The value created from the expectation of future benefits relates to which principle?

The principle of anticipation is central to understanding the value derived from the expectation of future benefits. This principle posits that the value of a property is directly linked to the expected future income or benefits that it can generate. Therefore, when assessing a property, appraisers take into account not just its current condition and market dynamics, but also the anticipated future performance—such as rental income or appreciation in value—over time.

For example, if a property is expected to generate substantial rental income in the coming years, its current value is likely to be higher due to that expectation. This concept is fundamental to valuation methodologies, as it acknowledges that buyers make purchasing decisions based on what they foresee as future advantages, thus influencing the current market value.

Understanding this principle is critical for appraisers, as it helps them accurately assess how much prospective buyers are willing to pay based on predicted future benefits.