The Income Approach Combined with Market Prices in Forest Property Valuation

TL;DRAbstract

The aim of this paper is to find out the suitability of the income approach combined with market prices in forest property valuation, the subjects are fairly large (at least 10 hectares). The paper includes a short description of the traditional methods used in forest property valuation and their applications in Finland and the most recent empirical results on forest property valuation based on calculated expected incomes combined with market prices. Valuation of forest properties is possible using either comparison or income approaches. Both these methods can also be combined as a hybrid, which uses price information of the market and cash flow based on growth and yield models of forests. This enables you to solve the discounting rates by equaling net present values to the market prices. Such market oriented discounting rates, as investors ’ subjective or hyperbolic time preferences, can be used as a basis in the valuation of all forest growing areas. When using the income approach th

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