What does Investment Value Mean?

Short Answer

Investment Value equates to the value of an asset under a specific set of investment parameters.

Definition

Investment Value is generally defined as:

“The value of property to a particular investor, or a class of investors, for identified investment objectives. This subjective concept relates specific property to a specific investor, group of investors, or entity with identifiable investment objectives and/or criteria.”

What it Means

Investment value can be used by potential investors interested in purchasing a real estate asset under a defined set of investment objectives, such as a specifically identified rate of return.

Whereas Market Value takes into account perceptions and motivations of the overall market, Investment Value considers the perceptions and motivations of a specified strategy.

The most used instance in which one would be concerned with Investment Value, is if an asset is being considered for purchase and the buyer wishes to know how the pricing compares with what they would like to get out of the deal in terms of return. If Investment Value takes into account their specified rate of return, they can compare the result to the anticipated price of the property and make an informed buying decision.

Investment value can be equivelent, higher, or lower than Market Value depending on the situation of the property.