Browsing by Subject "kansainväliset arviointistandardit"

Determining the market value of forest properties is needed for several purposes. In Finland the most used methods for valuation of forests are summation approach, income approach and market approach. Real estate valuation methods are standardized by the International Valuation Standards Council (IVSC). The council publishes standards that have been the premise for real estate valuation also in Finland. However, standard for the valuation of forests doesn’t exist due to significant problems in every method used. From International Valuation Standards Councils perspective valuation should always be market-based. Figures for the calculations should be derived from the market. This has been problematic for forest properties as the specific forest inventory data has been too expensive and difficult to collect. The new forest inventory data system of The Finnish Forest Centre, which is based on airborne laser scanning, creates new possibilities for combining the data with the market prices. This enables a better examination of the valuation methods used and a possibility for the creation of a standardized method. The purpose of this study was to compare the attributes and suitability of the most used valuation methods when determining the market value of forest properties. Research material of this study consists of 15 representative forest property transactions (areas over 10 hectares) from Central Finland and the laser scanning based inventory data of these properties. The attributes investigated were the size of correction from total value when using summation approach, the internal rate of return in the income approach, possible net income for the near future and the accuracy of these valuation methods. In addition, taxation of forest revenues, transfer taxes, administration costs of forests and trade costs were applied in examination of these methods. Processing and calculations of data were carried out with MELA, Motti, Tforest and Excel programs. The average internal rate of return was 5,3 percent and median 4,3 percent, which is similar to previous studies. Investments in forest properties are categorized to an average risk-return investment class. The correction from total value when using summation approach was similar to previous studies as it varied from -2 to -60 percent and was -26 percent on average (and -13 percent when expectation values were left out). The possible net income from these forest properties from the period of five years could cover 64 percent of market prices; however notable differences were among properties. When taking taxes, administration and trade costs into account the average internal rate of return sets down between 3 - 4 percent. The total value correction in summation approach is only -4,5 percent on average (+12,9 percent without expectation values). The problems of the valuation methods can be seen when looking at the accuracy of the methods. Standard deviation of every method varies from 25 - 35 percent when comparing them to the market values. Notable is that with a very simple method; multiplying the growing stock with the average stumpage prices, the results are as accurate as with more complex methods. The most accurate results for the whole research material were calculated with the income approach using 5 percent interest rate. Also using the summation approach and taking taxes, administration and trade costs into account was very accurate. More research is still needed for every method. Perhaps in practical valuation tasks the market value of forest properties should be investigated using multiple methods side by side, as IVSC has proposed. The results of this study are similar to previous studies and therefore support the intention for combining the new laser scanning based forest inventory data to the market prices. The use and research of extensive and up-to-date market data of forest properties could also open new possibilities in valuation of non-market benefits.