“Economic” and “functional” obsolescence

Abstract

Purpose -This paper has three principal aims: to briefly consider the term "depreciation" in the context of property values; to critically review the term "obsolescence" and two of its distinct forms; and to highlight the practical difficulties in pricing obsolescence using inflexible methodologies in a market place that is subject to evolving criteria. Design/methodology/approach -The paper critically reviews existing literature and advice from international professional bodies. Findings -The general conclusions are that despite the need to be more explicit in valuations, current methods are unable to address such detail. The guidance and advice offered by professional bodies need to be thoroughly revised. It is hoped that the progress being made in methodology will be incorporated in directed guidance to practitioners. Originality/value -The paper offers an applied examination of an issue that has an impact on many aspects of contemporary real estate consultancy services.

An indicator for decline of industrial estates

“…The differences between obsolescence and physical deterioration have been described by many authors (see e.g. Nutt et al 1976;Salway 1986;Baum 1991;Bryson 1997;Mansfield 2000;Mansfield and Pinder 2008). The debate appears to be focused on obsolescence, since physical deterioration seems to be defined more unambiguously.…”

“…First, we will elaborate literature on the obsolescence of property, e.g. Baum (1991;, Mansfield and Pinder (2008), Dunse and Jones (2005) and Salway(1986). Second, we will connect this with literature from which causes and effects of urban decline are derived (e.g.…”

“…Lichfield (1988) however regards physical or structural deterioration as an element of obsolescence. Mansfield (2000) and Mansfield and Pinder (2008) argue that some authors falsely use the term 'physical obsolescence' when actually referring to a process of physical deterioration. An important distinction between obsolescence and physical deterioration is proposed by Dunse and Jones (2005): "a key distinction between physical deterioration and obsolescence is that the latter is outside the control of property owners" (Dunse and Jones 2005:206).…”

“…Some of these external factors probably coincide with the factors believed to result in obsolescence according to Mansfield, quoted above. Mansfield and Pinder (2008) critically review different studies on obsolescence, identifying two main forms: economic and functional obsolescence. Baum (1991) uses the categorisation by Salway (1986) to distinguish between aesthetic, functional, legal and social obsolescence, which he then further classifies under either functional or aesthetic obsolescence.…”

An indicator for decline of industrial estates

“…Lichfield (1988) however regards physical or structural deterioration as an element of obsolescence. Mansfield (2000) and Mansfield and Pinder (2008) argue that some authors falsely use the term 'physical obsolescence' when actually referring to a process of physical deterioration. An important distinction between obsolescence and physical deterioration is proposed by Dunse and Jones (2005): "a key distinction between physical deterioration and obsolescence is that the latter is outside the control of property owners" (Dunse and Jones 2005:206).…”