ABSTRACT
The growth in institutional investment in land and buildings in the 1970s provided an impetus for valuers to think about the way in which their valuation approaches related to more widely used methods of investment analysis. Expected returns can only be estimated by a consideration of the future, which is unknown. Return measures may describe the future; they may describe the present; or they may describe the past. The use of borrowing, or debt, leads to another type of initial yield measure known as the cash-on-cash yield. Equivalent yield is the average of the initial yield and the yield on reversion. When an investor purchases future rights subject to uncertainty he or she has accepted some risk. Tenant risk, sector risk, planning risk and legal risk are unsystematic and, in a portfolio context, risk reduction can be achieved through diversification. The use of risk-adjusted discount rate is the most popular approach to growth-explicit discounted cash flow appraisals.