Galasuyk, 2018; Andrews, 2011; Michaletz and Artemenkov, 2018) for the field of PV, and
specifically addresses its property valuation context developing an example of property
valuation under the TAPA’s Basic Pricing Equation (BPE).
PV is a field within the broader continuum of Economic measurements, which is an
interdisciplinary research area providing an overarching study of the existing micro-economic
measurement practices, some of which are now considered to be stand-alone professionally
recognized occupations (see Artemenkov et al., 2008). In particular, we concentrate on the analysis
of the distinguishing features for the following Economic measurement sub-fields: investment-
financial valuation (IFV), PV and the assessment of efficiency of investment projects (AEIP).
The succinct perspective on these fields is presented in Table I, where the three fields of
Economic measurements being analyzed, as seen, can be arranged from left to right in the
general order of the diminishing liquidity of subject assets being dealt with (IFV deals with
most liquid assets traded on generally efficient markets, while the AEIP deals with
non-tradeable operations, with PV being notionally in the middle of the continuum).
As can be seen, the PV is a field which is still evolving to establish itself internationally
as a recognized stand-alone professional occupation in many countries and clearly articulate
its body-of-knowledge vision. The International Valuation Standards Council, an
international body representing the experts and professionals in the PV field, is making
laudable efforts to consolidate the field in many directions, especially as far as holding out
for the scope of the field to include not just the real estate assets under its umbrella, but also
all other asset types, such as business as well as plant and equipment valuations.
As far as the vision for the PV field is concerned, right now, there is a propensity to
mix-and-mingle foundational visions borrowed from the contiguous areas of Economic
measurements ( from the right and, especially, left of Table I) as evidenced by a recent spate
of vision-for-valuation papers intended for PV (Black et al., 2000; Gilbertson and Preston,
2005; RICS, 2017). The approach to stand back and think explicitly about the differentiating
features of the PV field within EMs in terms of its sui generis underlying methodological
vision, public objectives, etc., is less prominent. But, we contend, it is a fruitful approach.
It may so happen that when the nature of PV within the continuum of EMs fields is more
fully grasped there will be a renewed drive to put its analytical methodology on a more
sound unified footing; thus, the path blazed in this direction by a rich filiation of research
from F. Babcock in 1930s, through R. Ratcliff and P. Wendt in 1960s, to W. Kinnard and
T. Grissom in later dayswill be continued with reference to the broaderscope of the PV field.
As we perceive it, at its most abstract, the starting point of methodological vision for PV,
its “unit of analysis,”is a (historic or planned) transaction. From the applicable set of historic
transactions (and offers), the PV valuer gleans the observed prices and asset’s economic
features. Via some methodology and techniques in common use through the field (say, the
three approaches), she/he uses them to assist in consulting on prices in prospective
transactions (“price drafting”)–as when hired by the interested parties (either or both of the
transacting agents) and with the explicit consideration of the public interest (howsoever
defined) entering into the picture.
Therefore, a comprehensive valuation theory originating from this transactional nexus and
clearly annunciating its transactional principles, apart from possessing a certain neatness of
proceeding from the very methodological get-go, will likely have a set of appealing properties,
without requiring much by way of a “protective belt”(Lakatos, 1980) for its assumptions.
By contrast, most of the current advancements in the PV field of property and business
valuations often result from mostly borrowing from the left and right of center in terms of Table I,
and thus require a lot of hedging of assumptions and by-analogy thinking vis-à-vis the public
reference market. Examples of such by-analogy borrowings in the PV context of property
valuation would include the theory of “real options”as applied to real estate (it borrows from the
IFV field) (Lucius, 2001) and the increasing adoption of the “investment valuations”in the