The difference between property yields and the yield on risk-free assets such as government bonds, used to gauge whether property is attractively priced relative to alternatives.
Related terms
- All-risks yield
The single capitalisation rate that reflects all the risks and growth prospects of an asset.
- Comparable evidence hierarchy
The ranking of transactional evidence by reliability, from open-market completed transactions at the top down to asking prices and hypothetical opinions; value…
- Comparable method
Valuing a property by reference to prices achieved on similar assets, with adjustments.
- Cost approach
Valuing a property as the cost to replace it, less depreciation, plus land value.
- Depreciated replacement cost (DRC)
A cost-based valuation method giving the current cost of replacing an asset new, less deductions for physical, functional, and economic obsolescence; used for…
- Depreciation
The loss in value of a building over time from physical, functional, or economic causes.
- Discounted cash flow (DCF)
A valuation that discounts projected future cash flows to present value.
- Equated yield
The internal rate of return on a property investment that accounts for expected rental growth over the holding period, used in explicit cash-flow appraisals.