Property sustainable value versus highest and best use analyzes
Marek Walacik, Małgorzata Renigier‐Biłozor, Aneta Chmielewska, Artur Janowski
Abstract
Abstract Sustainable development of all the urban environment elements (including properties) is a very information requiring decision making process that absorbs data from many different fields. Since economic aspects of that kind of development are one the fundaments of the concept, property assessment procedures quite often support sustainable development. The current market value definition interpretation provided by valuation standards of international rage (EVS, IVS) and highest and best use of property (H&BU) have also become widely discussed and troublesome issues. The discussion is vital due to the fact of H&BU consideration in wider context, including sustainable development and sustainable value. The authors in order to improve clarity of the paper proposed a definition of sustainable value. The use of modified methods of sensitivity and scenario combined analysis as a solution enabling sustainable value quantification with the use of H&BU property assessment theory and practice was proposed. The obtained sustainable value coefficient, determined according to proposed methodology, enabled consideration of all the highest and best use tests. Additionally, it enabled consideration of sustainability context. It was described by maximal productivity of property strongly correlated with socio‐economic and socio‐cultural phenomena. Highlights The concept of sustainable development involves much more than the “green” issue, thus can create an added value for real estate analysis (especially based on “highest and best use” assumptions). Even though the “highest and best use” notion has been defined its' interpretation causes many ambiguities and problems. “Highest value” is a condition that requires taking into account all the circumstances (physical, legal, financial and productivity) with maximum: return rate/developed area/increase of build‐up area. Maximal productivity in highest and best use context means directly not to give any decreases in sustainable value or/and give possibility to increases the sustainable value in the future. “Sustainable value” can reflect not only economic issues (reflected directly by property value) but can exceed its' meaning to a broader sense including sustainable development issues (social, political, environmental directions) at the same level.