DEPRECIATION AND VALUATION ACCURACY

Valuation, whether for market purposes or for estimates of individual worth, are rarely proved inaccurate. However, this may be due to difficulties in proving error rather than reliability of valuation methods. If this is true, rationality is a more important test of a valuation method. Nonetheless, the potential for error can be simply illustrated by comparing valuers' assessments of value of straightforward and complex office investments. The complexity of the second example illustrated in this paper derives from the impact of depreciation, and the recommended approach is presented as a general solution to problems of valuing the increasingly common depreciating property investment.