Deriving market prices for forestland properties from comparables
ISSN: 0263-7472
Article publication date: 27 July 2018
Issue publication date: 6 August 2018
Abstract
Purpose
The purpose of this paper is to construct a market price predictor (MPP) for forestland properties by applying a sales comparison approach (SCA) with several value-related characteristics obtainable from the property-specific sales line declarations.
Design/methodology/approach
An SCA-based predictor was designed for appraising and valuing forestland properties with varying quantitative features that impact their overall value. Using a two-stage classification procedure, representative reference sales (i.e. comparables) are objectively and commensurately selected for the subject using location and forest characteristics as classifiers.
Findings
The new SCA-based MPP is a stable and reliable tool applicable for pricing forestland properties in any location when data from comparables are available.
Research limitations/implications
A systematic and spatio-temporally continuous data collection procedure is a prerequisite for obtaining appropriate data for the SCA-based appraisal and valuation techniques, including the MPP model presented in this study.
Practical implications
The MPP model is suitable for the practical appraisal and valuation of forestland properties.
Social implications
It is expected that by applying the MPP model for the appraisal and valuation of forestland properties, positive societal contributions will be achieved through the intensification of the forestland property market.
Originality/value
The MPP model provides an objective alternative to the adding-value technique, which is the most commonly applied tool to appraise forestland properties in Finland. It is also offers an assumption-free alternative to the income approach.
Keywords
Acknowledgements
The authors thank Dr Seppo Rouvinen, and Eero Viitanen and Teemu Silmu for their help with the compilation of data used in this study. Eero Viitanen’s support in processing data with the R is also gratefully acknowledged.
Citation
Eerikäinen, K. and Venho, M. (2018), "Deriving market prices for forestland properties from comparables", Property Management, Vol. 36 No. 4, pp. 423-445. https://doi.org/10.1108/PM-07-2017-0043
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited