The RICS Valuation Review – The Use Of Explicit DCF

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In 2023, the recommendations of the “RICS Independent Review of Real Estate Investment Valuations” were implemented with changes to the RICS Red Book (UK Supplement). One of the principal changes was to encourage valuers to use explicit Discounted Cash Flow models more readily where appropriate. This talk will allay any fears of prescription and discuss the circumstances where explicit DCF should be applied and the inputs and variables to consider when applying the valuation model to determine Market Value.

• Determining the appropriateness of the explicit DCF model
• The importance of “marking to market” – Market Value
• The importance of determining the inputs for an explicit valuation model
• The DCF discount rate, growth and exit yield
• The relationship between the capitalisation rate and the DCF discount rate

 Nick French, Real Estate Valuation Theurgy, Property Education