Modern real estate appraisal activities in China started late, and the appraisal theory system adopted was basically imported from western countries. In view of the fact that the current transfer system of state-owned land use right in China is different from the private ownership of land in Britain and America, it is decided that the theoretical system of real estate appraisal, especially in practical application, should also be changed accordingly. At present, the theory and method of real estate yield and real estate valuation are not very clear. This paper expounds my personal views on this.

Real estate yield is the ratio of converting the net income of real estate into value. Different rates of return will lead to great changes in value. If the rate of return is not selected properly, the calculation results will be very different. There are not only income method, but also hypothetical development method, benchmark land price correction coefficient method, even cost method and market method for real estate valuation involving yield. This paper only discusses the theory and method of real estate yield and real estate valuation.

I. Calculation of Rate of Return

The methods to obtain the rate of return include market extraction, accumulation, investment rate of return sorting insertion, combination of mortgage and self-owned funds, combination of land and buildings, etc. The key problem of obtaining the rate of return is that the calculation caliber of the income amount should be consistent with the calculation caliber of the rate of return. This paper expounds the market extraction method and accumulation method widely used in evaluation practice.

1. Market extraction method. There are two ways of thinking in the market extraction method, that is, the net income adopts accounting profit and net cash flow.

(1) net income adopts accounting profit.

In this case, the annual depreciation expense can be reset at the end of the life of the building, which is actually an uncertain form of income, that is, v = a/r and r = a/v.

Taking rental operation as an example, it is generally believed that net income is the balance of total annual income minus depreciation expenses, maintenance expenses, management fees, related taxes and fees, interest expenses and insurance fees last year. The depreciation expense here only refers to the depreciation of buildings, which is applicable on the premise of unlimited land use. However, at present, China implements the policy of land transfer within a time limit, and the value of land decreases with the increase of service life, so the depreciation expense here is broad, and it should also include the amortization expense of the value of land use rights. For interest income and expenses, it is generally assumed that income and expenses occur at the end of the year when calculating the rate of return, but this is not the case. If the actual rental income occurs at the end of the period and the expenses occur during the period, the loan interest of the expenses incurred during the period should be considered; If the actual rental income occurs at the beginning of the period, or there is deposit income, then the deposit interest of rental income or deposit income should also be regarded as income.

(2) Net cash flow is used for income. That is, in the previous thinking, the total income of middle age does not deduct depreciation expenses. In this case, it is actually a form of limited income, that is, v = a/r [1-1(1+r) n], and r is obtained by substituting it into the known quantity.

Theoretically, it is feasible to use net profit and net cash flow for annual net income as long as the calculation caliber of income is consistent with the calculation caliber of yield. However, at present, China implements the policy of land transfer within a time limit, and there is a problem of amortization of land use rights, that is, it is difficult to determine the replacement value of buildings and land use rights in practice. In addition, the lessor is concerned about the net cash flow, not the accounting net profit. The author thinks that it is more appropriate to use the income method to evaluate real estate, and the net cash flow is the net income.

(2) accumulation method. Cumulative method, also known as safe interest rate plus risk adjusted value method, is a widely used method in evaluation practice, and its basic formula is:

Real estate yield = risk-free interest rate+risk yield

The net income corresponding to the above formula should be accounting net profit. According to the practice of using net cash flow for net income, it is necessary to investigate the depreciation expenses of buildings and the amortization expenses of land. Some people think that the yield of the house = risk-free interest rate+risk yield+depreciation rate. The author believes that it is not appropriate to simply add up the depreciation rate of buildings or the amortization rate of land. Assume that the interest rate of national debt is risk-free, because the principal is recovered at the end of the issuance of national debt. In this case, it can be assumed that the principal is recovered in equal amount within the economic life. Assuming that the economic life of real estate is 50 years, the interest rate of five-year treasury bonds issued in February 2003 is 2.62%, and its annual recovery rate is (a/f, 2.62%, 50)=0.99%, which is related to the depreciation rate of 65438. That is, the cumulative yield formula corresponding to the net cash flow is:

Real estate yield = risk-free interest rate+risk yield+average capital recovery rate (fund annual deposit coefficient)

Second, the income method

The key to the application of the income method is that the calculation caliber of the income amount should be consistent with the calculation caliber of the rate of return, and the relevant viewpoints have been expounded in the previous calculation of the rate of return. This paper expounds the application of income method based on the examples and viewpoints in the qualification examination of land valuers and related textbooks.

(A) using the income method to evaluate real estate

A textbook case is as follows:

1. Overview of appraisal object

The appraisal object is a two-story shopping mall with mixed structure, with a building area of 2 180 m2 and an area of 1250 m2, which is used for commerce.

2. Evaluation technology, method and evaluation process

According to the characteristics that the appraisal object is a shopping center, the value of the appraisal object on the appraisal base date is calculated by income method according to the appraisal purpose and market factors.

(1) Calculate the total income.

According to the geographical location of shopping malls and the rent level of similar shops around, the market comparison method is adopted to determine the rent of shopping malls and shops as 4.4 yuan/m2/day. The average occupancy rate of stores in shopping malls is 75%, and the total annual rental income is1964× 4.4× 365× 75% = 2365638 yuan.

(2) Calculate the total cost

① Annual depreciation expense. Shopping malls and shops are mixed structures with a service life of 50 years. Therefore, the depreciation period of buildings is 50 years, the residual rate is 2%, and the profit period is 50 years. According to the project cost market, the cost of such houses is 900 yuan /m2, then:

Annual depreciation expense = building construction cost ×( 1- residual rate)/service life

=900×2 180×( 1-2%)/50

= 38,455 yuan

② Annual management fee. 3% of the annual rent is accrued, and the annual management fee is 70,969 yuan.

③ Annual maintenance fee. According to 65438+ 0.5% of the construction cost, the annual maintenance fee is 29430 yuan.

④ Annual insurance premium. According to 2‰ of the building construction cost, the annual insurance premium is 3,924 yuan.

⑤ Pay taxes and fees every year. Business tax and surcharges are accrued at 5.565% of the annual rent, and the annual business tax and surcharges are 13 1648 yuan;

The property tax is accrued according to 12% of the annual rent, and the annual property tax is 283,877 yuan;

Land use tax is calculated by 5 yuan/m2. The annual land use tax is:

5× 1250=6250 yuan;

The total annual tax payment is 42 1775 yuan.

⑥ Annual interest rate. Calculated according to 6.93% of the construction cost, 6.93% is the one-year deposit interest rate. Assuming the average investment of funds during the one-year construction period, the annual deposit interest is 67,983 yuan.

The above six expenses total 632,536 yuan.

(3) Calculate the annual net income

The net income of the whole year is the total income of the whole year minus the expenses of last year, and the total expenditure is 1733 102 yuan.

(4) Determine the reduction interest rate

The lowered interest rate is rounded to 10%, the one-year loan interest rate is 6.93%, and the risk interest rate is 3%.

(5) Calculate the real estate price

Property price = 1733 102×(p/a, 10%, 50)= 17 183360 yuan.

The author believes that the above evaluation ideas have the following problems:

The first is the treatment of depreciation expenses. In this case, the income is calculated by accounting profit, and only buildings are depreciated, which does not explain the ownership of land use rights. According to China's current land transfer policy, the value of land use right should be amortized, otherwise it will get an incomplete accounting profit, which is actually inconsistent with the reduction interest rate obtained by addition.

The second is to determine the reduction interest rate. In this example, the cumulative method is used to determine the interest rate reduction. The loan interest rate is a risky interest rate, which is obviously inappropriate as a risk-free interest rate here.

The third is interest expense. In this case, it is not appropriate to calculate the interest expense according to the construction cost, because the construction cost is actually a part of the real estate value, which is evaluated, and its interest is the most fundamental part of the net income to be obtained by real estate management. It is obviously unreasonable to deduct it as an expense here. The author thinks that if income and expenses occur at the same time as their discount period, interest expenses should not be considered, just as the discount method formula in the development law assumes that there is no investment interest and development profit, because it is discounted to the evaluation benchmark date at a suitable rate of return and a suitable discount period. The income method usually assumes that the income expense occurs at a certain moment, and the actual occurrence time deviates from this assumption, so that the interest expense can be adjusted. If the objective rental income occurs at the end of the period and the expenses occur during the period, the loan interest of the expenses incurred during the period should be considered when the income and expenses are assumed to occur at the end of the period. If the objective rental income occurs at the beginning of the period, and the expenses average during the period, and it is assumed that the income expenses occur at the beginning of the period, then the expenses incurred during the period should be discounted. In fact, the income method is dynamic, while the interest expense method is static. It is not rigorous to mix the two methods together. Therefore, the author suggests that the assumed time of income and expenses should be as consistent as possible with its weighted discount period, and interest expenses can be ignored.

The fourth is the time when income and expenses occur. When evaluating real estate by income method, it is generally assumed that income and expenses occur at the end of the period, but the actual situation is that rental income generally occurs at the beginning and expenses generally occur evenly during the period. The author thinks that the hypothetical time of income and expenses must be consistent with the objective time of rent and expenses used in the evaluation, and the net income occurs at the beginning and end of the evaluation, with a difference of yield.

(B) the use of income method to assess land use rights

In the 2002 national land appraiser qualification examination teaching material "Theory and method of land valuation", the idea of using income method to evaluate land price is: first, get the price of buildings by methods other than income method, and then subtract the net income belonging to buildings from the net income of real estate to be evaluated to get the net income of land; Then the land price can be obtained by reduction at the land reduction interest rate. Its calculation formula is:

l =[a-b(R2+d)]/r 1 = a 1/r 1

Among them:

L: land price;

A: the net income generated by the building and the land within its corresponding scope (if A is depreciation income, D will be removed);

B: the price of the building;

R 1: land reduction rate;

R2: architectural reduction;

D: depreciation rate of buildings;

A 1: net land income.

According to the viewpoint of this textbook, the price B of the building in the formula is the net value after deducting depreciation from the replacement price, so that the net income generated by the building decreases year by year with the increase of service life, but if the price change factor is not considered, the actual net income A of the previous year remains basically unchanged, so that the net income a 1 of the land will increase year by year, while r 1 remains basically unchanged, and the land evaluation value L will appear with the evaluation time. The author believes that the annual net income of real estate is an expected income of real estate investment, which is determined by the real estate value in a brand-new state. Once determined, if the price change factor is not considered, it will remain basically unchanged, as will the net income of buildings and land. Therefore, B in the above formula should be the replacement value of the building, not the net value after deducting depreciation.

Thirdly, hypothetical development method.

The textbook "Theory and Method of Real Estate Valuation" designated for the qualification examination of real estate appraisers in China in 2003 points out that the most basic formula of hypothetical development method is divided into the following two types:

65438+

Value of real estate to be developed = value of real estate after development-development cost-management expenses-investment interest-sales tax-sales tax-development profit-taxes and fees that investors should pay when purchasing real estate to be developed.

2. Discount method

Value of real estate to be developed = value of real estate after development-development cost-management expenses-sales tax-sales tax-taxes and fees that investors should pay when purchasing real estate to be developed.

According to Article 5.5.6 of the Code for Real Estate Valuation: "The time value of funds must be considered when the hypothetical development method is adopted. In practice, it is easy to adopt the method of discount; When it is difficult to use the discount method, you can use the method of calculating interest. "

The author thinks that two problems should be paid attention to when using this method:

The first is the difference between the real estate development rate of return and the real estate operation rate of return. In the textbook "Theory and Method of Real Estate Valuation" designated by the National Qualification Examination for Real Estate Appraisers in 2003, capitalization rate and discount rate are two different concepts (for example, Case 7 ~ 4 in this textbook p248), and capitalization rate is the ratio of real estate net income to value. As for the discount rate in the cash flow discount method in the hypothetical development method, the textbook says that the principle of capitalization rate is the same as that in the income method, which should be equivalent to the average rate of return required by similar real estate development projects in the same market, including capital interest and development profit. The author thinks that the discount rate mentioned in the textbook is actually the real estate yield, but the yield of real estate development is different from that of real estate management, which can better reflect its essence and understand it. That is, the rate of return on real estate development is used to discount the value and development cost after the completion of development, and the rate of return on real estate operation is used to obtain real estate value through leasing operation.

Secondly, when the actual project payment and other payable expenses are consistent with the image progress, the above formula is applicable, but the actual project payment and other payable expenses are often consistent with the image progress. According to the current relevant laws and regulations, the project payment payable has the priority to be compensated. Therefore, when evaluating the value of construction in progress, the difference between the actual payment of project funds and other payables and the image progress should be included in the description of special items, or directly deducted when evaluating mortgage loans. Fourth, the cost method

At present, all kinds of textbooks are not very clear about the evaluation method of cost method to evaluate real estate and real estate integration. For example, the textbook "Theory and Method of Real Estate Valuation" (p 149) designated for the qualification examination of real estate appraisers in China in 2003 is the basic formula applicable to old real estate:

Land price of old houses = land recovery price or reconstruction cost+purchase and construction price of buildings-building depreciation

The problem with the above formula is that there is a time limit for land transfer now, and there is no revision of the remaining service life; Moreover, the repurchase price or redevelopment cost of land refers to the value after the completion of land development, while the replacement cost of land in real estate integration projects should be the value after the completion of the whole real estate development project, including loan interest and development profit during the construction period.

In practice, there is such a calculation formula:

Old house price = (land replacement cost+building replacement cost) × replacement rate

The problem with the above formula is that it is not appropriate to equate the revision of the remaining useful life of land with the renewal rate of buildings.

In my opinion, it is clearer to change it to the following formula:

Land price of old houses = land replacement cost × residual service life correction coefficient+building replacement cost × new rate.

= (land acquisition price+supporting expenses+related taxes and fees+loan interest during construction period+development profit) ××× correction coefficient of remaining service life+(prophase project cost+project cost+additional expenses+supporting expenses+loan interest during construction period+management fee of construction unit+development profit )×× innovation rate.

Coefficient × residual life correction coefficient