Investment value (valeur d'investissement)

Investment value is the value a property has for a specific person, taking into account their objectives, their holding period, their target return and their tax or wealth situation. Every prospective buyer calculates, often without calling it that, their own investment value before making an offer. The European Valuation Standards 2025 define it as the value of a property to a particular owner or prospective owner, calculated on the basis of that individual’s investment criteria.

It differs from market value on one essential point: market value is the best price that the market, with all its possible buyers, would offer; investment value is the maximum price that an identified buyer would accept to pay according to their own requirements. It is used for decisions to buy, hold, develop or sell, not to fix a price enforceable against third parties.

Where the rule comes from

EVS 2, § 6 of the EVS 2025 defines investment value, describes its subjective character and requires the report to state that the basis adopted is investment value, that market value may be different, and that the document is intended only for the named client. The Charte de l’expertise en évaluation immobilière (the French property valuation charter), in Title III, § 2.2.1, draws the same distinction for income methods: for a market value, all the assumptions come from the market; for an investment value, the calculation starts from the situation of an individual investor.

In a valuation report

I collect the client’s criteria: expected return, holding period, method of financing, plans for the property. I generally build a discounted cash flow with those assumptions and present the result alongside the market value. The report states clearly the basis of value, the criteria supplied by the client and the prohibition on using the document against third parties. This value is not the one a judge, a notaire (French civil-law notary) or the French tax authorities expect: in those settings, market value applies.

Example

A shopkeeper wants to buy the freehold of the premises rented at €24,000 a year. The market value, established by comparison and capitalisation at 6.5 %, is €370,000. For the shopkeeper, the purchase removes a rent, secures the business and fits into a twenty-year holding; with a discount rate of 5 % corresponding to the cost of financing, the discounted cash flow gives €430,000. The shopkeeper’s investment value exceeds the market value by €60,000: they can outbid without that changing the market value of the premises.

Not to be confused with

Fair value between identified parties takes account of both parties, not a single buyer. A convenience price (prix de convenance) is a supplement paid by a particular buyer; it echoes the idea of investment value without being its full calculation.