Theoretical aspects of commercial real estate valuation

Real estate valuation plays an important role in many applications: government agencies need valuation for tax purposes and planning the costs and benefits of various projects, financial institutions need valuation of collateral and risk forecasting, and investors need real estate valuation. Such appraisals are still mostly done by hand, but with the growth in the number of properties and the decreasing time intervals for which appraisals are required, the task has become more complex than ever. The recent increase in quality commercial real estate data and new modeling techniques for processing it have opened up new possibilities in the field of automated valuation models (AVMs). Automated valuation systems already have examples of successful applications for residential real estate price forecasting. The lack of studies evaluating the possibilities of using AVM for forecasting commercial real estate in the Russian market determines the relevance of this work. In this paper, a theoretical study of the potential of using automated valuation models in the Russian commercial real estate market is carried out.