Return to more comparable transactions Even if the current climate is clouded by uncertainty, the fog is slowly beginning to lift. The number of transactions is in- creasing and will provide appraisers with the necessary benchmarks for valuation, despite the need for particularly critical review.
Cancelled deals were often used out of necessity in the past to set conditional limits on the market value of an invest- ment property. This, at least, is no longer necessary.
The in part exaggerated pessimism on the part of market participants that has prevailed since mid-2022 is gradually giving way to a critical realism which will facilitate the preparation of well found- ed, evidence-based valuations with a more limited price range.
against inflation. On the other hand, we are also witnessing the comeback of yields. Investors who depend to a significant degree on debt financing must focus their attention on properties with sufficiently
Subjective criteria must, consequently, be responsible for these massive price differences if the objective criteria like location, the condition of the building and earnings are comparable.
A market value assessment is therefore particularly important to find a price acceptable to both sides despite the broad spread currently paid on the market. The involvement of a competent and neutral ap- praiser is, just now, an immense advantage and absolutely recommended. It can limit the range of a possible price and support negotiations on the basis of objective criteria.
high cash flow to service their loans – and that is only possible when prices are substantially lower than some high-wealth
The expectations of sellers and the readiness of buyers to accept these conditions are by no means synchronised.
buyers are prepared to pay. The potential for expansion is also priced differently by the market, but the trend is clearly pointing towards no or little added value for these additions. In other words, the expectations of sellers and the readiness of buyers to accept these conditions are by no means synchro- nised.
On the seller’s side, the most important “subjective” criterion is the time horizon within which a sale should or must be completed. A focus on the “concrete gold concept”, meaning the (higher) long-term value, is definitely allowed in the absence of time constraints. The pressure to make a sale generally results in the (lower) earnings value.
Vienna | 2024
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