GLOSSARY.
WHAT IS THE ERTRAGSWERTVERFAHREN?
The Ertragswertverfahren is the income approach of the German valuation ordinance for let property. The value is the land value plus the present value of the sustainable net income over the remaining useful life of the building.
HOW IT WORKS.
Example with round figures, simplified and without market adjustment:
- Gross income (annual rent): €150,000
- minus operating costs: €30,000, giving a net income of €120,000
- minus return on land: land value €1,000,000 times property yield rate 3% gives €30,000
- building net income €90,000 times present value factor for 40 years remaining useful life at 3% (approx. 23.1) gives approx. €2,080,000
- plus land value €1,000,000 gives an income value of approx. €3,080,000
WHY IT MATTERS.
For apartment buildings and commercial property, sustainable income determines the value, not construction cost. Knowing the levers, rent, costs, property yield rate and remaining useful life, explains why prices differ.
RELATED TERMS.
Would you like to know what your property is worth? Contact us.
German version: Ertragswertverfahren.
As of November 2026, AENGEVELT Research.