Hedonic estimation of income multipliers

Abstract

Income multipliers are commonly used in the valuation of income streams. All income dollars, however, are not alike, and investors make distinctions based on the nature and source of the income. The income multiplier is adjusted for the characteristics of the investment. The present study deals with major apartment buildings and concerns the estimation of income multipliers from market observations. Regression analysis is used to estimate the gross and net income multipliers, as well as adjustments for differences in property features, zoning aspects, and economic conditions. The multipliers are then used in the valuation of two subject properties. An important issue is reconciling the estimates when the two multipliers lead to somewhat different values. The sample consists of high‐rise buildings in the West End area of downtown Vancouver, Canada, but the approach is general and widely applicable.

Citation

Janssen, C.T.L. (2003), "Hedonic estimation of income multipliers", Property Management, Vol. 21 No. 5, pp. 315-336. https://doi.org/10.1108/02637470310508662