Are you considering a real estate transaction abroad? Accurately calculating the property's value is often the biggest challenge. This article shows you how to precisely calculate the international property value using the right methods and standards.
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The topic briefly and concisely
International standards (IVS, EVS) and local market knowledge are crucial for accurately calculating property value internationally.
Recognised valuation methods such as the comparative, income, intrinsic value, and DCF approaches provide a solid foundation for appraisal.
Professional appraisers and digital tools like Auctoa ImmoGPT help reduce complexity and minimize risks in foreign assessments.
The value of a property abroad is often a black box. Many owners and investors face significant challenges. Different laws and volatile markets make assessment considerably more difficult. Yet a sound valuation is essential for your decisions. Here, you will learn which factors influence international value. You will also become familiar with recognised valuation methods. This way, you can navigate confidently through complex real estate markets. You can calculate the international property value.
Global Evaluation Standards: Establishing the Basis for International Property Values
International organisations establish important standards. TEGoVA publishes the European Valuation Standards (EVS). These are applied in over 30 countries. The standards provide a framework for consistent valuations in Europe. The IVSC issues the International Valuation Standards (IVS). They are recognised by more than 100 organisations worldwide. The latest version of the IVS came into force on 31 January 2025. It takes into account current market developments. An international standardisation is crucial. It promotes transparent markets. Being familiar with these standards helps you enormously. This way, you can calculate the property value internationally more effectively. Now, let's consider the specific challenges.
Overcoming challenges: Reducing complexity in international real estate valuation
Appraising properties across borders presents many pitfalls. Each country has its own laws and tax regulations. For example, the property transfer tax varies significantly. In the EU alone, there are 27 different legal systems. Market transparency and data availability differ greatly, making direct comparisons immensely difficult. An initial, non-binding value indication can help. It provides a rough orientation within 2-3 days. For a detailed valuation, expert knowledge is essential. Auctoa's ImmoGPT can give you some initial assessments here. Local particularities are the next important point.
Understanding Local Conditions: Identifying Key Factors for Property Value Abroad
The value of land is influenced by many local factors. The location is often the most important factor of all. Land in city centres can be ten times more expensive. This is true compared to peripheral locations. Infrastructure, such as transport connections and utilities, plays a major role. Soil quality and potential contamination can also affect the value by up to 30%. [2] The permissible buildability is another critical point. Local building regulations define this. In Germany, the standard land value is updated every two years. You need to analyse these factors carefully. Only then can you accurately calculate the international land value. Now, let's move on to common valuation methods.
Important local influencing factors:
A thorough analysis of these points is crucial:
Micro and macro location of the land (e.g., proximity to centres, transport connections).
Size, shape, and topography of the land. A good layout can increase value by 15%.
Level of development (water, electricity, sewage). Fully developed plots are often 20-25% more valuable.
Soil quality and potential contamination.
Legal framework: development plans, usage restrictions (e.g., heritage protection).
Local market demand and supply. In booming regions, price increases of 5-10% per annum are possible.
Environmental factors and landscape features.
Socio-economic factors of the area (purchasing power, population development).
These details are essential for an accurate valuation.
Valuation methods in an international context: Selecting approaches for determining value
Internationally recognised methods are key to precise valuation. The comparative value method (Market Approach) analyses sale prices of similar properties. Ideally, at least 3-5 comparable properties are used for this. The income value method (Income Approach) is relevant for investment properties. It capitalises on future earnings. The cost approach method determines value. It is based on replacement costs and is often used for specialised properties. There is also the DCF method (Discounted Cash Flow), which discounts cash flows over a period typically of 5-10 years. The choice of the right valuation methodology is crucial. An Auctoa valuation often combines several methods. This leads to the highest accuracy. Next, we will examine specific methods in more detail.
Specific Procedures Under Scrutiny: Applying the DCF and Residual Value Method
The Discounted Cash Flow method (DCF) is gaining international importance. It forecasts cash flows usually over 5 to 10 years. These are then discounted. Choosing the correct discount rate is critical in this process. A deviation of just 1% can significantly alter the result. The residual value method is often used by project developers. It determines the maximum sustainable purchase price for land. It deducts all development costs from an expected sale revenue. A profit of typically 15-25% is also subtracted. These methods require detailed market knowledge. An incorrect assumption can distort the result by more than 20%. The valuation strategy must suit the property. The role of surveyors is not to be underestimated.
Overview of International Valuation Methods:
These methods are used internationally:
Sales Comparison / Market Approach: Based on the prices of recently sold, comparable land. At least 3-5 good comparisons are necessary.
Income Approach / Investment Method: Determines the value based on potential rental or lease income. Important for investment properties.
Cost Approach / Depreciated Replacement Cost: Consists of the land value and the construction costs of the buildings (less depreciation). Often used for owner-occupied or special properties.
Discounted Cash Flow (DCF) Method: Forecasts future cash flows over a specific period (often 5-15 years) and discounts them to the present day.
Residual Method: Often used to determine the maximum land value for development projects.
The choice depends on the type of property and the purpose of the valuation.
Consider German specificities: Understanding standard land value and ImmoWertV in an international comparison
In Germany, the standard land value plays a central role. Appraisal committees determine it at least every two years. The Immobilienwertermittlungsverordnung (ImmoWertV) provides the legal framework. The standard land value is an average value for a zone. It does not take into account individual property characteristics. Deviations of +/- 20% from the actual market value are therefore not uncommon. [1] For an accurate property valuation, these individual factors must be included. This is an important difference from many other countries. The professional valuation is the next step.
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Expert advice is essential for reliable international property valuation. Qualified appraisers know local markets and international standards. They are familiar with standards such as IVS or EVS. They take all relevant factors into account. They apply recognised methods correctly. A professional valuation does cost money, but it can protect against poor decisions. Losses of often over 10% of value are thus avoided. Auctoa offers you AI-supported valuations and expert knowledge. Contact us now without obligation. Or chat for free with our ImmoGPT. This gives you a solid foundation. You can securely calculate the property value internationally. The conclusion summarises the most important points.
Conclusion: Strategically and soundly calculate the international property value
What are the biggest challenges in calculating international property values?
The biggest challenges include different legal frameworks, lack of market transparency, hard-to-compare data, and the application of various national valuation methods. Thorough research and expert assistance are therefore essential.
How does location affect property value abroad?
Location is usually the dominant factor. Criteria such as connectivity, infrastructure, and neighbouring areas are important. The region's economic development and political stability also count. They can change the value significantly. In metropolises, prices per square metre can be 10 to 100 times higher. This applies in comparison to rural areas.
What documents are required for an international property valuation?
Typically, land registry excerpts, site plans, building plans (if developed), information on development, lease agreements (for investment properties), and construction permits, if applicable, are required. The exact requirements can vary depending on the country and purpose of the valuation.
Can I determine property value abroad myself online?
Online tools can provide an initial rough estimate but do not replace a professional valuation. For reliable results, especially in complex international markets, the expertise of a qualified appraiser or service provider like Auctoa with specialised tools such as ImmoGPT is recommended.
How long does an international property valuation take?
The duration depends on complexity, data availability, and the scope of the assignment. A preliminary value indication can often be given within a few days. A complete appraisal can take 2-6 weeks or longer.
What does a professional international property valuation cost?
Costs vary greatly. They depend on the country, type of property, scope of valuation, and appraiser's qualifications. Costs can range from a few hundred euros for simple indications. Complex appraisals cost several thousand euros. Request a non-binding offer from Auctoa.
Additional useful links
Bank for International Settlements (BIS) provides insights into economic and financial stability, relevant for the real estate market.
Federal Ministry of Finance provides information on taxes and financial regulations in the real estate sector.
Federal Ministry of Finance explains the division of purchase prices for properties.
Deutsche Bundesbank offers statistics and indicators for the German residential property market.
International Valuation Standards Council (IVSC) is the official website of the organisation that issues the International Valuation Standards (IVS).
RICS (Royal Institution of Chartered Surveyors) contains the International Valuation Standards (Red Book), worldwide recognized valuation guidelines.
RICS (Royal Institution of Chartered Surveyors) provides the German translation of the RICS Valuation – Red Book 2017.
BORIS-D is the central information system for standard land values in Germany.
ifo Institute offers a press release on expected price increases in the global real estate market.
FAQ
What are the biggest challenges in calculating international property values?
The greatest challenges are the varying legal frameworks, lack of market transparency, difficult-to-compare data, and the application of different national evaluation methods. Thorough research and expert assistance are therefore essential.
How does location affect property value abroad?
The location is usually the dominant factor. Criteria such as connectivity, infrastructure, and neighborhood are important. The economic development of the region and political stability also matter. They can change the value many times over. In metropolises, prices per square meter can be 10 to 100 times higher compared to rural areas.
What documents are required for an international property valuation?
Typically, land register excerpts, site plans, building plans (if developed), development information, rental agreements (for investment properties), and possibly building permits are required. The exact requirements may vary depending on the country and the purpose of the valuation.
Can I determine the property value abroad myself online?
Online tools can provide an initial rough estimate but do not replace a professional evaluation. For reliable results, especially in complex international markets, the expertise of a qualified appraiser or service provider like Auctoa, with specialized tools such as ImmoGPT, is recommended.
How long does an international property valuation take?
The duration depends on the complexity, data availability, and scope of the assignment. An initial indication of value can often be provided within a few days. A complete appraisal can take 2-6 weeks or longer.
What does a professional international property valuation cost?
The costs vary significantly. They depend on the country, type of object, scope of evaluation, and the qualifications of the appraiser. Costs can range from several hundred euros for simple indications. Complex appraisals can cost several thousand euros. Request a non-binding quote from Auctoa.
