Regressed DCF, Real Estate Value, Discount Rate and Risk Premium Estimation. A case in Bucharest

• Main Authors: Maurizio D’Amato, Ion Anghel
• Format: Article
• Language: English
• Published: Firenze University Press 2013-08-01
• Series: Aestimum
• Online Access: https://oaj.fupress.net/index.php/ceset/article/view/6653

Discounted Cash Flow Analysis is a method used for real estate valuation and valuation of worth. The application of DCF requires the selection of an appropriate discount rate. Discount rate estimation is based on the sum between a risk free and a risk premium. A different approach is the selection of an IRR of comparable projects. The work tests the regressed DCF as a model of valuation. The method is based on regressed DCF recently proposed (D’Amato and Kauko, 2011) relies on deriving risk premium in a specific urban context starting from a small sample of DCF used to appraise commercial property in the same urban context.  Therefore it will be used regressed DCF as discount rate and  risk premium estimation. The area interested by the empirical application is near Bucharest.