amount to 3261.8 rubles.
The total area of the property under appraisal is 42 sq. m. m. Thus, in accordance with the cost approach, the cost of restoring the object will be 136,995.6 rubles. (3261.8 rubles * 42 sq. m).
Replacement cost should be determined taking into account accumulated depreciation. The useful life of a residential building is 40 years. Depreciation on the appraised object is 30 years. Thus, when assessing, it is necessary to take into account 10/40 of the replacement cost of the object.
Estimating the value of the object by the cost approach will be:
RUB 136,995.6 * 10 / 40 \u003d 34248.9 rubles.
2.5 Reconciliation of residential real estate appraisal results
To evaluate a residential real estate object - a two-room apartment located in the Zaeltsovsky district of Novosibirsk - the methods of income and comparative approaches were used, according to which the following results were obtained:
1. According to the method of comparing sales of analogues, the cost of the object is 2410714 rubles.
2. As part of the income approach:
3. In accordance with the cost approach, the cost of the object will be 34248.9 rubles.
The determination of liquidation value is quite rare in Russian valuation practice, which affects the low level of methodological support for this type of valuation.
The only factor that affects the value of the liquidation value and distinguishes it from the market value is the “forced sale” factor, which is typical for non-market conditions for the sale of real estate.
Thus, it becomes quite obvious that in order to calculate the salvage value in the current Russian conditions, it is possible to use the following equation:
Slick. = Sryn. x (1 - Kvyn.),
where is slick. - salvage value of real estate;
Sryn. - market value of the object under study;
Kvyn. - correction for forced sale, provided 0< Квын. < 1.
According to the above equation, salvage value is calculated in two steps. At the first stage, the market value of the studied property is determined. At the second stage, the value of the adjustment for the forced sale is calculated and included in the value of the market value, that is, the market value is adjusted for the "forced sale" factor (for non-market conditions of sale).
If the calculation of the market value of real estate does not cause difficulties, then the definition of an adjustment for the forced sale and its mathematical justification raises many questions. In practice, appraisers accept it intuitively in the range from 0.1 to 0.3 (10 - 30% of the market value).
So, in the case of a value of the adjustment coefficient at the level of 10%, the salvage value of a residential property will be:
Slick = 2410714 rubles. x (1 - 0.1) = 2169642.6 rubles.
If the value of the adjustment coefficient is at the level of 30%, the salvage value of the residential property will be:
Slick = 2410714 rubles. x (1 - 0.3) = 1687499.8 rubles.
So, in general, we can conclude that the liquidation value of the property will be from 70 to 90% of its market value and will range from 1,687,499.8 thousand rubles. up to 2169642.6 thousand rubles.
Thus, it is clear that the price of the apartment in the four options turned out to be different. To determine which price most accurately reflects the value of an object, it is necessary to know the purpose of the valuation, since the purpose of the valuation determines the choice of determining the value.
If the purpose of the assessment is to determine the value of an object acquired for the purpose of making a profit in the form of periodic income with subsequent sale, then one should focus on the figure obtained in the income method (1327118.6 rubles - 1346178 rubles)
If the purpose of the assessment is to determine the real market value of the object, while there is enough information on the sales prices of similar objects, then the cost of the apartment should be taken as the figure obtained by comparing market analogues (2410714 rubles).
If the purpose of the appraisal is to determine the value of an apartment that serves as collateral for obtaining a mortgage loan, then the liquidation value is the most appropriate, since the sale of the appraisal object in the event of non-fulfillment of the loan agreement must be ensured in a fairly short time. Thus, as the value of the property, a value in the range of 1,687,499.8 thousand rubles should be taken. up to 216942.6 thousand rubles.
CHAPTER 3. SUGGESTIONS TO IMPROVE REAL ESTATE APPRAISAL METHODS
residential property appraisal cost
In general, the first chapter is devoted to a greater extent to the theoretical foundations, the basic categories associated with real estate valuation.
The second chapter of the work presents the results of real estate appraisal from the standpoint of three approaches to determining the market value: appraisal in terms of costs (cost approach), appraisal by direct comparison of sales (comparative approach), appraisal in terms of expected or actual income (income approach) .
When comparing the results of the assessment, it was found that all approaches give different results. Let us consider the main directions for improving the presented approaches to real estate valuation.
In modern appraisal practice, the technology of carrying out replacement cost calculations using UPVS collections is often used. The use of these collections began in 1997, when market information on real estate objects was practically absent, and the use of these collections was the only way to determine the “market value”, mainly for the revaluation of fixed assets. In the last decade, there have been great changes in the information support of the real estate market and budgeting. The Gosstroy of the Russian Federation has switched to a new estimate and regulatory framework. Decree of the Gosstroy of Russia No. 16 dated April 08, 2002 “On measures to complete the transition to a new estimated and regulatory base for pricing in construction” canceled from 01/01/2003 the regulatory documents of the Gosstroy of the USSR, drawn up at the price level provided for by the estimated and regulatory bases of 1991. and 1984. Instead of them, state elemental estimated norms (GESN) and federal unit prices (FER) are introduced. Gosstroy of Russia approved and put into effect:
· GESNr-2001 "State elemental estimated norms for repair and construction works";
· GESN-2001 "State elemental estimated norms for general construction works";
GESNm-2001 "State elemental estimated norms for equipment installation"
HPES are designed to determine the composition and the need for resources necessary to perform construction work at facilities, prepare cost estimates (estimates) using the resource method, as well as to pay for work performed and write off materials.
Gosstroy of Russia develops Federal unit prices (FER, FERr and FERm) only for the Moscow region. Further, the prices for the Moscow Region are transferred by Gosstroy to the Regional Centers for pricing in construction to link prices to regional conditions. After binding, the collections of prices are sent back to Gosstroy for their further approval. Currently, the process of developing a new regulatory framework has not yet been completed. Conducting real estate valuation based on the new regulatory framework is a very complex and time-consuming task that requires special knowledge and skills. In order for the new regulatory framework to enter into the practice of valuation, it is necessary to carry out a set of works on the development of software and computing systems adapted to solving applied problems of real estate valuation.
Recently, regional centers for pricing in construction have begun to work actively, firms specializing in the provision of information services have appeared, for example, NPF Center for Information Technologies in Construction.
And only real estate appraisers still use long-outdated collections of the 70s of the last century and at the same time justify the “market value” of objects on their basis. Experienced appraisers have long understood the shortcomings of the use of UPVS collections, primarily related to the list of costs included in unit prices, average indexation, inconsistency in technologies, the ratio of the scope of work, etc.
So, in the collections of UPVS, the following cost items are taken into account:
· direct costs;
overhead costs;
Planned savings (profit);
general site costs for the allocation and development of the construction site;
cost of design and survey work;
costs associated with the production of work in the winter;
The cost of premium wages
the cost of maintaining the directorate of a standing enterprise;
· losses from the liquidation of temporary buildings and structures;
· the cost of transporting workers over a distance of more than 3 km. in the absence of public transport;
· the cost of paying employees bonuses for the mobile nature of work.
Experienced appraisers in their calculations use their own developments based on adjustments to analogues or consolidated estimates.
In the work of P.G. Grabovoi, S.P. Korostelev “Property appraisal, Part I. Real estate appraisal”, it is shown on a specific example that the results of calculating the replacement cost of residential real estate using the methodology of the UPVS significantly, several times, differ from market indicators.
However, in the majority of reports reviewed by the Expert Council of the Russian Society of Appraisers, the assessment of the market value of real estate is still based on outdated UPVS. Moreover, in order to somehow bring the results of these calculations closer to market indicators, a certain multiplying factor is introduced into them, which is called “entrepreneur's profit”. It is accepted absolutely arbitrarily, since it is not possible to remove this indicator from the market in modern conditions. It should be emphasized here that, in accordance with IVS-2003, “the application of market value requires the conclusion of a valuation solely on the basis of market data”. When applying the RSA, the appraiser determines unequivocally a non-market value, which should be reflected in the report.
In Russia, there is still no reliable information base on the aggregated basic indicators of the cost of construction, which are available from Western appraisers (following the example of WESSEXS, LAXTONS, R.S.MEANS).
Currently, the main recognized information base for real estate valuation are the developments of Co-Invest LLC. This firm quarterly publishes the bulletin "Price Indices in Construction", as well as the series "Appraiser's Handbook": "Industrial buildings", "Residential buildings", "Collections of purchasing power parities of currencies in national construction markets", "Handbook of the replacement cost of buildings and structures in current price level, etc.
When using these publications, it must be remembered that most of their calculations are based on the normative base of the planned economy, indexed by certain price coefficients and, therefore, the final results of the assessment may have a significant error for the reasons stated above. When applying certain indices, it is necessary to carefully study the prerequisites for their calculation.
Recently published and announced as the first in the country, expected by appraisers, the Regional Guide to Construction Costs (RCC-2006). It provides cost indicators by type of construction work, aggregated cost indicators (CSI) and "information for assessing the required amount of investment in the express option." In fact, the latter definition refers to the estimated cost of objects-analogues of modern buildings and structures. Part III of the RCC contains "analogue objects with technical and economic indicators of structural elements, analogous objects with technical and economic indicators for the object as a whole and a summary table of technical and economic indicators recommended for determining the cost of residential buildings and social and cultural facilities." Cost indicators are defined in prices as of 01.01.2006 for the "Moscow region". The directory includes cost indicators for 18 types of modern residential buildings and 27 non-residential real estate. In RCC-2007 this list of objects has been significantly expanded.
The publication of RCC creates the conditions for its application in real estate and business valuation procedures. If in real estate appraisal it is possible to use part II of the handbook "Aggregated value indicators", then in the cost approach of business appraisal it is possible to use part III "Objects-analogues of buildings and structures".
Thus, RCC collections should become the basic basis for real estate valuation. However, there are significant shortcomings of these collections. The main one is that they do not provide the initial data and the main assumptions of the obtained values of the cost of analogues. So, it is not entirely clear what specific composition of the equipment is taken into account in the final indicators, what was included in the builder's other costs, etc. The joint work of estimators, analysts and appraisers in the direction of improving the RCC can lead to the creation of an information base that is so necessary for real estate appraisers.
The main direction in the development of appraisal activity is currently becoming the appraisal of the market value of real estate. This becomes possible due to the fact that our country is accumulating a database of the actual market value of real estate.
In order to simplify the process of appraisal of residential real estate in appraisal agencies, a regression model of the cost of an apartment can be used, which allows you to calculate the cost of a residential property depending on a number of its parameters.
An example of building such a model is given in the magazine "Real Estate" for December 2005. The model was built according to the price lists of several real estate companies that are engaged in the implementation of housing of various consumer characteristics in various districts of the city of Novosibirsk. For the analysis, information was collected on 450 apartments (150 options for each type of apartment - one-, two-, three-room) according to the following parameters:
The cost of the apartment
The area in which the property is located
Ownership type:
public housing,
Housing acquired under a privatization agreement,
Property purchased under a sale and purchase agreement
Material of the house where the apartment is located:
Panel, brick, monolith,
House type:
Elite,
improved layout,
typical,
full size,
- "Khrushchev",
storey of the house,
The floor on which the apartment is located,
The total area of the apartment,
living area of the apartment,
kitchen area,
The presence of a balcony or loggia,
Having a phone.
Let us consider in detail the procedure for building a model using the example of one-room apartments.
At the first stage of building the model, the matrix of correlation coefficients was analyzed in order to identify parameters that strongly depend on each other. The main task was to select such factors, the correlation coefficient for which would not exceed the value of 0.8. Based on the results of the analysis, a matrix of correlation coefficients was built, which takes into account 6 factors, that is, exactly half of those initially collected, since the remaining factors did not satisfy the condition imposed on the correlation coefficient.
Based on the collected data on the selected factors, the following regression model was built:
Ρ = -10.12 + 9.24 Stotal + 35.62 * x1 - 21.17 * x2 + 15.07 * x3 +
65 * x4 + 64.48 * x5 (3.1)
or in general:
Ρ= -a0 + asStot + a1x1 + arr + a3x3 + a4x4 + a5x5 (3.2)
The following notation is used in the presented equation:
Ρ is the price of an apartment with fixed parameters defined below,
Stot - the total area of the apartment,
x1 is a dummy variable characterizing the area in which the apartment is located,
x2 is a dummy variable characterizing the material of the house where the apartment is located;
x3 is a variable that characterizes the number of storeys of the building in which the appraised apartment is located;
x4 is a dummy variable characterizing the floor on which the apartment is located;
x5 is a dummy variable characterizing the presence of a telephone in the apartment.
Statistical indicators for this model confirmed the significance of the results obtained.
Thus, the resulting model very well reflects the dependence of the average cost of apartments on its parameters in the housing market of the city of Novosibirsk (without taking into account extreme options).
The presented models were put into practice in the real estate agencies of the city of Novosibirsk "Zhilfond" and "Amir - Real Estate", which have full-time employees for assessing the cost of apartments for sale, and also acting as collateral in loan agreements. It should be noted that experts highly appreciated the effectiveness of their application.
The second important problem appraisers face is predicting the value of an apartment in the future. This problem becomes especially relevant when assessing the cost of an apartment for mortgage purposes, since the sale of an apartment will take place in the future, and it is important to determine the rate of growth in the cost of an apartment for the period of a loan agreement.
The initial data for building a model of price dynamics in the secondary housing market were taken from the Real Estate magazines by quarters of the corresponding years. For each year, information was collected on 240 apartments - 80 for each type of apartment (one-, two-, three-room apartments). . The main purpose of building the model is to determine the model for changing the prices of real estate in the secondary market.
The structure of the collected data on apartments is shown in fig. 2.1, 2.2, 2.3.
Rice. 2.1. The structure of apartments considered when building the model, by type of housing
Rice. 2.2. The structure of apartments considered when building the model, by type of housing
Rice. 2.3. The structure of the apartments considered when building the model, by the type of material of the house
The temporal analysis of economic phenomena distinguishes between different types of evolution.
1. Trend, trend or long-term movement. There is no strict definition of a trend, it is revealed intuitively. A trend corresponds to a slow change in some particular direction that persists over a long period of time.
2. Cycle, short-term component - fast quasi-periodic movement, in which there is an increase phase and a decrease phase.
3. Seasonal component - changes that occur regularly, as opposed to a cycle.
4. Random fluctuations, effects - chaotic movement of a relatively high frequency, which has a more or less constant character.
Some statistical series represent one or another type of evolution in its pure form, but most of them are a combination of all or individual components.
Theoretically, a series of price dynamics is a combination of trend, seasonal component and random fluctuations. At the present stage of development of the real estate market, the seasonal component of the price of an apartment is disrupted, which is due to high rates of price growth and the investment attractiveness of the market in question. That is why special attention was paid to highlighting the trend in the dynamic series under consideration.
According to the series of dynamics of prices for apartments, the following model was built.
Polynomial of the second degree:
yi = a + bt2, (3.3)
where i - apartment type,
t - time period.
It should be noted that, in accordance with the criteria used in statistics, the correlation coefficient should be close to 1 (exceed 0.7), the significance factor F should be less than 0.03 (for the given model parameters).
Thus, the obtained models reflect well the dynamics of prices in the secondary housing market of the city of Novosibirsk.
According to the obtained model, the growth in the cost of one-room apartments should have been 22.0% in 2006, while the actual growth in cost was 24.3%.
According to this model, the growth in the cost of a two-room apartment in the city of Novosibirsk in 2006 was supposed to be 21.7%, while in fact the growth rate was 21.6%.
In accordance with the presented model, the growth in the cost of a three-room apartment in the city of Novosibirsk in 2006 was supposed to be 21.5%, while in fact the growth rate was 31.0%.
Substituting real data on the cost per square meter of apartments in the city of Novosibirsk in each quarter of 2006, it can be noted that this value falls within the boundaries of the confidence intervals built according to the model.
According to experts, the resulting model adequately describes the current situation in the real estate market at the moment. The forecast for growth in the cost of housing by the end of 2006 for certain types of apartments coincides with real data, since the growth of the market predicted by experts is 20-30%.
The appraiser is constantly faced with the problem of predicting the cost of apartments, this problem is especially acute when assessing for lending purposes. The correctness of the decision depends on the experience, qualifications of the specialist, as well as on the quality of the collected data on the market of the object being evaluated. The use of the proposed statistical models in the work of specialists will help improve the accuracy of forecasts, as well as the quality of residential real estate valuation.
CONCLUSION
Based on the results of the study, the following conclusions can be drawn.
There are three approaches to the valuation of real estate objects.
The income approach consists in determining the value of the property being valued based on the amount of income that it can generate in the future, and is most often used to evaluate commercial real estate.
The cost approach determines the cost based on the construction costs of a similar object (the cost of materials, transportation costs, etc.), and is based on the fact that the value of the object being assessed cannot be higher.
The method of comparing sales (comparative approach) consists in finding the closest analogues to the valued object and making adjustments to their value, taking into account the differences between them and the valued object. This approach is the main one in the evaluation of residential real estate, as there is a sufficient number of proposals for the sale of residential premises on the market for a correct assessment.
The purpose of the assessment presented in the practical part of the work was to determine the market value of an apartment consisting of two living rooms, located in the Zaeltsovsky district of Novosibirsk
To evaluate a residential real estate object - a two-room apartment located in the Zaeltsovsky district of Novosibirsk - the methods of income, cost and comparative approaches were used, according to which the following results were obtained.
According to the method of comparing market analogues, the cost of the object is 2410714 rubles.
As part of the income approach:
According to the method of direct capitalization, the cost of the apartment will be 1,327,118.6 rubles;
According to the method of discounting future income - 1346178 rubles.
According to the cost approach, the cost of the object will be 34248.9 rubles.
In accordance with the methodology for determining the liquidation value of an object, the cost of a two-room apartment in the Zaeltsovsky district will range from 1,687,499.8 thousand rubles. up to 2169642.6 thousand rubles.
The improvement of the cost approach to the valuation of residential real estate consists in the development of documents, collections, reflecting the real costs of the construction of similar objects, since the normative collections used by appraisers in the course of their work were published in the 70s. of the last century and have long been outdated, and the correction factors used in these approaches are not justified in any way.
The main direction of improving market approaches to valuation is the use of statistical models in the process of estimating the value of real estate objects.
The paper presents examples of a model for determining the value of a property based on a number of its qualitative characteristics, as well as a statistical model for predicting the value of a property after a certain period of time. It should be noted that this problem is especially relevant in the case of real estate appraisal for lending purposes, since in this case the real estate object is sold some time after the appraisal. The use of the proposed statistical models in the work of specialists will help improve the accuracy of forecasts, as well as the quality of residential real estate valuation.
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Annex 1
APARTMENT LAYOUT
LOCATION IN THE ENTRANCE
Annex 2
Information on the sale of apartments similar to the property under appraisal in January 2006
| No. p / p | Street | House type | Floor / number of floors | Total / living area | Kitchen | Balcony / loggia | Telephone | Isolated / adjoining rooms | Cost, thousand rubles | The cost of 1 sq. m., thousand rubles. |
| 1 | Red Avenue | Π | 2/5 | 39/26 | 5,5 | B | + | cm | 2450 | 62,8 |
| 2 | Dachnaya | Π | 2/5 | 40/28 | 6 | B | + | from | 2200 | 55 |
| 3 | Dm. Donskoy | Π | 3/5 | 42/28 | 6,5 | B | + | cm | 2100 | 50 |
| 4 | Dachnaya | Π | 4/5 | 40/26 | 6 | B | + | cm | 2150 | 53,8 |
| 5 | Red Avenue | Π | 2/5 | 41/28 | 5,5 | B | + | from | 2650 | 64,6 |
| 6 | Zhukovsky | P | 4/5 | 44/28 | 6 | B | + | cm | 2350 | 53,4 |
| 7 | spring | P | 3/5 | 43/29 | 6,5 | B | + | cm | 2400 | 55,9 |
| 8 | Dachnaya | P | 2/5 | 42/28 | 6 | B | + | cm | 2300 | 54,8 |
| 9 | Dachnaya | P | 2/5 | 40/26 | 5,5 | B | + | from | 2150 | 53,8 |
| 10 | Dm. Donskoy | P | 3/5 | 44/29 | 6 | B | + | cm | 2100 | 47,7 |
| 11 | Estimated object | P | 2/5 | 42/28 | 6 | B | + | cm | - | - |
Determination of the value of real estate objects, taking into account corrective coefficients
| № | ksozh | Kbl | Kat | keyes | cliff | Kvys | Kmus | Kk | The cost of 1 sq. m | Equiv. standing. | |
| 1 | 1,00 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 0,95 | 62,8 | 55,9 | |
| 2 | 0,95 | 1,00 | 1,00 | 1,04 | 1,00 | 0,98 | 1,00 | 1,00 | 55 | 55,7 | |
| 3 | 1,00 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 50 | 54,6 | |
| 4 | 1,0 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 53,8 | 55 | |
| 5 | 1,0 | 1,00 | 1,00 | 1,04 | 1,00 | 0,98 | 1,00 | 0,95 | 64,6 | 53,6 | |
| 6 | 0,95 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 53,4 | 53,2 | |
| 7 | 1,00 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 55,9 | 53,7 | |
| 8 | 1,00 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 54,8 | 53,3 | |
| 9 | 1,00 | 1,00 | 1,00 | 1,04 | 1,00 | 0,98 | 1,00 | 0,95 | 53,8 | 54,1 | |
| 10 | 1,00 | 1,00 | 1,00 | 0,96 | 1,00 | 0,98 | 1,00 | 1,00 | 47,7 | 50,5 | |
| Arithmetic mean | 55,9 | 54 | |||||||||
