Comparative Analysis of Transaction Prices and the Values of Forest Properties in Poland

Abstract

Research Highlights: In the paper, we explore systematic discrepancy between sale prices and values of forest properties in Poland. We argue that the systematic valuation bias found is partially caused by the simplified parametric appraisal methodology currently used in Poland. Background and Objectives: Most of the forests in Poland are state-owned, but in recent decades, the market for private forest properties has been dynamically growing. In the paper, we investigate the relations between the actual transaction prices, and the estimated value of forest properties in selected regions in Poland. We hypothesize that sale prices systematically deviate from valuations. An additional question arises regarding the determinants of forest property prices. We hypothesize that due to asymmetric information positive amenities are not fully capitalized in property prices in Poland. Materials and Methods: In the paper, we adopt two regression models used to investigate the valuation accuracy and bias. We test the hypothesis that valuations are unbiased estimates of transaction prices. Results: The results indicate that market prices for forest properties systematically differ from estimated values. Conclusions: Systematic deviation of forest property sales prices from market values may contribute to the imperfect information available to the market participants, especially when information is asymmetrically distributed between buyers and sellers. This may confirm the hypothesis that sellers are not fully aware of the advantages of the property being sold, and provide further explanations for large systematic differences between sales prices and valuations based on parametric valuation methods used in Poland.

Influence of Recreational, Landscape and Protective Functions on the Value of Forest, Wooded and Bushy Properties in Urbanized Areas on the Example of the Local Market of the City of Krakow

“…Ecological real estate has been given much less attention. Gaca et al (2020) studied the factors determining the value and sale price of forests with a dominant timber production function, located in the Małopolskie and Kujawsko-Pomorskie voivodships. Currently, due to the growing importance of urban forests and green areas, in particular with regard to improving the quality of living conditions in cities, one should expect not only increased acquisition of new land for such projects, but also acquisition of already arranged areas by local government entities and, in the longer term, also other investors.…”