The content on this page encourages the appropriate consideration of Discounted Cash Flow (DCF) models in valuation. It is the valuer's decision, based on their professional judgement, which valuation approach, method and model is used. Use of DCF is not mandatory.

Valuation is an evolving profession. In some places, such as the UK, implicit income capitalisation models remain prevalent for the valuation of many property investment assets on a market value basis, however, explicit DCF models are being increasingly considered in appropriate circumstances.

Please note that this page will be frequently updated with new content in the coming months.

DCF practice information paper

A practical global guide covering the use of DCF valuation.

DCF basis of conclusions

A summary of responses and published conclusions covering RICS DCF valuation workstreams.

FAQs

Given the breadth and diversity of RICS Registered Valuers in the UK and around the world, RICS recognises the importance of bringing about lasting change through a holistic basket of proportionate and supportive measures, over an appropriate timeframe, rather than through any one single regulatory intervention. These measures include a global practice information covering DCF valuation, DCF web hub, upskilling programme and a review of relevant global standards.

No. It is the valuer's decision, based on their professional judgement, which valuation approach, method and model is used. Use of DCF is not mandatory (see Global Red Book VPS 5). RICS is encouraging valuers to be more explicit and transparent in valuation through appropriate consideration and application of methods.

Valuers should apply professional judgement around the selection and application of method(s) and model(s). Valuers should select valuation method(s) and model(s) that are suitable for the task. This can evolve over time and valuers should keep up with appropriate market considerations and practice. RICS is encouraging valuers to be more explicit and transparent in valuation through appropriate consideration and application of methods.

The proposals referred to in the question above are designed to be proportionate and mindful of the different valuation purposes and range of real estate investment assets globally. In some markets and locations DCF is already the most commonly adopted method for valuing investment property – irrespective of firm size. The proposals for upskilling, the DCF hub and practice information are intended to facilitate the appropriate use of DCF, but the Global Red Book standard will allow flexibility for the valuer to reflect the valuation purpose and market circumstances in their choice of valuation method and model.

Training and upskilling opportunities

A free webinar took place on 14 November 2023. Click below to view it.

 

A three-part web class is taking place on 2, 8 and 16 October


A webinar on global DCF case studies took place on 23 February 2024. Click below to view it.

Software and data

RICS notes the popularity of certain valuation modelling and data products available in the market, the use of bespoke valuation technology solutions and spreadsheet templates and models.

We are mindful of providing a balanced view on valuation software and data. RICS does not typically endorse external commercial products.

RICS is engaged with software and data providers through its valuation software principles workstream and RICS Tech Partner Programme.

Please get in touch with us at standards@rics.org with any related queries.

Research

Our global commercial property monitors are leading indicators of conditions in commercial property occupier and investor markets around the world.

This paper aims to discuss the benefits of, and challenges to, an increasing use of data in the commercial property market. The paper deals with the ownership of data, its security and regulation.

Getting involved

Join the conversation on RICS’ insight community, MyRICS (also available via the Connected Community app).

 

To stay informed with the pipeline of Valuation standards and practice information, see here:

 

To find out about further ways to get involved with RICS standards development, see here:

 

If you have any questions or feedback on this page, please contact standards@rics.org.