Dr. Nikolai TRIFONOV, OM, BSV, FRICS, HonAAPOR, HonOKO, HonBSV
Belarusian State University
P.O.Box 11, 220029, Minsk, Belarus
Tel.: +375 29 6776776, Tel./facs.: +375 17 3343608E-mail: [email protected]
MODERN CONDITION: MARKET VALUE OR USER
VALUE?
Table of Contents
1. Introduction
2. Market value
3. Complications in Application
4. User value
5. Algorithm of calculation
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Introduction
First half of last century –
traditional approaches to valuationLast decade of the century –
new essential features in emerging marketsFrom time of financial crisis –
such features correspond to all markets
Market value
Methodology of valuation most widespread now is based on concept of market value where
a willing seller and a willing buyer decide to change a valuation subject for a calculated sum of money on the valuation date on the base of well-done marketing (IVS).
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Market value (contd.)
This is a conception of
a value in exchange
Based on the assumption of
a stability of the market
of a valuation subject
(a real estate or a business).20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Complications in Application
Approximation of a market value
looks strange for changing markets:emerging markets with its non-
transparencyall markets
The stable markets exist only in imagination
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Modern condition
Prices are not established by what has gone before or even what exists now, but by buyers’ and sellers’ future needs and expectations.
A willing seller and a willing buyer have typically ignored market value, but are interested in value in use.
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Value in UseValue in use is a value of concrete property at
concrete use for the concrete user (IVS).
In book keeping a value in use is the value of calculated future cash flows discounted to a present situation which presumably will arise from continuation of use of an active and from its sale in the end of its term of useful services (IFRS 5, app. A).
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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User valueInvestor is not interested in value in
current use, but value in the highest& best use.
We have introduced this kind of value and name it the "user value".
User value is a current value of the future incomes of valuation subject in highest& best use.
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Algorithm of calculation
1. To define the highest&best use of a valuation subject.
2. To forecast the incomes of this use, including return of the capital by sale in the end of use.
3. To predict changes of capitalization rate in the market of valuation subject.
4. To discount future incomes to the valuation date.
20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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Dr. Nikolai TrifonovManaging Director of the Council of Valuers’
Associations of the CIS
Chairman of the Belarusian Society of Valuers
Fellow of Royal Institution of Chartered Surveyors
Honourary member of Associacao Portuguese de Avaliadores de Activos Fixos
Honourary member of Assocation of Kyrgysian
Appraisers
Honourary member of Osteuropaeische Sachverstaendige Verein
Order of Merit in Valuation (Russia)20.04.23 Prof. Nikolai TRIFONOV
ERES Conference 2010 in Milan
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