Abstract
Income capitalization is a widely used in commercial property for valuation, development appraisal or for project feasibility analysis. As a decision-making tool, its technical and philosophical limitations are manifest but often overlooked. If bungled, capitalization, can lead to ‘white elephant’ projects, investment losses, corporate collapse. To avoid such waste, the research investigates capitalization technical issues and philosophical conundrums. Sound capitalization practice scopes project and clarifies valuation base(s). Market comparison, risk diagnostics and analytics help render complex data to estimate yields or an appropriate discount rate. For a project feasibility analysis, supplementary salient concerns include wider strategic imperatives, indigenous land rights, stakeholder management, administrative probity and the inclusion of environmental or social spillovers.
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