Property interest rate

The property interest rate is a profitability indicator in the real estate industry , which reflects the market developments for the market participants in the real estate market .

General

It describes the usual market interest rates for building plots and land rights and is therefore used to determine the market value of real estate , especially for the variants of the discounted earnings method . It is an interest rate with which the market value of real estate is given interest on average. Since the market value of a property also depends to a large extent on the respective material value and the real estate market is only slightly dependent on the capital market , the property interest rate is relatively insensitive to fluctuations in the capital market. The lower the property interest rate, the more stable the value of the property.

detection

In Germany, it is determined retrospectively by the expert committee based on past market transactions . The real estate interest rates published by the appraisal committees are not directly comparable with the ARY ( All-Risks Yield ) of the international real estate appraisal procedure, which is mainly used in the income approach procedure. In the ARY, for example, the risk of loss of rent taken into account elsewhere in the capitalized earnings method is also shown.

The property interest rate can also be used as a comparison with a market return expectation or interest rate for an alternative investment .

The simplified calculation of the property interest results as follows:

{\ displaystyle Liegenschaftszins = {\ frac {\ text {Annual net income}} {\ text {Purchase price}}}}

.

This formula takes into account neither the land value nor the remaining economic useful life (RND) of the building, which is rather indifferent from a financial mathematical point of view for properties with a very high RND.

According to the Immobilienverband Deutschland IVD, the average property interest rates in Germany in 2019 are between 0.5 and 9.0%.

Legal issues

In § 14 ImmoWertV , market adjustment factors and property interest rates are defined as follows:

With market adjustment factors and property interest rates , the general value relationships on the property market are to be recorded, unless these are to be taken into account in any other way.

Market adjustment factors are particular

Factors for adjusting the material value, which are derived from the ratio of suitable purchase prices to corresponding material values (material value factors, Section 193, Paragraph 5, Clause 2, No. 2 BauGB ),
Factors for adjusting the values of heritable building rights or building plots calculated using financial mathematics, which are derived from the ratio of suitable purchase prices to the mathematically calculated values of the corresponding building rights or building plots (heritable building rights or building plot factors).

The property interest rates ( capitalization interest rates, Section 193, Paragraph 5, Sentence 2, No. 1 of the Building Code) are the interest rates at which the market values of properties are on average based on market interest, depending on the type of property. They are to be derived on the basis of suitable purchase prices and the corresponding net income for similarly built and used properties, taking into account the remaining useful life of the buildings in accordance with the principles of the capitalized earnings method (sections 17 to 20 ImmoWertV).

rating

It is controversial whether the property interest rate actually has an independent meaning or primarily only represents a calculation variable in the income value model of ImmoWertV, which is to be determined from purchase prices by reversing the calculation procedure prescribed for the income value method. In any case, alternative calculation methods are not available. The proper use of the property-specific derived property interest rates primarily results in the market reference in the discounted earnings method.

literature

Literature on property interest rates in the catalog of the German National Library

Individual evidence

↑ Willi Alda, Joachim Hirschner: Project development in the real estate industry - Springer . ISBN 978-3-658-02019-4 , pp. 54 .
↑ Property interest rate - definition & amount. Retrieved August 15, 2019 .
↑ Assessment aid for real estate experts. Real Estate Association Germany, April 2019, accessed on August 15, 2019 .
^ Nico B. Rottke / Matthias Thomas (eds.), Immobilienwirtschaftslehre - Management , 2011, p. 794

[1] Willi Alda, Joachim Hirschner: Project development in the real estate industry - Springer . ISBN 978-3-658-02019-4 , pp. 54 .

[2] Property interest rate - definition & amount. Retrieved August 15, 2019 .

[3] Assessment aid for real estate experts. Real Estate Association Germany, April 2019, accessed on August 15, 2019 .

[4] Nico B. Rottke / Matthias Thomas (eds.), Immobilienwirtschaftslehre - Management , 2011, p. 794