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 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.
· Flat.
· 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 housing 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. Evaluation 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 public auction in the manner established 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.
Business success in the conditions market economy largely predetermined 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 everyday 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 area (office or production) per workplace, spending on purchases per capita, 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, current state and predicting 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 the analysis, as well as ignoring changes in the existing structures of the population and employment.
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, dossiers of real estate brokers, 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 items.
The profit of the entrepreneur is the prevailing market norm that encourages the entrepreneur to invest 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 when estimating fixed assets of enterprises incorrectly, 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 effective 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.
Future income generated by the property is divided into two types: income from operating (operational) activities as a result of commercial leases 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 income stream 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 period significantly less than the adequate marketing period for this type of property, the value of the limited realization is used as the basis of 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 do not have a 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 involve a professional expert in the field of the environment.
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 next 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 | eat | eat | eat | eat | No | ||
As can be seen from the initial data, the objects of comparison differ from the estimated one 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 objects are brought into the same conditions for financing and sale time, which creates single base to make adjustments for other 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 | eat | eat | eat | eat | 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 sales 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 unit 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 also made it possible 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 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 purchase 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 through an increase in income and the formation of a wide middle class capable of becoming the main supplier of buyers, or through 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 arrears 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 maintaining it, and hence 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 in the foreseeable future will experience a shortage of demand, which can significantly reduce income from the traditional real estate firms' activity of providing services for the sale and purchase 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, entirely depends 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 solvency investment project in the real estate market is the consistency of 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
RUSSIAN ACADEMY OF CIVIL SERVICE
UNDER THE PRESIDENT OF THE RUSSIAN FEDERATION
Federal State Educational Institution of Higher Professional Education
"NORTH-WESTERN ACADEMY OF PUBLIC SERVICE"
in Kaluga
finance and credit
THESIS
Kaluga
Introduction
Chapter 1. Theoretical foundations for assessing the market value of real estate
1.1 Real estate valuation: basic concepts and principles of valuation
1.2 Approaches and methods for assessing the value of real estate
1.3 Property valuation issues
Chapter 2. Determination of the market value of the property
2.1 Description of the subject matter
2.2 Determination of the market value of real estate under the cost approach
2.3 Determination of the market value of real estate in the framework of the market approach
2.4 Determination of the market value of real estate under the income approach
3.1 Determination of the final value of the market value of the object of assessment
Conclusion
Bibliography
Introduction
The transition of our country to a market economy required the in-depth development of a number of new areas of science and practice, in particular, real estate valuation.
The real estate market is a sector of the national market economy, which is a set of real estate objects, economic entities operating in the market, market functioning processes, i.e. processes of production (creation), consumption (use) and exchange of real estate and market management, and mechanisms that ensure the functioning of the market (infrastructure and legal environment of the market).
Now the real estate market includes residential apartments and rooms, office buildings and premises, buildings for industrial and commercial purposes, cottages, summer cottages and rural houses with land plots. Regional peculiarities of the real estate market should be taken into account.
In the production and economic practice of economic entities, there are many cases when it becomes necessary to assess the market value of the property of enterprises. Not a single operation of buying and selling property, lending against collateral, insurance, resolving property disputes, taxation, etc., can do without valuation.
Determining the market value of real estate is a complex and unique process, since it is almost impossible to find two absolutely identical properties. Even in the case when buildings are built according to the same standard project, but located on different land plots, their cost can vary significantly.
The relevance of the topic of the thesis is due to the fact that today there is an increasing need for a competent and objective assessment of the value of real estate, and the institution of property valuation has not yet been fully formed, there is no information base for valuation, the professional training of appraisers in Russia has not yet reached the world level.
The purpose of the work is to determine the market value of the property and justify ways to increase it.
To achieve this goal, it is necessary to solve the following tasks:
1. Explore the theoretical basis for assessing the market value of real estate;
2. To characterize the object of assessment and its environment;
3. Justify the market value of the appraisal object based on three generally accepted approaches;
The object of research is the procedure for determining the market value of property.
The subject of the study is the justification of the market value of the property and the development of recommendations for its increase.
Structurally, the work consists of an introduction, three chapters, a conclusion and a list of references. The first chapter discusses the theoretical foundations of real estate valuation, the second chapter calculates the market value of a property, the third one harmonizes the results of the valuation and determines ways to increase the market value of real estate.
The theoretical and methodological basis of the study is the dialectical method of cognition, as well as the works of scientists, periodicals and Internet materials on the problem under study. In addition, the following methods were used: economic-statistical, monographic, calculation-constructive, as well as the comparison method.
Chapter 1. Theoretical foundations for assessing the market value of real estate
1.1 Real estate valuation: basic concepts and principles of valuation
Various benefits (objects, things, property) are created, sold and acquired to meet certain needs of the state, legal entities and individuals, as well as to obtain benefits from their possession and use. From the possibility of this or that object of property to satisfy the existing needs and from the benefits that the possession of this object will bring in the future, its value, and therefore, the cost, depends.
All operations and transactions with real estate require knowledge of the value of the property. In market conditions, the value of real estate depends on factors, trends and changes in the economy and society as a whole. The need for real estate appraisal arises in the following cases:
§ transactions of purchase and sale or leasing;
§ corporatization of enterprises and redistribution of property shares;
§ attraction of new shareholders and additional issue of shares;
§ cadastral valuation for the purposes of taxation of real estate objects: buildings and land plots;
§ real estate insurance;
§ lending secured by real estate;
§ making real estate objects as a contribution to the authorized capital of enterprises and organizations;
§ development of investment projects and attraction of investors;
§ liquidation of real estate objects;
§ execution of inheritance rights, court sentence, resolution of property disputes;
§ other operations related to the sale of property rights to real estate objects.
Immovable things (real estate, real estate) include land plots, subsoil plots, isolated water bodies, and everything that is firmly connected with land, that is, objects that cannot be moved without disproportionate damage to their purpose, including forests, perennial plantations, buildings, structures. 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.
In real estate valuation, land is considered to have a value, while improvements are considered to be a contribution to value.
Real estate is in free civil circulation and is the object of various transactions, which gives rise to the need to assess its value, i.e. in determining the monetary equivalent of various types of real estate at a particular point in time.
In today's economy, there are many different types of value. They are necessary due to various needs and functions. This includes types such as borrowed value, insurance value, fair market value, book value, rental value, salvage value, investment value and many others. However, in general, value can be divided into two categories: value in exchange and value in use.
Value in exchange is the price that will prevail in a free, open and competitive market based on the equilibrium established by the factors of supply and demand. It is sometimes called objective cost because it is determined by real economic factors.
Value in use is the value of the property for a specific user or group of users, i.e. the value of real estate that is used as part of a going concern (for example, real estate used by a factory).
Of all the types of value, the most widespread is the market value - the main type of value in the conditions of market relations. When determining the market value, we proceed from the fact that the market existed in the past (property has already been sold), exists in the present (property is being created for sale) and will exist in the future, since neither the past nor the present of the market contradict this.
Based on the foregoing, we can conclude that not only the market itself, but also the instruments formed by the market, the most important of which is the cost, have a three-component nature. From this perspective, we can say that the cost:
Valid cost, i.e. the most probable price in a given market;
Truly market-based, since the space of market values, which includes the cost of a particular object, is formed solely under the influence of factors of a free, open and competitive market;
Indeed, it is objective, since it reflects the opinions of all the main subjects of the market of the manufacturer (seller), buyer and investor, thereby exhausting the market interests of the parties.
Value can be drawn from the past by putting ourselves in the place of the buyer, from the present by putting ourselves in the place of the builder, and from the future if we put ourselves in the place of the investor. Three main approaches to property valuation follow from this: market, cost and income approaches.
The main task in determining the value is to predict the quantity, quality and duration of future benefits from owning the object of assessment and converting these benefits into present value. Property is analyzed based on the principles of valuation.
The evaluation principles are divided into four groups:
1) principles based on user perceptions (principles of utility, substitution and expectation);
2) principles arising from the process of real estate operation (principles of contribution, residual productivity, marginal productivity, balance, economic size and economic division);
3) principles driven by action market environment(principles of alternativeness, variability, dependence, supply and demand, competition and compliance);
4) the principle of the best and most efficient use is the main principle of evaluation. This principle combines all other principles and is the foundation of any real estate appraisal.
A prerequisite for real estate valuation is to take into account the specifics of the functioning of the real estate market, since the state of the real estate market has a significant impact on income flows, risk levels and on the possible sale price of a property at a certain point in the future, i.e. on the main data used in the valuation using the income approach.
1.2 Approaches and methods for assessing the value of real estate
In real estate appraisal, there are three generally accepted approaches to determining the value: costly, market and profitable. Each approach has its own established methods, techniques and procedures. The conceptual similarity of approaches to the evaluation of various property objects is revealed. At the same time, the type of the object being valued determines the features of specific methods arising from the specific problems of valuation, which, as a rule, are inherent only to this type of property.
Cost approach
The cost approach to the valuation of real estate is based on comparing the costs of creating a real estate object with the value of the valued or comparable objects. The approach is based on a study of the investor's ability to purchase real estate and proceeds from the principle of substitution, which states that the buyer, exercising due prudence, will not pay for an object more than the amount that it would cost to obtain the relevant building plot and build an object similar in purpose and quality for the foreseeable future without significant delays.
The main stages of the assessment procedure in this approach:
1. Calculation of the cost of acquiring or long-term lease of free and available land in order to optimize its use;
2. Assessment of the replacement cost of the building being assessed. The calculation of the replacement cost is based on the calculation of the costs of recreating the object in question, based on current prices and manufacturing conditions for similar objects on a certain date.
3. Determining the amount of physical, functional and external depreciation of the property;
4. Estimation of the value of entrepreneurial profit (investor's profit);
5. Calculation of the final cost of the appraised object by adjusting the replacement cost for depreciation, followed by an increase in the resulting value by the cost of the land plot.
The cost approach is most appropriate when evaluating properties that have recently been put into operation, it leads to the most convincing results in the case of a sufficiently justified cost of the land plot and insignificant accumulated depreciation of improvements. The cost approach is justified in estimating the value of planned objects, special-purpose objects and other property, transactions for which are rarely concluded on the market, and can be used in valuation for insurance purposes. This approach, when evaluating objects subject to reconstruction, allows you to determine whether construction costs will be offset by an increase in operating income or proceeds from the sale of property. The use of the cost approach in this case avoids the risk of overinvestment.
Also, the cost approach is used for the purposes of taxing the property of legal entities and individuals, during the arrest of real estate, to analyze the best and most efficient use of a plot of land.
Determining the value of a land plot
In accordance with Art. 35 of the Civil Code of the Russian Federation, upon transfer of ownership of a building, structure, structure located on someone else's land to another person, it acquires the right to use the corresponding part of the land plot occupied by the building, structure, structure and necessary for their use, on the same conditions and the same amount as the previous owner.
Of all land valuation methods, the method of comparative sales analysis is of decisive importance.
The replacement cost of the construction of the property under appraisal is calculated at current prices as new (excluding accumulated depreciation) and related to the appraisal date. The basis for determining the replacement cost is the calculation of the costs associated with the construction of the facility and its delivery to the customer. Depending on the procedure for accounting for these costs, it is customary to allocate direct and indirect costs in the cost of construction.
Direct costs are directly related to construction (the cost of materials, the wages of construction workers, the cost of construction machines and mechanisms, etc.). Indirect costs - costs that are not directly related to construction (fees to design and estimate organizations, the cost of investments in land, marketing, insurance and advertising costs, etc.). The developer's profit reflects the costs of managing and arranging the construction, general supervision and the entrepreneurial risk associated with the development. The profit of the entrepreneur is defined as part of the profit from the sale of the object. Regardless of the amount of interest and its corresponding basis (a component of the value of property), the amount of entrepreneurial profit remains constant.
The main source of comparative data on the cost of real estate objects are construction contracts for the erection of structures, such as the one being assessed. In addition, design appraisers typically maintain their own databases of current prices for completed homes, office buildings, apartments, hotels, shop buildings, and industrial buildings. Currently in Russia there is a system of standards and price levels determined by the corresponding price indices.
Built objects under the influence of various natural and functional factors lose their operational qualities and are destroyed. In addition, the market value of the object is influenced by external economic impact from the immediate environment and changes in the market environment. At the same time, physical depreciation (loss of performance), functional aging (loss of technological compliance and cost due to scientific and technological progress), external or economic depreciation (change in the attractiveness of an object in terms of changes in the external environment and the economic situation in the region) are distinguished. Together, these types of depreciation constitute accumulated depreciation, which will be the difference between the replacement cost of the object and the cost of reproduction (replacement) of the object of assessment.
The most complete and reliable source of information about the technical condition of a building or structure is the materials of a natural survey. The first condition for conducting such surveys should be an accurate definition of the functional purpose of the object of assessment: use for its intended purpose or with a change in technological and functional parameters. In this case, it is necessary to present the limits of changes in loads and impacts on the supporting structures of buildings.
The second condition for conducting research is obtaining complete information about the natural and climatic parameters and specific factors of the impact of the area where the object is located and their changes in the process of technogenic activity.
Market Approach
A prerequisite for the application of market approach methods is the availability of information about transactions with similar real estate objects (that are comparable in purpose, size and location) that took place in comparable conditions (time of the transaction and conditions for financing the transaction).
The comparative approach is based on three main principles of real estate valuation: supply and demand, substitution and contribution. Based on these principles of real estate valuation, the market approach uses a number of quantitative and qualitative methods to highlight the elements of comparison and measure adjustments to market data of comparable properties to model the value of the property being valued.
The main principle in the market approach to real estate valuation is the principle of substitution, which states that a potential buyer will not pay a price for property that exceeds the cost of acquiring a similar, from his point of view, property.
The main difficulties in applying the methods of the market approach are associated with the lack of transparency of the Russian real estate market. In most cases, the real prices of real estate transactions are unknown. In this regard, often when assessing, the prices of proposals for objects put up for sale are used.
The sales comparison method determines the market value of a property based on an analysis of recent sales of comparable properties that are similar in size and use to the property being valued. This method of valuation assumes that the market will set the price for the property being valued in the same way as for comparable, competitive properties. In order to apply the sales comparison method, specialists use a number of valuation principles, including the principle of substitution.
The application of the sales comparison method consists in sequentially performing the following steps:
1. detailed market research in order to obtain reliable information about all factors related to objects of comparable utility;
2. identifying suitable units of comparison and conducting a comparative analysis for each unit;
3. comparison of the object being evaluated with the selected objects of comparison in order to adjust their sales prices or exclude them from the list of those being compared;
4. bringing a number of adjusted indicators of the cost of comparable objects to the market value of the object of assessment.
Real estate offices, government sources, own databases, publications, etc. can be used as sources of information about real estate market transactions.
After choosing the unit of comparison, it is necessary to determine the main indicators or elements of comparison, using which it is possible to model the value of the object through the necessary adjustments to the purchase and sale prices of comparable real estate objects.
In valuation practice, when determining the value of real estate, such main elements of comparison are distinguished as the transferred rights to real estate, the conditions for financial settlements when acquiring real estate, the terms of sale (purity of the transaction), the time of sale, the functional purpose of the object, location, convenience of access roads, area of the object, technical condition and level of finishing of premises.
This method is most effective for regularly sold objects.
Quantitative and qualitative methods are used to highlight the elements of adjustment measurement.
Quantitative methods include:
paired sales analysis (two different sales are compared to determine the adjustment for one comparison item);
· statistical analysis (the method is based on the use of the apparatus of mathematical statistics for correlation and regression analysis);
· Analysis of the secondary market (this method determines the amount of adjustments, based on data that are not directly related to the object of assessment or the object of comparison) and others.
Quality practices include:
classification (comparative) analysis (the method is similar to the analysis of pair sales, except that the adjustments are expressed not in percentages or monetary amounts, but in categories of fuzzy logic);
Distribution analysis (comparative sales are distributed in descending order of adequacy, then the place of the object of assessment in the series of comparative sales is determined).
income approach
Determining the market value of real estate using the income approach is based on the principle of expectation. According to this principle, the typical investor, that is, the buyer of a property, acquires it in anticipation of receiving future income from use. Considering that there is a direct relationship between the size of the investment and the benefits from the commercial use of the investee, the value of real estate is defined as the value of the rights to receive income generated by it, in other words, the value of the property is defined as the present value of future income generated by the valuation object.
The advantage of the income approach compared to the cost and market approaches is that it reflects the investor's view of real estate as a source of income to a greater extent, that is, this quality of real estate is taken into account as the main pricing factor. The main disadvantage of the income approach is that, unlike the other two approaches, it is based on forecast data.
The main stages of the assessment procedure in this approach:
1. Preparing a forecast of future income from renting the appraised areas for rent for the period of ownership and, based on the data obtained, determining the potential gross income (GRP), which is calculated according to formula 1.1:
PVD \u003d S * Ca, (1.1)
S is the area to be leased, sq.m;
Sa - rental rate for 1 sq.m.
2. Determination based on market analysis of losses from underutilization of space and in the collection of rent, calculation of the actual gross income (ARI). As a rule, the owner in the long run does not have the opportunity to permanently lease 100% of the building area. Losses of rent occur due to underemployment of the property and non-payment of rent by unscrupulous tenants. The degree of unemployment of an object of income-producing real estate is characterized by the coefficient of underutilization, determined by the ratio of the value of unleased areas to the value of the total area to be leased.
The calculation of the actual gross income (ARI) is carried out according to the formula 1.2:
DVD \u003d PVD * Kz * Ks, (1.2)
DVD actual gross income;
PVD potential gross income;
Kz area load factor;
Kc coefficient of collection of payments.
It should be noted that other income received from the operation of the facility in excess of rental payments (for example, for the use of additional services - car parking, etc.) must be added to the DIA calculated by the above method.
3. Calculation of the costs of operating the property being valued, which is based on an analysis of the actual costs of its maintenance and / or typical costs in this market. Expenses can be conditionally fixed (property tax, insurance premiums, payments for a land plot), conditionally variable (utilities, current repairs, salaries of maintenance personnel, etc.), replacement costs (expenses for the periodic replacement of fast-wearing structural building elements).
Thus, the estimated value of operating costs is subtracted from the DIA, and the final figure is net operating income (NOR).
4. Recalculation of net operating income into the current value of the object.
Direct capitalization method - a method for determining the market value of an income-generating object, based on the direct conversion of the most typical income of the first year into value by dividing it by the capitalization ratio obtained on the basis of an analysis of market data on the ratio of net income and the value of assets similar to the object being valued, obtained by the market method extraction. Such a Western classic version of the direct capitalization method, in which the capitalization ratio is extracted from market transactions, is practically impossible to apply in Russian conditions due to the difficulties in collecting information (most often, the conditions and prices of transactions are confidential information). Based on this, in practice it is necessary to use algebraic methods for constructing the capitalization coefficient, which provide for a separate assessment of the rate of return on capital and the rate of its return.
It should be noted that the direct capitalization method is applicable to the valuation of existing assets that do not require, at the date of the valuation, large investments in the duration of repairs or reconstruction.
1.3 Property valuation issues
Difficulties are associated with a number of problems that arise in property valuation (approaches and methods), incorrectness or inconsistency of laws and regulations in this area. Let's consider these questions in a little more detail.
The first problem is by account, and not by purpose - the choice of capitalization and discount rates.
1. The cost of a loan (cost of capital) - for enterprises that do not have independent behavior (there is no securities market).
2. The average marginal value of own finances - for enterprises whose shares are quoted on the market.
3. Based on the average operating profitability of the enterprise or its own industry.
4. Average marginal marginal costs of the projects under study (when investing).
5. Rates of reimbursement for loans.
6. Planned norms.
7. Rate of interest on loans (a political economy concept related to national income (ND) and domestic national product (GNP)).
8. Profitability of an alternative investment (for example, a deposit account in a bank).
9. Minimum risk-free return, from an investor's point of view.
The real short-term interest rate, defined as the difference between the yield on Treasury bills and the consumer price index.
A lot of practical methods for choosing a rate with the same theoretical base speaks of the unfavorable methods and criteria for choosing it. The definition of the room rate is outside of financial management theory - in the field of psychology (the realm of art, not science).
In order to make an assessment by different specialists, the value of the compound interest rate should be adopted by law and reflected in the methodology, as it was in its time, according to the standard coefficient of efficiency of capital investments (investments - as they say now). Initially, the efficiency rate was different for each industry, then one rate was adopted for all industries. It should be emphasized that the standard efficiency ratio played the same role (carried the same load) as the capitalization rate (efficiency rate, comparison rate, investment placement rate).
The second problem is related to point valuation of the property value. The situation is such that ten experts working independently of each other will give ten different estimates of the value of the same property (property). This is due to the calculation procedure and the choice of standard coefficients. The situation is reminiscent of the manufacture of a part. On the same machine, different parts will be manufactured by the same worker according to the same drawing. There are many reasons for this, most of which, in principle, cannot be ruled out. Therefore, a system of tolerances for the dimensions of parts has been adopted in production. If the dimensions of the manufactured part are within tolerance, then it is considered fit. The deviations and scatter of the initial data used for the calculation in all approaches and methods, as a percentage of the average, are more significant than the tolerances for the dimensions of the parts.
The way out of this situation (the solution to this problem) is to replace the point valuation of the property value with the interval one, on the one hand, and the numerical calculation should be carried out by probabilistic methods. The concept of evaluation in mathematics implies an approximate calculation, most often at the level of an order of magnitude. For example, when calculating on a slide rule, it was required to determine the number of digits in the integer part of the number.
Another problem is related to the choice of weighting factors when reconciling property value calculations made using the three approaches. Each author (expert, appraiser) accepts weight coefficients (factors of significance of the calculation method) at his own discretion, and the difference between the estimates can be significant. One way out of this situation is to adopt a weighting factor that is evenly distributed in a certain range for each assessment method (approach).
The next problem arises in the comparative (market) assessment of the value of property, when it is necessary to introduce correction factors to bring the object being valued and market analogues to a comparable type. Here, too, there is considerable arbitrariness. This is especially true of the correction factors when comparing the locations of the territorial location of the property being valued, and a number of others.
One of the most difficult problems is the reliability of information. This applies both to market information about the asking and sold price of the assessed value of the property, and information on standards when calculating the value using the standard method in the cost approach. Previously, design and technological institutes of all branches of the national economy had this information. This information is either lost or outdated.
To remove most of the problems that arise in the process of estimating the value of property, all calculations should be performed on the basis of probability intervals. As a result of the calculation, the value of the property will be presented as a truncated distribution. The median cost estimate should be recommended as the offer price of cost. In this case, the chances for the seller and the buyer are the same: the probability for the buyer to buy cheaper than the offered price is equal to the probability for the seller to sell for more than the offered price.
In this case, both the seller and the buyer have full information about the possible prices of the sale and purchase and their probability. Depending on the urgency of the proposed transaction, counterparties can make informed decisions: for the buyer to wait and look for another acquisition object, if time is needed; for the seller - a reduction in the asking price if there is an urgency in the implementation of the transaction.
There are many such options on the market. For the seller and the buyer, the urgency in buying and selling can be different.
In 2001, Decree of the Government of the Russian Federation of July 6, No. 519 was adopted, in which the Ministry of Property Relations of the Russian Federation is charged with the obligation to "develop and approve methodological recommendations for valuation activities." This should be done in relation to the various objects of assessment, types of value of the object of assessment, the conduct of the assessment, as well as the examination of assessment reports. The work is carried out in coordination with the federal executive authorities that regulate the relevant field of activity.
However, the ministry is not in a position to develop a methodology for all property objects (for all occasions), and even more so to develop regulatory materials.
Therefore, at the regional level, depending on the existing property market, on the basis of an industry-wide methodology, develop regional methods for groups of homogeneous objects with the creation of the necessary regulatory framework. Then the problem arises of coordinating and approving local methods at the level of the administration of the region, city or region.
The procedure for agreeing and approving regional methodological materials in relation to various objects of property should be regulated by the Ministry of Property Relations of the Russian Federation.
This will help to more reasonably evaluate all types of value of various types of property, which will remove various misunderstandings, lead to comparability of the calculation results by different appraisers and appraisal firms, and reduce the semi-criminal connotation in the field of appraisal activities.
Chapter 2. Determination of the market value of the property
2.1 Description of the subject matter
Currently, there is a fairly stable demand for new real estate in the form of detached buildings, in the price range of $330-$3250 sq.m. In general, the offer ranges from $400 sq.m. to $4500 sq.m. At the same time, there is a tendency to some increase in the upper limit of the offer price.
This is explained by the fact that until recently insolvent demand becomes financially justified.
On the other hand, particularly prestigious office space and retail space have by now "found" their relatively permanent owners. Accordingly, the prices for premises, although less prestigious, but still expected to be sold, are rising. In addition, fluctuations in the prices of proposals are not always justified from the point of view of economic logic.
The property is owned by LLC "Aris" and is located in the Leninsky district of the city of Kaluga.
The object includes a three-storey brick office building with a restaurant with a total area of 1.375.8 sq.m.
The object is located on one of the longest highways of the city, relatively close to the business and administrative center of Kaluga. Transport accessibility is good.
Description of the land
Plot shape rectangular;
Land area 556.0 m2
Soil condition sandy soils form the basis of the building foundations.
Topography of the area: the relief of the site is calm.
Infrastructure provision:
The following communications are connected to the residential building for:
· water supply;
sewerage;
· power supply;
heat supply;
telephonization
Possible restrictions on use and easements
Permitted use. The practice of working in the real estate market shows that a change in the functional purpose of real estate is possible only upon agreement with the local administration, which is also confirmed by the owner of the object of assessment.
easements. It is assumed that the site is subject to typical easements, such as the right of way and communication, but it is assumed that none of the existing easements should be an obstacle to the best and most efficient use of the site. The site does not include monuments, unique natural objects, power transmission towers, leading signs, etc., so there are no special restrictions for the construction of office and residential premises.
Building Description
The building has 3 floors, made in compliance with modern construction standards.
Table 1
Structural elements of the building
| Structural element | Characteristic | Technical condition |
| Foundations | Concrete belt | Excellent |
|
and their exterior |
silicate brick red finishing brick, t=0.5 |
Excellent |
| Partitions | brick | Excellent |
|
Covers: Attic; Interfloor; Above basement |
W/concrete W/concrete W/concrete |
Excellent |
| Roof | Combined | Excellent |
| floors | Parquet, tiles, linoleum | Excellent |
|
Wooden |
Wooden modernized | Excellent |
| Interior decoration | Euroclass | Excellent |
|
Sanitary and electrical devices: heating · water pipes sewerage electric lighting · phone · ventilation |
Central, from the boiler room Drain to city sewer Hidden wiring Natural |
Excellent |
| Other works | blind area | Excellent |
2.2 Determination of the market value of real estate under the cost approach
In this case, an administrative brick three-story building was chosen as an analogue object in accordance with Sat. UPVS No. 33, tab. 4 (Enlarged indicators of the replacement cost of the construction of residential, public, communal buildings and consumer service buildings. M: 1972) Table 52 as the most appropriate in terms of design features to the object of assessment.
table 2
Comparative analysis of the object of assessment and the object-analogue
(Determination of the coefficient of similarity)
| Structural elements | Analog object | Object of assessment | Similarity degree (similarity coefficient) | Specific weight, elements % | |||
| analogue object | object of assessment | ||||||
| 1 | 2 | 3 | 4 | 5 | 6 | ||
| 1. Foundations | reinforced concrete blocks | reinforced concrete blocks | 1,00 | 5,0 | 5,0 | ||
| 2. Walls and partitions | brick | brick | 1,00 | 24,0 | 24,0 | ||
| 3. Overlays | w/concrete | w/concrete | 1,00 | 9,0 | 9,0 | ||
| 4. Floors | concrete | concrete | 1,00 | 10,0 | 10,0 | ||
| 5. Openings | simple wooden | simple wooden | 1,00 | 11,0 | 11,0 | ||
| 6. Interior decoration | simple | - | 0,00 | 8,0 | 0,0 | ||
| 7. Sanitary and electrical devices |
central heating · water pipes sewerage · ventilation electric / lighting |
central heating · water pipes sewerage · ventilation electric / lighting |
1,00 | 12,7 | 12,7 | ||
| 8. Roof | roll on reinforced concrete slabs | ─ | 0,00 | 6,0 | 0,0 | ||
| 9. Stairs and entrances | – | – | 1,00 | 5,0 | 5,0 | ||
| 10. Simple work | – | – | 1,00 | 9,3 | 9,3 | ||
| TOTAL: | 0,8 | 100 | 86 | ||||
| Correction factor | 0,86 | ||||||
Determination of the total replacement cost of the appraised object.
Basic input data:
Capital group - I.;
· Building volume: Vstr. = 4444 m3;
· Total area: S=1.375.8 m2;
Sources of regulatory data: Sat UPVS No. 4, table 52
Basic calculation formula:
PVA \u003d US1969 x Vstr. x I69-84 x I84-20.12.2007 x Kn, (3.1)
where PVS is the total replacement cost of the object, rub.
US1969 cost of building a unit of construction volume in 1969 prices; US1969=24.9 r/m3
Vpage construction volume, cub. m;
I69-84 index of cost conversion from 1969 prices to 1984 prices; for residential and commercial buildings on average - 2.21;
I84-20.12.2007 - index of conversion of the cost from prices in 1984 to prices on the date of assessment (20.12.2007) according to Inf. Sat. on pricing and settlements for work performed in construction, Kaluga: December 2007;
K84-20.12.2007 = 61.07
Кn is a correction factor for the difference of the object-analogue of the assessment. Kn=0.86
Calculation of the total replacement cost of the object:
PVA \u003d 24.9 x 4,444 x 2.21 x 61.07 x 0.86 \u003d 12.843.755.88 rubles.
Assessment of depreciation (depreciation) of an object
Based on the estimated effective life of the object (capitality group I), physical depreciation (depreciation) as of the valuation date will be 5%, i.e. RUB 642.187.80
Since the building is new, there is no functional (moral) deterioration.
Economic (external) depreciation has not been established: buildings of this type and condition are currently in demand on the market, and there is no reason to assume that this situation will change significantly in the near future.
Determining the entrepreneur's profit
The entrepreneur's profit is the market-determined level of return that the entrepreneur expects to receive in the form of a premium for the use of his capital invested in construction.
The profit of an entrepreneur (Ppr) can be determined from the ratio of entrepreneurial income Dpr and the cost of construction (C / b str.) Taking into account the construction period (Tstr.) According to the formula:
According to the Kaluga construction organizations, the cost of construction of 1 square. m of individual office buildings of conventional construction is an average of 10,500 rubles. including finishing. Normal interior decoration increases the cost of construction by 9-12%. Luxury finishing increases the cost of individual works by 1.38 times (Marshall & Swift Handbook). The construction period currently usually does not exceed 2 years. The cost of investing in Kaluga in retail space located within the central part of the city lies in the range of $$ 1200÷3500 sq. m. m. Let's take for our calculations the value - 1200 US dollars, or 30936 rubles. Under these conditions, the profit of the entrepreneur:
= 0.937, or 97.3%.
Table 3
Calculation of the final value of the object of assessment
Thus, the market value of the property, obtained using the cost approach, is 25,982,918.15 rubles, or rounded 25,982,918 rubles. (Twenty-five million nine hundred eighty-two thousand nine hundred eighteen rubles) without VAT.
2.3 Determination of the market value of real estate in the framework of the market approach
Table 4
Characteristics of objects of comparison
| Characteristics of comparison objects | Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | ||||
| 1 | 2 | 3 | 4 | 5 | 6 | ||||
| Address of the object | Kaluga, st. Suvorova, d.29 |
Kaluga, st.Tele-visionnaya, 2a |
Kaluga, st. Moscow, d.237 |
Kaluga, st. Azarovskaya, 26 |
Kaluga, crystal, |
||||
| Year of construction | 2002 | 1995, reconstruction 1998 | 2003 | 1971, reconstruction 2002 | 1988 | ||||
| Total area (sq. m.) | 1375,8 | 1157,1 | 297,3 | 2234,0 | 3806,0 | ||||
| Main purpose in current state | Office space, cafes, recreation areas | Office rooms | Office space, recreation areas | Office and exhibition premises | Office rooms | ||||
| Initial appointment | Same | Administrative building | Administrative building | book base | Administrative-industrial building | ||||
| External enclosing structures | brick | brick | brick | brick-panel with foam block inserts | reinforced concrete panels | ||||
| Location | above the average | the average | the average | below the average | below the average | ||||
| Land plot |
122971 m2 (other buildings available) |
under the building | under the building + ramp area | ||||||
| Finish quality | class "E" | class "U" | luxury class | luxury class | class "E" | ||||
| Quality of parking and vehicles | Along the street, spec. organized, 20 m long; playground in the yard | Parking along the street (20 m); indoor parking | Organized parking (special site) | Along the street, spec. organized 20 m long; indoor parking | Limited indoor parking | ||||
| Sale period | –– | December 2007 | August 2007 | February 2007 | October 2006 | ||||
| number of storeys | 3 floors | 2 floors | 3 floors | 2 floors | 3 floors | ||||
| Price 1 sq. m. of total area, rub. rub. | – | 33000 | 41500 | 28500 | 15500 | ||||
Definition (justification) of adjustments
1. Adjustment for market conditions (date of sale)
In this case, the most correct method is to use the pair sales method. It involves the selection of objects that differ only in the time of sale and determine the amount of adjustments. We did not find such objects, therefore the amount of adjustments was determined on the basis of data on monthly inflation rates for the periods of interest to us according to the formula:
where Mi is the average monthly inflation rate, Kinfl. = 1.0072
Calculation formula: Kinfl = Ksr.m.infl = const Ksr.m.infl = 1.0072
100 × Ktcrminfl 100
Table 5
2. Location.
The location of the compared objects was evaluated based on an expert assessment on a scale: “excellent”, “excellent”, “good”, “above average”, “average”, “below average”, “satisfactory”, “bad”, “very bad”. Thus, the scale consists of 8 gradations. Each gradation was estimated at 10%.
Table 6
| Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | |
| Location | above the average | the average | the average | below the average | below the average |
| Amount of adjustments, % | - | +10 | +10 | +20 | +20 |
3. Correction for physical difference.
The only significant difference between the objects of comparison and the object of assessment is the material of the enclosing structures in the object of comparison No. 3 - reinforced concrete panels, while in the object of assessment and other objects of comparison, brick was used for these purposes. This difference is estimated by us at 6%.
4. Correction for the state of the object
The state in which the object of sale and purchase is located has a direct impact on its price. The easiest way to take into account the difference in the “condition” factor is to adjust the sale price for the cost of the repair work that needs to be carried out so that the object of comparison becomes consistent with the condition of the object of evaluation.
In this case, the state of the object was assessed by an expert in the range of the following gradations: "excellent", "good", "above average", "average", "below average", "satisfactory", "poor", very poor" with the price of one gradation – 6%.
Table 7
5. Adjustment for finish quality
When evaluating the quality of finishing, six levels of quality were considered:
Top quality - class "luxury";
Improved quality - class "U";
average quality - class "C";
Satisfactory quality - class "E" (economical)
low-level quality - "N";
very bad - "Oh".
Gradation price 5%
Table 8
6. Correction for the area of the object.
In our case, we have an area range from 297.3 m2 to 3806.0 m2. According to our research, an increase in area by 1 m2 gives a decrease in the price of 1 m2 by:
(Sob.av. Sob.ots) x K, (3.3)
where: Sob.av. area of the comparison object;
Sob.ots area of the object of assessment;
K empirical coefficient, K = 0.00533
Calculation formula:
Table 9
7. Adjustment for the presence of a land plot.
The presence of a land plot is regarded as an advantage, since it is one of the potentials of the facility. Studies show that in most cases, the presence or absence of a land plot near office buildings is estimated by the market within 5% of the value of the object (in addition to the parking lot).
8. Correction for number of storeys.
In our case, objects with the number of floors from 2 to 5 are considered. Studies show that more than 3 floors are not considered an advantage. The current state of the office space market is such that investors and tenants prefer to use buildings with 2÷3 floors as office space. From the point of view of market value (value in exchange), and not investment (in use), the cost of 1 sq.m of buildings with more than 3 storeys is lower than the cost of 1 sq.m. 2÷3 storey buildings. Up to 5 ÷ 6 floors, such a reduction in cost lies within 3 ÷ 5%. For 9, 11-storey buildings, this value is 12÷15%.
9. Adjustment for the availability and quality of parking.
The presence of parking at the property is regarded as an increasing cost factor. In this case, the availability and quality of parking was assessed. The quality of parking was considered in three options:
· outdoor parking- along the street in front of the facade of the building there is a parking space within 50m; such parking was expertly estimated at 5%, (medium quality);
· organized parking - outside the road there is a special asphalted area for car parking - 10%, (good quality);
· indoor parking - parking for cars outside the gates of the enterprise (on the internal territory) - 0%, (poor).
Table 10
Final Adjustments
| Comparison elements | COMPARABLE SALES | ||||
| Object of assessment | Object No. 1 | Object No. 2 | Object No. 3 | Object No. 4 | |
| 1 | 2 | 3 | 4 | 5 | 6 |
| Selling price, rub./sq. m | –– | 33000 | 41500 | 28500 | 15500 |
| Transferred rights | Full ownership | Full ownership | Full ownership | Full ownership | Full ownership |
| Adjustment amount | ― | 0% | 0% | 0% | 0% |
| Adjusted Price | ― | 33000 | 41500 | 28500 | 15500 |
| Financing conditions | Market | Market | Market | Market | Market |
| Adjustment amount | ― | 0% | 0% | 0% | 0% |
| Price after adjustment | ― | 33000 | 41500 | 28500 | 15500 |
| Terms of sale | Commercial | Commercial | Commercial | Commercial | Commercial |
| Adjustment for terms of sale | ― | 0% | 0% | 0% | 0% |
| Price after adjustment | ― | 33000 | 41500 | 28500 | 15500 |
| Market conditions (date of sale) | ― | December 2007 | February 2007 | October 2006 | |
| Adjustment for market conditions | ― | 0,0 | +9,0 | +13,0 | +17,1 |
| Price after adjustment | ― | 33000 | 45235 | 32205 | 18151 |
Conclusion: The smallest number of adjustments was made for the object of comparison No. 3, therefore, the price of the object of assessment is taken equal to the adjusted price of the object of comparison No. 3, i.e. 32205 rub./sq.m. The found value lies in the price range from 18,151 rubles/sq.m to 45,235 rubles/sq.m. The value of the appraisal object, obtained by direct comparison of sales, will be: 32205 × 1375.8 = 44.307.639 rubles.
Thus, the value of the appraisal object is 44,307,639 rubles. (Forty-four million three hundred seven thousand six hundred thirty-nine rubles) without VAT.
2.4 Determination of the market value of real estate under the income approach
The work used the method of direct capitalization to assess the value of the property as ready for use. This method gives a fairly accurate estimate of the present value of future income in the case when the expected income stream is stable or has a constant growth (fall) rate.
Income Analysis
All income for the property being valued is projected based on the rent for premises of various functional purposes. We have conducted a market study, the purpose of which is to establish rental rates for residential premises that would be comparable to the object of assessment. This research included interviews with several owners, leasing agents and developers, studying the prices of offers and the terms of the current lease.
In the course of the preparatory work, it was found that, taking into account the location of the object and its profile, the following monthly rental price should be taken for calculation: 1175 rubles/sq.m.
Cost analysis
Operating costs are current expenses associated with the ownership and operation of the property. They are divided into constants - the value of which does not depend on the degree of occupancy of the building by users (property taxes, insurance premiums, land rent), and variables - depending on the degree of occupancy of the building (payment for electricity, water, etc.).
Property taxes include: land tax, building tax. Since the value of land was not made within the framework of this assessment, the level of its taxation should not be determined.
The property tax is 2% of the book value of the property (Book value = Cost - Depreciation).
For a newly purchased object, the initial cost is equal to the purchase price. For a newly built or under construction building, the cost is equal to construction costs, depreciation is 0. The book value of the building at the valuation date is the sum of the purchase price (or book value at the time of acquisition) of the building and the costs incurred for renovation, excluding VAT. We consider the amount of property tax to be constant, because for a building of capital group 1, the depreciation rate is 1% per year, and a change in the value of property tax can be safely neglected.
Insurance payments amount to 0.3% of the replacement cost of the finished object, excluding VAT.
In this case, the amount of utility bills is assumed to be 7% of the actual gross income (ARI).
The inclusion of facility management costs in operating costs is due to the peculiarity of the property as a source of income. Owning real estate, unlike owning a cash deposit in a bank, requires some effort to manage the property. Whether this is managed by the owner or a third party, including management costs in total costs, we acknowledge that part of the gross rental income is not generated directly by the property, but by the efforts of the manager.
For this type of facility, management costs account for 2.2% of the actual gross income.
Since the building was built in 2002 and major repairs are not required, the cost of current repairs is determined at a rate of 4% of the EIA.
Based on the available reliable data on the cost of replacing short-lived building elements that have similar characteristics to the object of assessment, a value of 3.6% of the EED was taken into account.
Other expenses typically amount to 2% of operating expenses.
Determination of the overall capitalization ratio
The capitalization ratio reflects the dependence of the value of the object on the expected income from its operation. Due to the lack of sufficient data on sales of similar properties, the capitalization rate can only be determined by the summation method, according to which the value of the capitalization rate is equal to the sum of:
SC \u003d NPb / r + R + L ± Sv.k., where
SC - capitalization rate;
NPb/r risk-free rate of return;
P is the risk premium corresponding to the investment in this asset;
L - premium for low liquidity of the object;
St. to. capital return rate.
The risk-free rate on term foreign currency deposits in banks of the highest category is 5-9% (we accept 7%).
Risk premium (P). The probability of loss of property was estimated based on information on the number of cases of loss of property in the city of Kaluga, taking into account the collected data P = 4%.
Additional risk premium – 4%.
The liquidity ratio is determined by the approximate time for the sale of this type of property, which we estimate, taking into account the current economic situation, at 0.4 years.
Kn/liq. = Kbezrisk. × sale time = 0.07 × 0.4 = 0.028 or 2.8%
The investment management risk premium is assumed to be 4.8%.
The second component of the overall capitalization ratio, the rate of return on capital or the increase/decrease in the value of the fund, is calculated as the ratio of one to the number of years required to return the invested capital.
The time it takes for the return of capital, according to the calculations of a typical investor, is 20 years, based on this, the capital recovery rate will be 5% (1/20).
At present, the situation on the market for non-residential premises in Kaluga is such that for relatively new properties with little natural wear and tear (depreciation) there is no reason to expect a decrease in their value in the foreseeable future. In addition, the cost increase is greatly influenced by the favorable location of the facility close to the city center and major highways. In this case, the investment attractiveness of the appraisal object is obvious, so the capital return rate is taken with a (-) sign.
The total capitalization ratio is:
R0 = 0.07 + 0.04 + 0.028 + 0.048 - 0.05 = 0.186
Calculation of the value of the object of appraisal using the method of direct capitalization of rental income
To calculate the potential gross income (GRP), the available monthly rental rates per year are used: 14,100 rubles/sq.m.
Thus, the PVH from the lease of the areas of the object of assessment will be: 14100 × 1375.8 = 19.398.780 rubles;
Calculation of the effective gross income (EGI) is made taking into account possible losses from underloading of delivered payments and losses in the collection of rent. For calculations, a value of 8% was taken, determined on the basis of available data from external sources and our own observations.
The calculations carried out showed that the EPD of the object of assessment is:
19.398.780 × 0.92 = 17.846.877.6 rubles
Table 11
Determination of the market value of the appraisal object using the method of direct capitalization of income
| Effective Gross Income (EVI) | RUB 17846877.60 |
| Operating expenses, | RUB 3,045,391.19 |
| including | |
| building tax | RUB 291,494.44 |
| insurance payments | RUB 53897.45 |
| · communal payments | RUB 1249281.43 |
| object management | RUB 392,631.31 |
| current repairs (4% of EVD) | RUB 713875.10 |
| Other expenses (2% of OR) | RUB 47115.76 |
| reserve for substitution (3.6% of the EVD) | RUB 642487.59 |
| Net operating income (NOI) before tax | RUB 14801486.41 |
| Net operating income (NOI) including income tax | RUB 11249129.67 |
|
Overall capitalization ratio (R0) |
0,19 |
| The value of the property being appraised is | RUB 60479191.77 |
Thus, the market value of the property, obtained using the income approach, is 60.479.191.77 rubles, or rounded 60.479.192 rubles. (Sixty million four hundred seventy nine thousand one hundred ninety two rubles) without VAT.
Chapter 3
3.1 Determination of the final value of the market value of the object of assessment
Applying various approaches to property valuation, we came to the following results:
Table 12
| Approaches (methods) | Weight coefficient | Cost, rub. |
| Cost approach (comparative unit method) | 0,35 | 25982918 |
| Market Approach (Direct Sales Comparison Method) | 0,25 | 44307639 |
| Income approach (direct income capitalization method) | 0,4 | 60479192 |
| Total cost | 1,00 | 44362607,85 |
The cost approach by weight is mainly used to evaluate objects that are unique in their type and purpose, or objects with little wear and tear. The building under appraisal belongs to the category of real estate objects with a low level of depreciation, therefore the specific weight of the market value obtained using the cost approach will have a fairly high coefficient of 0.35.
The data underlying the market approach cannot be considered absolutely reliable, and therefore the results of the market approach to estimating the value of this object must be treated with caution. Based on this, the result of the market approach is given a weighting factor of 0.25.
Earning value reflects the market behavior of a typical investor, so the result of this approach is assigned a maximum weighting factor of 0.40.
Thus, in our opinion, the following distribution of coefficients is the most objective:
Cost approach – 0.35;
· market approach – 0.25;
income approach – 0.40.
Taking into account the weight coefficients, the market value of the appraisal object as of 20.12.2007. is rounded 44.362.608 rubles. (Forty-four million three hundred sixty-two thousand six hundred and eight rubles) excluding VAT.
The value of a company's real estate is determined by its discounted future cash flows, and new value is created only when companies receive a return on invested capital that exceeds the cost of raising capital. Cost management further deepens these concepts, since in such a management system it is on them that the entire mechanism for making major strategic and operational decisions is built. Well-established value management means that all the company's aspirations, analytical methods and management techniques are directed towards one common goal: to help the company maximize its real estate value by building management decision-making on key value drivers.
Cost management is fundamentally different from the planning systems adopted in the 60s. It has ceased to be a function exclusively of the management apparatus and is designed to improve decision-making at all levels of the organization. It starts with the premise that a top-down command-and-control style of decision-making does not work, especially in large multi-business corporations. This means that lower-level managers need to learn how to use cost indicators to make smarter decisions. Cost management requires balancing the balance sheet on par with the income statement and maintaining a reasonable balance between long-term and short-term business objectives. If cost management is implemented and organized properly, the corporation reaps enormous benefits. Such management, in fact, is a continuous reorganization aimed at achieving maximum value.
For the object being evaluated, cost management is reduced to a more efficient use of available space.
The appraised building has an attic with a total area of 328.2 m2, which is currently partially used as a stationery warehouse. On the one hand, carrying out an appropriate reconstruction will make this room residential. On the other hand, in recent years, due to the expansion of cooperation between Kaluga enterprises and nonresident and foreign companies, the demand for hotel services has increased significantly. In this regard, it is proposed to carry out a comprehensive reconstruction of the attic to transfer it to the category of a residential attic, where it is planned to organize a hotel of 14 deluxe double rooms.
The cost of measures for the reconstruction of the attic is presented in Table 13.
Table 13
Estimated cost for the reconstruction of the attic
| № | Name of works | Cost, rub. |
| 1 | General construction works (dismantling) | 406.211 |
| 2 | General construction works (new) | 2.448.728 |
| 3 | Cold and hot water supply | 49.818 |
| 4 | Heating | 90.144 |
| 5 | Sewerage and plumbing equipment | 31.738 |
| 6 | Supply and exhaust ventilation and air conditioning | 67.534 |
| 7 | Electric power equipment and electric lighting | 422.402 |
| 8 | Communication device | 37.010 |
| 9 | Security and fire alarm | 114.531 |
| 10 | Automatic heating, ventilation | 7.638 |
| 11 | Room improvement | 872.640 |
| Total | 4.548.394 | |
To finance these works, it is planned to use a loan on the following terms:
· Loan amount – 5.250.000 rubles.
· Interest rate – 14% per year;
· Loan term – 1 year;
· Securing the property being valued;
· Loan repayment terms – quarterly payment of interest and principal in equal installments, i.е. for 1.866.506 rubles. at the end of each quarter.
As already noted, the hotel will consist of 14 deluxe double rooms. The cost of living in such a room in Kaluga hotels ranges from 1400 rubles. up to 2500 rub. per day. For calculations, the value of 1600 rubles is taken, since the object being evaluated is located close to the city center, but initially this building was not intended for the hotel business, which creates certain inconveniences for customers.
The investment horizon is set for 1 year, as there are no objective grounds to believe that the property being valued will not be sold after this period.
Cash flow is presented in table. fourteen.
Table 14
Cash flow in RUB
| Item of expenses | 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total for the year |
| Reconstruction | 4548394 | – | – | – | 4548394 |
| Loan service | 1866506 | 1866506 | 1866506 | 1866506 | 7466025 |
| Operating expenses | 124539 | 127030 | 129571 | 132162 | 513302 |
| income tax | - | 292073 | 291463 | 290841 | 874377 |
| Total | 6539439 | 2285609 | 2287540 | 2289509 | 13402098 |
| Item of income | 1st quarter | 2nd quarter | 3rd quarter | 4th quarter | Total for the year |
| Hospitality | – | 1344000 | 1344000 | 1344000 | 4032000 |
| Depreciation | 1299145 | 1302393 | 1305649 | 1308913 | 5216100 |
| Credit | 5250000 | – | – | – | 5250000 |
| Total | 6549145 | 2646393 | 2649649 | 2652913 | 14498100 |
| Balance | 9706 | 360784 | 362109 | 363404 | 1096002 |
The main source of income is the hotel business. At the same time, it is important to emphasize that with an excess demand for this type of service, no objective reasons for the low occupancy of rooms have been identified.
To determine how much the current market value of the property being valued will increase as a result of the recommended measures, it is advisable to use the capitalization ratio used in the income approach. This is due to the fact that this project is an investment project, i.e. focused primarily on income generation.
Consequently, the increase in the current market value of the appraisal object will be:
1.096.002 / 0.19 = 5.768.432 (rub.)
(Five million seven hundred sixty eight thousand four hundred and thirty two rubles) excluding VAT.
Conclusion
As follows from the provisions of the standards, "all methods, procedures and techniques for measuring market value, if they are based on market indicators and correctly applied, lead to the same expression of market value." At the same time, "any method based on market information is inherently comparative." Thus, according to existing standards, only the quality of information and the correct application of procedures can serve as a limitation on the use of a particular method.
In the first chapter of the work, the concept of real estate, types of real estate value, basic approaches, methods of real estate valuation, as well as problems associated with justifying the value of real estate are considered.
Real estate is physical objects with a fixed location in space and everything that is inseparably connected with them, both below the surface and above the surface of the earth, or everything that is a service item, as well as the rights, interests and benefits arising from the ownership of objects.
A real estate object is understood, firstly, as an enterprise as a whole as a property complex, and secondly, a land plot, an integral part of which may be: a building (structure) or a group of buildings; isolated water bodies, perennial plantings; engineering structures and networks; stationary structures landscaping of the territory of the site; elements of economic, transport and engineering support; other objects.
Real estate appraisal is carried out from the standpoint of three approaches: profitable, costly and comparative. Each approach allows you to emphasize certain characteristics of the object.
Each of the three considered approaches involves the use of its inherent methods in the assessment:
Method of direct capitalization of income;
Sales comparison method;
Comparative unit method.
Thus, in the event of a decrease in the efficiency of their use, real estate objects can change their purpose. This happens both as a result of depreciation of buildings and other improvements, and under the influence of trends in the real estate market.
In the second chapter, the valuation of the property was carried out using three approaches to valuation.
Each of the methods used has advantages and disadvantages.
The comparative approach provides a direct assessment of the market value, based on statistics on the real commercial real estate market. When processing the data, special measures have been taken to protect the creditor from overestimation. In this regard, the comparative approach is given the most weight.
The cost approach makes it possible to best take into account the design features and the physical condition of the object of assessment. At the same time, the information base is not perfect. The main problems are related to the valuation of land. In addition, when calculating the replacement cost, one has to rely on average conversion indices to current prices, which can lead to errors.
The income approach is based on market data and avoids some of the disadvantages of the cost approach. The main source of error in the method is the uncertainty associated with the use of forecast data on income and growth rates.
In the third chapter of the work, the results of the assessment of the market value of the property were agreed, its final value was substantiated, and recommendations were given for increasing it.
Calculations showed that the market value of the appraisal object as of 20.12.2007. is rounded 44.362.608 rubles. (Forty-four million three hundred sixty-two thousand six hundred and eight rubles) excluding VAT.
However, the proposed value management measures make it possible to increase the current market value by 5,768,432 rubles. (Five million seven hundred sixty eight thousand four hundred and thirty two rubles) without VAT.
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24. Estimated activity in the economy. Textbook / under the general editorship. Juhi V. M., Kireeva V. D. - M .: ICC "MarT", 2003. 101 p.
25. Solovyov M. M. Valuation activity (estimation of real estate): Textbook. – M.: State University Higher School of Economics, 2002
26. Simionova N., Simionov R. Valuation of the enterprise (business). – M.: March, 2004. – 464 p.
27. Tarasevich E. I. Methods for assessing real estate. St. Petersburg, 1998. - 247 p.
28. Tepman LN Valuation of real estate. - M.: UNITI, 2006. - 463 p.
29. Land management. Educational and practical guide / Ed. e. n., prof. L. I. Koshkina. – M.: VSHPP, 2004. – 520 p.
30. Fedotova M. A. How much does a business cost? Assessment methods. - M., Publishing house "Perspective", 2004
31. Friedman J., Ordway Nick. Analysis and valuation of income-generating real estate. Per. from English. – M.: Delo, 1997. – 480 p.
32. Tsypkin Yu. A., Tsukanov I. L. Legislative acts, regulatory documents and standards for valuation activities: Educational and methodological manual. – M.: Finance and statistics, 2003. 164 p.
33. Shcherbakov V. A., Shcherbakova N. A. Estimation of the cost of an enterprise (business). – M.: Omega-L, 2006. – 286 p.
34. Economics of real estate / Ed. A. B. Krutik, M. A. Gorenburgov. - M.: Lan, 2001. - 297 p.
35. Economics of real estate: Textbook. - M.: Delo, 2000
36. Avdeev A. P. Problems of real estate appraisal // Issues of appraisal. No. 1. - 2001. - p. 28-30
37. Akimova I., Biktimirova N. New approaches to the standardization of real estate valuation in the system of current legislation and real law enforcement practice // Law and Economics. - 2005. - No. 12. - from. 18-21
38. Gribovsky S. Mass real estate appraisal // Financial business. 2000. - No. 4. - from. 43-45
39. Gribovsky S. Real estate appraisal using the income approach // Problems of real estate. 2000. Issue. 2.
40. Gribovsky S. Economic and mathematical models of real estate valuation // Finance and credit. 2005. - No. 3. - from. 24-43
41. Grigoryeva I. L. Property valuation problems // Financial business. - 2004. - No. 1. - from. 48–49
42. Zelensky Yu. V. On the comparability of the results of approaches in real estate valuation - the principle of model consistency. Voprosy otsenki. 2005. - No. 4.
43. Loginov MP On the issue of real estate appraisal in Russia // EKO. - 2002. - No. 9. - from. 103–107
44. Ozerov E.S. The phenomenon of equilibrium price as the basis of the axiom of the theory of valuation // Real Estate Problems. 2000. Issue. 1. From 32–54.
45. Ozerov E.S. Economics and management of real estate. St. Petersburg: MKS, 2003.
46. Ozerov E.S. To the question of substantiation and use of the axiom of the theory of evaluation // Real Estate Problems. 2004. Issue. 1. From 3-5.
47. Patskalev A. F. Estimation of the cost of land // Issues of assessment. - 2006. - No. 1.
48. Official Website of the SBRF htpp:/www.cbr.ru
49. htpp:/www.cfin.ru
Clause 1 Article 30 of the Civil Code of the Russian Federation.
Economics of real estate / Ed. A. B. Krutik, M. A. Gorenburgov. - M.: Lan, 2001., p. 48-49
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
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 make it possible to 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 evaluating 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 organizational measures by which buyers and sellers are brought 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 began after the August 1998 crisis - the stage of ending price reductions, the beginning of stabilization and some recovery. This happened against the backdrop of a favorable development of macroeconomic indicators in the country and, in particular, low (compared to the autumn of 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, a research institute building, or a housing market for primary and secondary housing, with or 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 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 completely and independently, within the framework of the law, to control and regulate the income and expenditure part of real estate ownership, as well as to 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 the civil law one, 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 efficient 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 real estate, but is also subject to state intervention, including the reinforcement of management by 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 at hand, whether on the one hand, the cost of personnel, 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. IN financial reporting factors such 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 efficiency" .
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, customer relations, 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 followed by the company, 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. The program for determining the demand for Additional services and their demand; |
|
|
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, each of which selects certain criteria 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 cost of money factor 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 its 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. Largest Russian banks are more likely to continue lending to development projects that are in 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 amendments to the law contain two important moments. 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, on 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 residential premises market, remains the most fundamental in relation to other elements of the economy and, due to the funds raised, 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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