1

A SHORT HISTORY OF PROPERTY VALUATION MODELS— THE 17TH TO 21ST CENTURY

Prepared for presentation at theEuropean Real Estate Society Conference,

Stockholm, Sweden,27 June 2009Rodney L Jefferies

Agricultural Management and Property Studies Department, Commerce Faculty, Lincoln University, Canterbury, New Zealand

P.O. Box 84, Lincoln University, Lincoln 7647, New Zealand

Overview of Paper•The aim of this paper is to set in context of a history — necessarily short to fit in the scope of a conference paper — concentrating on describing and examining the development of investment valuation models — not the theory beyond that necessary to explain the models in their historical context.•It does deal with methodology — but only to the extent as to how the models fit within the broader investment valuation paradigms of their day and professional generation.•This paper, based on the author’s PhD current research literature review, omits any equations and examples of the models referred to. The citations and references refer the reader to relevant sources for such details and elaborations by the originators of the models. (A Doctoral proposal was presented at this ERES Conference Doctoral Session 1.5 – A generic property interest real value investment valuation model).•Accompanying this paper is a colour chart [Following] setting out the key contributions to income valuation models historically over the last four centuries in chronological order by decades within each highlighted century, beginning in 1600 to the present time. •This shows the contributions of the various authors stratified into those from the UK, USA, and Australia/New Zealand with a brief identification of their key publications or contributions. •It highlights the historical developments in income valuation models set longitudinally against the different technologies available to valuers applying these models in practice.

Sections in PaperIntroduction

History of income valuation thought, concepts, professional practice and standardsHistorical development of investment valuation modelsInvestment versus market value

Firstly, UK property investment valuation modelsHistory of models and valuation tables in 16th–18th CenturyEquated yield modelsUK rational or logical valuation modelsReal value modelsRICS Research report into valuation methodsUK Professional response and EY endorsementReal Value Hybrid Model Discounted cash flow “models” in the UKAdvanced explicit DCF, arbitrage , split tenant-risk/market risk rate , actuarial,

convertible bond and real options modelsInter-country comparisons

4

Clay’s 17th Century Valuation Model

Based on 30 years purchase @ 3.33% p.a.

Sections in Paper ContinuedSecondly, USA investment real estate appraisal models

Capitalization models in the USA – 1930-1960sSplit-capitalization modelsBand of investment modelsEllwood’s mortgage-equity modelDiscounted cash flow (DCF) models in USABlackadar’s dynamic capitalization model

Thirdly, Australia & New ZealandSynthesis of traditional and other models from UK & USAAustralian & New Zealand adaptations of DCFs from overseas

modelsDCF model development & standards in Australia & New ZealandJefferies’ generic real value model

6

Author's slide rule from the 1960's

Influence of technology on progress

Odhner Mechanical Calculator circa 1935-45 as used by Author in Dunedin

in 1964

Sections in Paper ContinuedFourthly, The parallel influence of technology

•This first technological advance arose from the printing press – mass produced ready-reckoners, almanacs and valuation and interest tables from the early 17th Century•Next advance was the introduction of slide rules in 18th — 20th Century •Next was mechanical calculators — invented in 1822 used to 1960s•Next was electronic calculators — invented in 1957 used to present•Next was electronic computers — invented in 1960s used to present

•Application of models to multi-tenanted properties•The lag in textbook coverage •“Long live” direct capitalisation! –Progress is inevitable however!

•Valediction –This author would propose a real value model for real estate valuation

– but “he’d have to say that” – wouldn’t he?

•The time-charts Follow:

8

Technology becomes – electronic & then small and portable

Vintage Compaq Portable II -1986 As used by Author 1986-1995

Vintage Sharp Compet 364R Calculator As used by Author ex 1973 & still on his desk

Don’t worry its too small - overall view - see next slide for 17th Century only!

17th – 21st Century – Development of Income Valuation ModelsChronological Overview

NOTES: Key contributions

to land ecomomics and income

valuation models

Cla

y w

rote

"Ea

sy, a

nd N

eces

sary

Tab

les

of In

tere

st a

nd

Ren

ts F

oreb

orne

, als

o fo

r the

Val

uatio

n of

Lea

ses,

Ann

uitie

s an

d Pu

rcha

ses

eith

er in

Pre

sent

or i

n R

ever

sion

".

Petty

dev

elop

ed c

apita

lisat

ion

usin

g "y

ears

pur

chas

e".

New

ton

esta

blis

hed

theo

rem

s of

com

poun

d in

tere

stPh

illip

s pu

blis

hed

"Com

poun

d in

tere

st &

ann

uity

" &

mis

c ta

bles

for r

econ

stru

ctio

n af

ter t

he 1

666

Fire

of L

ondo

n

Smar

t pub

lishe

d "T

able

s of

Inte

rest

, Dis

coun

t Ann

uite

s &

c.Sm

ith p

ublis

hed

"Wea

lth o

f Nat

ions

"- in

cl. t

heor

y of

rent

as

func

tion

of p

rice.

Bai

ly w

rote

"Ta

bles

for t

he p

urch

asin

g an

d re

new

ing

of

leas

es"

, con

solid

atin

g ea

rlier

writ

ers

and

givi

ng m

athe

mat

ical

de

rivat

ions

of c

ompo

und

inte

rest

form

ulas

Inw

ood'

s "T

able

s fo

r the

Pur

chas

ing

of E

stat

es"

- one

of

the

mos

t fam

ous

- use

d in

to th

e 20

th C

entu

ryM

alth

us p

ublis

hed

"An

inqu

iry in

to th

e pr

ogre

ss o

f ren

t"R

icar

do p

ublis

hed

"On

the

prin

cipl

es o

f pol

itica

l ec

onom

y"

Mill

s pu

blis

hed

"Ele

men

ts o

f pol

itica

l eco

nom

y"

Mar

x pu

blis

hed

"Das

Kap

ital"

Hos

kold

pub

lishe

d "E

ngin

er's

Val

uing

Ass

ista

nt"

repu

tedl

y cr

eate

d a

capi

taliz

atio

n ra

te @

spe

cula

tive

rate

+

sink

ing

fund

@ s

afe

rate

Hur

d de

fined

urb

an v

alue

as

econ

omic

rent

or g

roun

d re

nt c

apita

lized

.Fi

sher

repu

tedl

y co

ined

the

term

"ra

te o

f cap

italiz

atio

n"

& th

e th

eory

of v

alui

ng in

com

e-pr

oduc

ing

capi

tal.

Web

bs p

ublis

hed

"Val

uatio

n of

Rea

l Pro

perty

: A

gui

de to

th

e va

luat

ion

of la

nd a

nd b

uild

ings

etc

. for

var

ious

pur

pose

s" w

hich

ca

pita

lised

net

t ann

aul

inco

me

at a

num

ber o

f ye

ars

purc

hase

.Pa

rry

publ

ishe

d "P

arry

’s V

alua

tion

and

Inve

stm

ent T

able

s "

Bab

cock

wro

te "

The

App

rais

al o

f Rea

l Est

ate"

.M

ertz

ke a

dvoc

ated

a "

built

-up

capi

taliz

atio

n ra

te".

G

rimes

& C

raig

ue a

dvoc

ated

a "

thre

e-in

tere

st-ra

te".

Fish

er w

rote

"T

heor

y of

Inte

rest

".

Thor

nson

den

ounc

ed "

Ann

uitis

ts"

advo

catin

g H

osko

ld.

Bab

cock

adv

ocat

ed "

Spl

it ca

pita

lizat

ion

rate

s" in

"Th

e A

ppra

isal

of R

eal E

stat

e".

Kni

sker

n ad

voca

ted

a "S

ingl

e ca

pita

lizat

ion

rate

".

Thor

nson

- ad

voca

ted

"Spl

it-ra

te c

apita

lizat

ion

met

hod"

w

ith s

inki

ng fu

nd a

dded

to th

e ca

pita

lizat

ion

rate

Ros

s or

igin

ated

"B

and-

of-in

vest

men

t" m

etho

d.

Rat

cliff

wro

te "

Urb

an L

and

Econ

mic

s"Jo

hn M

urra

y w

rote

"P

rinci

ples

and

Pra

ctic

e of

Val

uatio

n"

App

rais

al In

stitu

te s

tart

s "T

he A

ppra

isal

of R

eal E

stat

e"W

eim

er a

dvoc

ated

"ca

pita

lizat

ion

as o

nly

valid

met

hod"

El

lwoo

d cr

eate

d m

ortg

age-

equi

ty m

etho

d an

d pu

blis

hed

"T

able

s fo

r Rea

l Est

ate

App

rais

ing

and

Fina

ncin

g"

Mob

il O

il N

.Z. L

td. P

ublis

hes

"DC

F In

vest

men

t Ana

lysi

s"Sp

eedy

adv

ocat

es "

Inve

stm

ent b

y D

CF

met

hods

."G

raas

kam

p p

rom

oted

a p

ract

ical

com

pute

r ser

vice

for

the

inco

me

appr

oach

.G

raas

kam

p dr

ivin

g fo

rce

behi

nd E

DU

CA

RE

cour

ses

at

Wis

cons

in U

nive

rsity

Ake

rson

dev

elop

ed "

Ellw

ood

With

out A

lgeb

ra m

etho

d"K

inna

rd p

ublis

hes

"Inc

ome

Pro

perty

Val

uatio

n"Jo

hnso

n pu

blis

hed

"The

Inst

ant M

ortg

age-

Equi

ty

Tech

niqu

e"

Gre

aves

acc

redi

ted

with

“...

cat

alys

ed th

e gr

adua

l ad

optio

n of

the

DC

F m

etho

d of

val

uatio

n in

the

UK

"W

ood

advo

cate

s a

"rea

l val

ue v

alua

tion

met

hod"

Nor

th p

ublis

hes

"Rea

l est

ate

inve

stm

ent a

naly

sis

and

valu

atio

n"M

arsh

all c

reat

ed "

equa

ted

yiel

d" m

odel

als

o pr

oduc

ing

the

initi

al ta

bles

& "

Don

alds

on's

Inve

stm

ent T

able

s"

(197

9)R

ose

publ

ishe

s "R

ose’

s P

rope

rty

Val

uatio

n Ta

bles

" G

reen

wel

l W. &

. Co

calle

d fo

r a "

New

val

uatio

n m

etho

d"B

owco

ck p

ublis

hes

"Pro

pert

y V

alua

tion

Tabl

es"

Dav

idso

n pu

blis

hed

"Par

ry's

Val

uatio

n an

d In

vest

men

t Ta

bles

" 10

th E

ditio

nFi

sher

- re

fined

Ellw

ood’

s J-

Fact

ors

for s

trai

ght-l

ine

or

Syke

s pr

opos

es a

"R

atio

nal v

alua

tion

mod

el"

Trot

t cha

ired

"RIC

S R

esea

rch

proj

ect i

nto

prop

erty

va

luat

ion

met

hods

"B

lack

adar

dev

elop

ed a

“dy

nam

ic c

apita

lizat

ion”

mod

el

Mas

on p

rodu

ced

"Am

eric

an In

stitu

te o

f Rea

l Est

ate

App

rais

ers

Fina

ncia

l Tab

les"

Cro

sby

advo

cate

s a

"hyb

rid e

quat

ed y

ield

and

real

val

ue

(sho

rt-c

ut D

CF)

mod

el"

Fish

er a

nd M

artin

pub

lish

"Inc

ome

Pro

pert

y A

ppra

isal

" A

pple

by &

Wes

twoo

d pu

blis

h "T

he A

ustr

alia

n Va

luat

ion

and

Life

Ann

uity

Tab

les"

Scar

rett

pub

lishe

s "P

rope

rty V

alua

tion:

The

five

m

etho

ds"

Bro

wn

prop

osed

a "

Split

tena

nt-r

isk/

mar

ket r

isk

rate

m

odel

"A

last

air A

dair

et a

l pub

lish

"Eur

opea

n V

alua

tion

Prac

tice:

The

ory

and

Tech

niqu

e" B

aum

and

Cro

sby

publ

ish

"Pro

pert

y In

vest

men

t A

ppra

isal

"Fr

ench

& W

ard

pro

pose

d an

"A

rbitr

age

mod

el"

Jeffe

ries

publ

ishe

d "U

rban

Val

uatio

n in

New

Zea

land

- Vo

l. II"

R

owla

nd p

ublis

hes

"Pro

pert

y In

vest

men

ts a

nd T

heir

Fina

ncin

g"B

ailli

eu K

nigh

t Fra

nk -

orga

nise

d th

e "P

rope

rty

Econ

omic

Tas

k Fo

rce"

AIV

LE is

sue

"Inf

orm

atio

n Pa

per o

n U

se o

f Dis

coun

ted

Cas

h Fl

ow in

Pro

pert

y V

alua

tions

"R

ICS

- is

sues

"Th

e M

allin

son

Rep

ort -

The

Pre

side

nt’s

W

orki

ng P

arty

on

Com

mer

cial

Pro

pert

y Va

luat

ions

"W

hipp

le p

ublis

hes

"Pro

pert

y va

luat

ion

and

anal

ysis

" Je

fferie

s N

ZIV

mon

ogra

ph "

Dis

coun

ted

cash

flow

(DC

F)

valu

atio

n te

chni

ques

& s

prea

dshe

et a

pplic

atio

ns"

NZI

V is

sue

"Gui

danc

e N

ote

4: U

se o

f Dis

coun

ted

Cas

h Fl

ow T

echn

ique

s in

Pro

pert

y Va

luat

ions

."Lu

sht p

ublis

hes

"Rea

l Est

ate

Valu

atio

n"A

ndre

w &

Boo

th p

ropo

sed

an "

Act

uaria

l and

a

conv

ertib

le b

ond

mod

el"

Isaa

c an

d Te

rry

Stel

ey p

ublis

h "P

rope

rty

Val

uatio

n Te

chni

ques

"To

ny J

ohns

on e

t al p

ublis

h "

Mod

ern

Met

hods

of

Valu

atio

n - 9

th E

d"K

enne

th L

usht

pub

lishe

s "R

eal E

stat

e V

alua

tion

- Pr

inci

ples

and

App

licat

ions

"A

kers

on p

ublis

hes

AI's

"C

apita

lisat

ion

Theo

ry a

nd

Tech

niqu

es: S

tudy

Gui

de"

Schu

lte p

ublis

hes

"Rea

l Est

ate

Educ

atio

n Th

roug

hout

Th

e W

orld

: Pas

t, Pr

esen

t and

Fut

ure"

Fisc

her p

ublis

hes

"Pro

perty

Val

uatio

n M

etho

dolo

gy"

Har

vard

pub

lishe

s "I

nves

tmen

t Pro

perty

Val

uatio

n To

day"

Dav

idso

n pu

blis

hes

12th

& 1

3th

Edn

s of

"Pa

rry'

s Va

luat

ion

& In

vest

men

t Tab

les"

AI p

ublis

h 1

2th

& 1

3th

Edns

of "

The

App

rais

al o

f Rea

l Es

tate

"Fi

sher

and

Mar

tin p

ublis

h 2n

d &

3rd

Edn

s of

"In

com

e Pr

oper

ty V

alua

tion"

And

rew

Bau

m e

t al p

ublis

h 4t

h E

d o

f "Th

e In

com

e A

ppro

ach

to P

rope

rty V

alua

tion"

Sara

h Sa

yce

et a

l pub

lish

"Rea

l Est

ate

App

rais

al: F

rom

Va

lue

to W

orth

" W

hipp

le p

ublis

hes

2nd

Edn

of "

Pro

perty

val

uatio

n an

d an

alys

is"

Ree

d ed

its "

The

valu

atio

n of

real

est

ate

– th

e A

ustra

lian

editi

on o

f the

App

rais

al o

f Rea

l Est

ate

– 12

th E

dn"

Wya

tt p

ublis

hes

"Pro

pert

y va

luat

ion

in a

n ec

onom

ic

cont

ext"

Bau

m a

nd C

rosb

y pu

blis

h 3r

d E

dn o

f "Pr

oper

ty

Inve

stm

ent A

ppra

isal

"Sc

arre

tt p

ublis

hes

2nd

Edn

of "

Pro

perty

Val

uatio

n: T

he

Computers

Calculators

Side Rules

Ready-Reckoners& Interest Tables

UK Land Economists &

Valuation Model Contributors

1617

- Th

omas

Cla

y

1662

- S

ir W

illia

m P

etty

1667

- Jo

hn N

ewto

n16

67 -

Hen

ry P

hilli

ps

1726

- Jo

hn S

mar

t17

76 -

Ada

m S

mith

1802

- Fr

anci

s B

aily

1811

- W

illia

m In

woo

d18

15 -

Rob

ert M

alth

us18

17 -

Dav

id R

icar

do

1848

- Jo

hn S

tuar

t Mill

1867

- K

arl M

arx

1877

- H

enry

Hos

kold

1910

- C

lare

nce

&

Nor

man

Web

b19

13 -

Ric

hard

Par

ry

1972

- M

icha

el G

reav

es19

73 -

Ern

est W

ood

1975

/76

Phi

lip M

arsh

all

1976

- Ja

ck R

ose

1976

- G

reen

wel

l W. &

Co.

19

78 -

Phi

lip B

owco

ck19

78 -

Alic

k D

avid

son

1980

/82

- Ste

phen

Syk

es19

80/8

6 - A

ndre

w T

rott

1985

- N

eil C

rosb

y

1991

- D

ougl

as S

carr

ett

1994

- R

ICS

1995

- G

eral

d B

row

n19

95 -

Ala

stai

r Ada

ir et

al

1995

- A

ndre

w B

aum

and

N

eil C

rosb

y19

95 -

Nic

k Fr

ench

and

C

harle

s W

ard

1996

- A

ndre

w A

dam

s an

d P

hilip

Boo

th

2000

- D

avid

Isaa

c an

d Te

rry

Stel

ey

2000

- To

ny J

ohns

on e

t al

2002

- Ti

m H

arva

rd20

02 &

200

8 - A

lick

Dav

idso

n20

06 -

And

rew

Bau

m e

t al

2006

- Sa

rah

Sayc

e et

al

2007

- Pe

ter W

yatt

2008

- A

ndre

w B

aum

and

N

eil C

rosb

y20

08 -

Dou

glas

Sca

rret

t

Century/Decade 1600 1610 1620 1630 1640 1650 1660 1670 1680 1690 1700 1710 1720 1730 1740 1750 1760 1770 1780 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

USA Land Economists &

Valuation Model Contributors

Ric

hard

Hur

d - 1

903

Irvin

g Fi

sher

- 19

06

Fred

eric

k B

abco

ck -

1924

Art

hur M

ertz

ke -

1927

John

Grim

es &

W

illia

m C

raig

ue -

1928

Irvin

g Fi

sher

- 19

30Iv

an T

horn

son

- 193

2Fr

eder

ick

Bab

cock

- 19

32Ph

illip

Kni

sker

n - 1

933

Ivan

Tho

rson

- 19

36Th

urst

on R

oss

- 193

7

Ric

hard

Rat

cliff

- 19

49

App

rais

al In

stitu

te -

195

1A

rthur

Wei

mer

- 19

53Le

on E

llwoo

d - 1

959

Jam

es G

raas

kam

p - 1

969

Cha

rles

Ake

rson

- 19

70W

illia

m K

inna

rd J

nr -

1971

Gra

aska

mp

- 197

1Irv

in J

ohns

on -

1972

Li

ncol

n N

orth

- 19

73Je

ffrey

Fis

her -

197

9

Jam

es M

ason

- 19

82G

ordo

n B

lack

adar

-198

1/83

Jeffr

ey F

ishe

r and

Rob

ert M

artin

-199

1K

en L

usht

- 19

96

Ken

neth

Lus

ht -

2000

Kar

l-Ver

ner S

chul

te -

2001

Cha

rles

Ake

rson

- 20

00 &

200

9A

ppra

isal

Inst

itute

- 20

01 &

200

8Je

ffrey

Fis

her a

nd R

ober

t Mar

tin -

2005

& 2

008

Australia & New Zealand Land

Economists & Valuation Model

Contributors

John

Mur

ray

- 194

9

Mob

il O

il N

.Z. L

td. -

196

8Sq

uire

Spe

edy

- 196

8

App

leby

and

Wes

twoo

d -

1991

Bai

llieu

Kni

ght F

rank

- 19

92Je

fferie

s - 1

990

Patr

ick

Row

land

- 19

93A

IVLE

- 19

93.

Tom

Whi

pple

- 19

95R

odne

y Je

fferie

s - 1

995

NZI

V - 1

995

Rod

ney

Jeffe

ries

- 199

6/7

AIV

LE -

1997

Dom

inic

k Fi

sche

r - 2

002

Tom

Whi

pple

- 20

06R

icha

rd R

eed

- 200

7

R e a d y - R e c k o n e r s & I n t e r e s t T a b l e s

M e c h a n I c a l C a l c u l a t o r s M e c h a n I c a l C a l c u l a t o r s

S l i d e R u l e s S l i d e R u l e s

R e a d y - R e c k o n e r s & I n t e r e s t T a b l e s R e a d y - R e c k o n e r s & I n t e r e s t T a b l e s

C o m p u t e r s

E l e c t r o n i c C a l c u l a t o r s E l e c t r o n i c C a l c u l a t o r s

C o m p u t e r s

17th - 19th Century – Development of Income Valuation Models - Chronological Overview

NOTES: Key contributions

to land ecomomics and income

valuation modelsC

lay

wro

te "

Easy

, and

Nec

essa

ry T

able

s of

Inte

rest

and

R

ents

For

ebor

ne, a

lso

for t

he V

alua

tion

of L

ease

s, A

nnui

ties

and

Purc

hase

s ei

ther

in P

rese

nt o

r in

Rev

ersi

on".

Petty

dev

elop

ed c

apita

lisat

ion

usin

g "y

ears

pur

chas

e".

New

ton

esta

blis

hed

theo

rem

s of

com

poun

d in

tere

stPh

illip

s pu

blis

hed

"Com

poun

d in

tere

st &

ann

uity

" &

mis

c ta

bles

for r

econ

stru

ctio

n af

ter t

he 1

666

Fire

of L

ondo

n

Smar

t pub

lishe

d "T

able

s of

Inte

rest

, Dis

coun

t Ann

uite

s &

c.Sm

ith p

ublis

hed

"Wea

lth o

f Nat

ions

"- in

cl. t

heor

y of

rent

as

func

tion

of p

rice.

Bai

ly w

rote

"Ta

bles

for t

he p

urch

asin

g an

d re

new

ing

of

leas

es",

con

solid

atin

g ea

rlier

writ

ers

and

givi

ng m

athe

mat

ical

de

rivat

ions

of c

ompo

und

inte

rest

form

ulas

Inw

ood'

s "T

able

s fo

r the

Pur

chas

ing

of E

stat

es"

- one

of

the

mos

t fam

ous

- use

d in

to th

e 20

th C

entu

ryM

alth

us p

ublis

hed

"An

inqu

iry in

to th

e pr

ogre

ss o

f ren

t"R

icar

do p

ublis

hed

"On

the

prin

cipl

es o

f pol

itica

l ec

onom

y"

Mill

s pu

blis

hed

"Ele

men

ts o

f pol

itica

l eco

nom

y"

Mar

x pu

blis

hed

"Das

Kap

ital"

Hos

kold

pub

lishe

d "E

ngin

er's

Val

uing

Ass

ista

nt"

repu

tedl

y cr

eate

d a

capi

taliz

atio

n ra

te @

spe

cula

tive

rate

+

sink

ing

fund

@ s

afe

rate

Computers

Calculators

Side Rules

Ready-Reckoners& Interest Tables

UK Land Economists &

Valuation Model Contributors

1617

- Th

omas

Cla

y

1662

- Si

r Will

iam

Pet

ty16

67 -

John

New

ton

1667

- H

enry

Phi

llips

1726

- Jo

hn S

mar

t17

76 -

Ada

m S

mith

1802

- Fr

anci

s B

aily

1811

- W

illia

m In

woo

d18

15 -

Rob

ert M

alth

us18

17 -

Dav

id R

icar

do

1848

- Jo

hn S

tuar

t Mill

1867

- K

arl M

arx

1877

- H

enry

Hos

kold

Century/Decade 1600 1610 1620 1630 1640 1650 1660 1670 1680 1690 1700 1710 1720 1730 1740 1750 1760 1770 1780 1790 1800 1810 1820 1830 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

USA Land Economists &

Valuation Model Contributors

Australia & New Zealand Land

Economists & Valuation Model

Contributors

R e a d y - R e c k o n e r s & I n t e r e s t T a b l e s

M e c h a n I c a l C a l c u l a t o r s

S l i d e R u l e s

Chronological Overview – 17th Century

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Clay wrote "Easy, and Necessary Tables of Interest and Rents Foreborne, also for the Valuation of Leases, Annuities and Purchases either in Present or in Reversion ".

Petty developed capitalisation using "years purchase".Newton established theorems of compound interestPhillips published "Compound interest & annuity" & misc tables for reconstruction after the 1666 Fire of London

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

1617 - Thomas Clay

1662 - Sir William Petty1667 - John Newton1667 - Henry Phillips

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

S l i d e R u l e s

12

Chronological Overview – 18th Century

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Smart published "Tables of Interest, Discount Annuites &c.Smith published "Wealth of Nations"- incl. theory of rent as function of price.

Baily wrote "Tables for the purchasing and renewing of leases" , consolidating earlier writers and giving mathematical derivations of compound interest formulas

Com

puters

Calculators

Side Rules

1726 - John Smart1776 - Adam Smith

1802 - Francis Baily

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

S l i d e R u l e s

Chronological Overview – 19th Century

Baily wrote "Tables for the purchasing and renewing of leases" , consolidating earlier writers and giving mathematical derivations of compound interest formulasInwood's "Tables for the Purchasing of Estates" - one of the most famous - used into the 20th CenturyMalthus published "An inquiry into the progress of rent"Ricardo published "On the principles of political economy"

Mills published "Elements of political economy"

Marx published "Das Kapital"

Hoskold published "Enginer's Valuing Assistant" reputedly created a capitalization rate @ speculative rate + sinking fund @ safe rate

Com

puters

Calculators

Side Rules

1802 - Francis Baily

1811 - William Inwood1815 - Robert Malthus1817 - David Ricardo

1848 - John Stuart Mill

1867 - Karl Marx

1877 - Henry Hoskold

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

M e c h a n I c a l C

a l c u l a t o r s

S l i d e R u l e s

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Chronological Overview – Early to Mid 20th Century

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Hurd defined urban value as economic rent or ground rent capitalized.Fisher reputedly coined the term "rate of capitalization" & the theory of valuing income-producing capital.Webbs published "Valuation of Real Property: A guide to the valuation of land and buildings etc. for various purposes" which capitalised nett annaul income at a number of years purchase .Parry published "Parry’s Valuation and Investment Tables "Babcock wrote "The Appraisal of Real Estate".Mertzke advocated a "built-up capitalization rate". Grimes & Craigue advocated a "three-interest-rate".

Fisher wrote "Theory of Interest ".Thornson denounced "Annuitists" advocating Hoskold.Babcock advocated "Split capitalization rates" in "The Appraisal of Real Estate".Kniskern advocated a "Single capitalization rate" .Thornson - advocated "Split-rate capitalization method" with sinking fund added to the capitalization rateRoss originated "Band-of-investment" method.

Ratcliff wrote "Urban Land Econmics"John Murray wrote "Principles and Practice of Valuation"

Appraisal Institute starts "The Appraisal of Real Estate"Weimer advocated "capitalization as only valid method" Ellwood created mortgage-equity method and published "Tables for Real Estate Appraising and Financing" Mobil Oil N.Z. Ltd. Publishes "DCF Investment Analysis"Speedy advocates "Investment by DCF methods."Graaskamp promoted a practical computer service for the income approach.

Com

puters

Calculators

Side Rules

1910 - Clarence & Norman Webb1913 - Richard Parry

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

Richard Hurd - 1903Irving Fisher - 1906

Frederick Babcock - 1924Arthur Mertzke - 1927

John Grimes & William Craigue - 1928

Irving Fisher - 1930Ivan Thornson - 1932

Frederick Babcock - 1932Phillip Kniskern - 1933

Ivan Thorson - 1936Thurston Ross - 1937

Richard Ratcliff - 1949

Appraisal Institute - 1951Arthur Weimer - 1953Leon Ellwood - 1959

James Graaskamp - 1969

John Murray - 1949

Mobil Oil N.Z. Ltd. - 1968Squire Speedy - 1968

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

M e c h a n I c a l C

a l c u l a t o r sM

e c h a n I c a l C a l c u l a t o r s

S l i d e R u l e s

S l i d e R u l e s

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

E l e c t r o n i c C a l c u l a t o r s

Chronological Overview – Mid 20th Century

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Graaskamp driving force behind EDUCARE courses at Wisconsin UniversityAkerson developed "Ellwood Without Algebra method"Kinnard publishes "Income Property Valuation"Johnson published "The Instant Mortgage-Equity Technique" Greaves accredited with “... catalysed the gradual adoption of the DCF method of valuation in the UK"Wood advocates a "real value valuation method"North publishes "Real estate investment analysis and valuation"Marshall created "equated yield" model also producing the initial tables & "Donaldson's Investment Tables" (1979)Rose publishes "Rose’s Property Valuation Tables" Greenwell W. &. Co called for a "New valuation method"Bowcock publishes "Property Valuation Tables"Davidson published "Parry's Valuation and Investment Tables" 10th EditionFisher - refined Ellwood’s J-Factors for straight-line or Sykes proposes a "Rational valuation model"Trott chaired "RICS Research project into property valuation methods"Blackadar developed a “dynamic capitalization” model Mason produced "American Institute of Real Estate Appraisers Financial Tables"Crosby advocates a "hybrid equated yield and real value (short-cut DCF) model"

Fisher and Martin publish "Income Property Appraisal" Appleby & Westwood publish "The Australian Valuation and Life Annuity Tables"Scarrett publishes "Property Valuation: The five methods"Brown proposed a "Split tenant-risk/market risk rate model"Alastair Adair et al publish "European Valuation Practice: Theory and Technique" Baum and Crosby publish "Property Investment Appraisal"French & Ward proposed an "Arbitrage model"Jefferies published "Urban Valuation in New Zealand - Vol. II" Rowland publishes "Property Investments and Their Financing"Baillieu Knight Frank - organised the "Property Economic Task Force"AIVLE issue "Information Paper on Use of Discounted Cash Flow in Property Valuations"RICS - issues "The Mallinson Report - The President’s Working Party on Commercial Property Valuations"Whipple publishes "Property valuation and analysis" Jefferies NZIV monograph "Discounted cash flow (DCF) valuation techniques & spreadsheet applications"NZIV issue "Guidance Note 4: Use of Discounted Cash Flow Techniques in Property Valuations."Lusht publishes "Real Estate Valuation"Andrew & Booth proposed an "Actuarial and a convertible bond model"

Com

puters

Calculators

Side Rules

1972 - Michael Greaves1973 - Ernest Wood1975/76 Philip Marshall1976 - Jack Rose1976 - Greenwell W. & Co. 1978 - Philip Bowcock1978 - Alick Davidson

1980/82 - Stephen Sykes1980/86 - Andrew Trott1985 - Neil Crosby

1991 - Douglas Scarrett1994 - RICS1995 - Gerald Brown1995 - Alastair Adair et al1995 - Andrew Baum and Neil Crosby1995 - Nick French and Charles Ward1996 - Andrew Adams and Philip Booth

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

Charles Akerson - 1970William Kinnard Jnr - 1971

Graaskamp - 1971Irvin Johnson - 1972 Lincoln North - 1973Jeffrey Fisher - 1979

James Mason - 1982Gordon Blackadar -1981/83

Jeffrey Fisher andRobert Martin -1991

Ken Lusht - 1996

Appleby and Westwood - 1991

Baillieu Knight Frank - 1992Jefferies - 1990

Patrick Rowland - 1993AIVLE - 1993.

Tom Whipple - 1995Rodney Jefferies - 1995

NZIV - 1995Rodney Jefferies - 1996/7

AIVLE - 1997

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

C o m p u t e r s

E l e c t r o n i c C a l c u l a t o r s

E l e c t r o n i c C a l c u l a t o r s

C o m p u t e r s

Chronological Overview – Late 20th Century - 1990s

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Sykes proposes a "Rational valuation model"Trott chaired "RICS Research project into property valuation methods"Blackadar developed a “dynamic capitalization” model Mason produced "American Institute of Real Estate Appraisers Financial Tables"Crosby advocates a "hybrid equated yield and real value (short-cut DCF) model"

Fisher and Martin publish "Income Property Appraisal" Appleby & Westwood publish "The Australian Valuation and Life Annuity Tables"Scarrett publishes "Property Valuation: The five methods"Brown proposed a "Split tenant-risk/market risk rate model"Alastair Adair et al publish "European Valuation Practice: Theory and Technique" Baum and Crosby publish "Property Investment Appraisal"French & Ward proposed an "Arbitrage model"Jefferies published "Urban Valuation in New Zealand - Vol. II" Rowland publishes "Property Investments and Their Financing"Baillieu Knight Frank - organised the "Property Economic Task Force"AIVLE issue "Information Paper on Use of Discounted Cash Flow in Property Valuations"RICS - issues "The Mallinson Report - The President’s Working Party on Commercial Property Valuations"Whipple publishes "Property valuation and analysis" Jefferies NZIV monograph "Discounted cash flow (DCF) valuation techniques & spreadsheet applications"NZIV issue "Guidance Note 4: Use of Discounted Cash Flow Techniques in Property Valuations."Lusht publishes "Real Estate Valuation"Andrew & Booth proposed an "Actuarial and a convertible bond model"

Com

puters

Calculators

Side Rules

1980/82 - Stephen Sykes1980/86 - Andrew Trott1985 - Neil Crosby

1991 - Douglas Scarrett1994 - RICS1995 - Gerald Brown1995 - Alastair Adair et al1995 - Andrew Baum and Neil Crosby1995 - Nick French and Charles Ward1996 - Andrew Adams and Philip Booth

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

James Mason - 1982Gordon Blackadar -1981/83

Jeffrey Fisher andRobert Martin -1991

Ken Lusht - 1996

Appleby and Westwood - 1991

Baillieu Knight Frank - 1992Jefferies - 1990

Patrick Rowland - 1993AIVLE - 1993.

Tom Whipple - 1995Rodney Jefferies - 1995

NZIV - 1995Rodney Jefferies - 1996/7

AIVLE - 1997

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

C o m p u t e r s

E l e c t r o n i c C a l c u l a t o r s

E l e c t r o n i c C a l c u l a t o r s

C o m p u t e r s

Chronological Overview – Beginnings of 21st Century - 2000s

NOTES:

Key contributions

to land ecomom

ics and incom

e valuation m

odels

Com

puters

Calculators

Side Rules

Ready-Reckoners&

Interest Tables

UK Land

Economists &

Valuation M

odel C

ontributors

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

USA Land

Economists &

Valuation M

odel C

ontributors

Australia &

New

Zealand Land Econom

ists &

Valuation Model

Contributors

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

Fisher and Martin publish "Income Property Appraisal" Appleby & Westwood publish "The Australian Valuation and Life Annuity Tables"Scarrett publishes "Property Valuation: The five methods"Brown proposed a "Split tenant-risk/market risk rate model"Alastair Adair et al publish "European Valuation Practice: Theory and Technique" Baum and Crosby publish "Property Investment Appraisal"French & Ward proposed an "Arbitrage model"Jefferies published "Urban Valuation in New Zealand - Vol. II" Rowland publishes "Property Investments and Their Financing"Baillieu Knight Frank - organised the "Property Economic Task Force"AIVLE issue "Information Paper on Use of Discounted Cash Flow in Property Valuations"RICS - issues "The Mallinson Report - The President’s Working Party on Commercial Property Valuations"Whipple publishes "Property valuation and analysis" Jefferies NZIV monograph "Discounted cash flow (DCF) valuation techniques & spreadsheet applications"NZIV issue "Guidance Note 4: Use of Discounted Cash Flow Techniques in Property Valuations."Lusht publishes "Real Estate Valuation"Andrew & Booth proposed an "Actuarial and a convertible bond model" Isaac and Terry Steley publish "Property Valuation Techniques"Tony Johnson et al publish "Modern Methods of Valuation - 9th Ed"Kenneth Lusht publishes "Real Estate Valuation - Principles and Applications"Akerson publishes AI's "Capitalisation Theory and Techniques: Study Guide"Schulte publishes "Real Estate Education Throughout The World: Past, Present and Future"Fischer publishes "Property Valuation Methodology"Harvard publishes "Investment Property Valuation Today"Davidson publishes 12th & 13th Edns of "Parry's Valuation & Investment Tables"AI publish 12th & 13th Edns of "The Appraisal of Real Estate"Fisher and Martin publish 2nd & 3rd Edns of "Income Property Valuation"Andrew Baum et al publish 4th Ed of "The Income Approach to Property Valuation"Sarah Sayce et al publish "Real Estate Appraisal: From Value to Worth" Whipple publishes 2nd Edn of "Property valuation and analysis"Reed edits "The valuation of real estate – the Australian edition of the Appraisal of Real Estate – 12th Edn" Wyatt publishes "Property valuation in an economic context"Baum and Crosby publish 3rd Edn of "Property Investment Appraisal"Scarrett publishes 2nd Edn of "Property Valuation: The

Com

puters

Calculators

Side Rules

1991 - Douglas Scarrett1994 - RICS1995 - Gerald Brown1995 - Alastair Adair et al1995 - Andrew Baum and Neil Crosby1995 - Nick French and Charles Ward1996 - Andrew Adams and Philip Booth

2000 - David Isaac and Terry Steley 2000 - Tony Johnson et al2002 - Tim Harvard2002 & 2008 - Alick Davidson2006 - Andrew Baum et al2006 - Sarah Sayce et al2007 - Peter Wyatt 2008 - Andrew Baum and Neil Crosby2008 - Douglas Scarrett

Century/D

ecade1600

16101620

16301640

16501660

16701680

16901700

17101720

17301740

17501760

17701780

17901800

18101820

18301840

18501860

18701880

18901900

19101920

19301940

19501960

19701980

19902000

20102020

Jeffrey Fisher andRobert Martin -1991

Ken Lusht - 1996

Kenneth Lusht - 2000Karl-Verner Schulte - 2001

Charles Akerson - 2000 & 2009Appraisal Institute - 2001 & 2008

Jeffrey Fisher and Robert Martin - 2005 & 2008

Appleby and Westwood - 1991

Baillieu Knight Frank - 1992Jefferies - 1990

Patrick Rowland - 1993AIVLE - 1993.

Tom Whipple - 1995Rodney Jefferies - 1995

NZIV - 1995Rodney Jefferies - 1996/7

AIVLE - 1997

Dominick Fischer - 2002Tom Whipple - 2006Richard Reed - 2007

R e a d y - R

e c k o n e r s & I n t e r e s t T a b l e s

E l e c t r o n i c C a l c u l a t o r s

C o m p u t e r s