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Valuation of market uncertainties for contaminated land

    Stephan Bartke Affiliation

Abstract

The revitalization of contaminated land carries many risks and uncertainties. This paper aims to reveal drivers of risk perception and to introduce a novel valuation method for the assessment of market-perceived risks for sites polluted by earlier use in a transparent and comprehensible procedure. International approaches to account for value deductions due to contaminations and resulting uncertainties are reviewed. Based on literature review and a national survey amongst German professional appraisers, a risk assessment methodology is elaborated, outlined and applied in a case study approach. We find that areas that have been properly decontaminated on average still have a depressed market value of 12.25%. Quantities such as location, time and feasibility of passing on risks can be combined in an algorithm to determine the absolute value reduction for a specific property to be appraised. Results should help appraisers, international investors and portfolio managers to deepen their understanding of valuation of risks associated with (previously) contaminated land.


First Publish Online: 11 Jan 2012

Keyword : Real estate appraisal, Contaminated land, Valuation of perceived uncertainties, Stigma and marketability risk, Risk scoring method

How to Cite
Bartke, S. (2012). Valuation of market uncertainties for contaminated land. International Journal of Strategic Property Management, 15(4), 356-378. https://doi.org/10.3846/1648715X.2011.633771
Published in Issue
Jan 11, 2012
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Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.