Basis of Valuation: Factors and Methodology

Introduction

The concept of housing has been defined in the UN Habitat Series (1976, 1996, 2016) as

 “Adequate shelter that goes beyond a roof to include basic infrastructure such as water, sanitation, drainage, ventilation, lighting, and other environmental and health considerations. Housing should provide sufficient space, privacy, security, accessibility, structural stability, and durability, as well as proximity to work, essential services, and facilities at affordable cost”

This vision culminated in the New Urban Agenda, part of the United Nations Quito Declaration on Sustainable CIties and Human Settlements for All.

From these conventions, two notable indices emerged:

1. Green City Index (Siemens, 2012)

1. This index evaluates cities based on approximately 30 indicators across 8-9 categories, depending on the region.

2. City Resilience Index (Arup, 2015)

1. Supported by the Rockefeller foundation, this index measures a city’s capacity to survive, adapt, and thrive in the face of chronic stresses and acute shocks. It uses 52 indicators, assessed via 156 questions, and aggregates data into 12 framework goals.

The gap in Valuation Frameworks

While these indices address urban sustainability and resilience, no comprehensive framework exists to address the unique challenges appraisers face in valuing properties. There is no unified platform to aggregate and moderate appraisal insights into a structured index.

Introducing REVI (Real Estate Valuation Index)

REVI fills this gap by creating a professional, research driven platform that aggregates appraisers insights into a cohesive valuation framework. This tool is designed for banking and financial stakeholders, offering a standardized basis for evaluating properties during financial transactions.

The REVI approach 

REVI is built on robust research comprising:

• 2,376 coded segments

• 148 thought units

• 84 research citations

These culminate in six key factors, synthesized into a Total Interpretive Structural Model (TISM), which defined linkages and hierarchies between valuation elements.

Current Focus: Valuation through Exploration

Our valuation methodology emphasizes the analysis of comparable properties, incorporating insights from professional appraisers who bring unique experiential knowledge. These experts regularly visit and re-evaluate properties, developing a nuanced understanding of value elements through repeated exposure.

Key steps in our Valuation process:

1. Deductive Boundary Definition

1. Identify what a place is not to refine its scope

2. Consumer Perception Analysis

1. Gather insights on consumer experiences, accommodation quality, and governance structure (rules and their implementation)

3. Market exploration

1. Assess owner interactions and market dynamics to evaluate market participation.

4. Integration into REVI

1. Aggregate findings into the REVI platform for systematic value representation.