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The research aims to critically assess the Income Capitalization Approach and its methodologies in property valuation.

February 8, 2026Architecture Image StudiesOpen Access

The Income Capitalization Approach for property valuation: a critical assessment of opportunities and limitations

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The research aims to critically assess the Income Capitalization Approach and its methodologies in property valuation.
Conducted a comparative analysis of income-based valuation methods in real estate.
Evaluated theoretical assumptions and operational procedures of methodologies in the ICA.
Examined critical variables including cash flows, capitalization rates, and terminal value estimation.
Integrated insights from international literature and practical reflections.
Direct Capitalization is effective in stable markets but lacks flexibility in irregular income contexts.
Discounted Cash Flow analysis offers better adaptability for complex scenarios.
The effectiveness of DCF heavily relies on the quality of its assumptions and market predictability.

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This analysis evaluates income-based property valuation methods, suggesting improvements in application and methodology.

Rocco Murro (2026) studied this question.

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