Investment value

Investment value is the value of a property to a particular investor. In the U.S. and U.K., it is equal to market value for the investor who has the capacity to put the property to good use—its highest-and-best-use, its most valuable use. For other investors with limited capacity or vision, investment value is lower because they cannot put the property to use in a way that is maximally productive.

International Valuation Standards

The current edition of International Valuation Standards (IVS 2011) defines Investment Value in a way which allows for either a higher value than market value or a lower value than market value:

Investment value - the value of an asset to the owner or a prospective owner for individual investment or operational objectives. [1]

Investment Value is a subjective measure of value, a 'value-in-use', whilst Market Value is an objective 'value-in-exchange'. As defined in IVS2, Investment Value is the valuation equivalent of the accountancy concept of Value-in-use. Whereas IFRSs define the accountancy concepts of fair value and Value-in-use in operational terms, IVSs define Market Value and Investment Value by way of generalised definitions.

References
  1. International Valuation Standards 2011
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.