Incans | INCANS Risk Insight: Capital Values Exit the Building, Analysis of Income Enters

For decades there have been calls for a re-think on CRE valuations. Now with the perfect storm of a data revolution, shorter leases, more operating expenses, ESG and Covid, this is the time the property valuation community could finally accept that analysis of the income is more important than capital values.

After 30 years, several books, many papers, and hundreds of presentations, Oxford professor and real estate expert Andrew Baum’s penny has finally started to drop for valuers: analysis of income is more important than capital values. The perfect storm of technological advancements leading a global data revolution, increasingly shorter leases, increased operating leverage, ESG, and Covid have accelerated the need to understand the risks associated with a commercial real estate portfolio, which has now become paramount. “The current situation is more likely to bring significant change than any situation I’ve seen in the last three decades,” says Baum.

Read the full insight here: Capital Values Exit the Building, Analysis of Income Enters