A valuer is assessing a property in a Victorian growth corridor where surrounding vacant lots have recently sold for more than the improved value of the subject property. Which valuation principle best explains this situation?
Correct Answer
B) The principle of highest and best use
The principle of highest and best use states that a property's value is determined by its most profitable legally permissible, physically possible, and financially feasible use. In growth corridors, vacant land may be worth more than improved properties if the existing improvements do not represent the highest and best use (e.g., redevelopment for higher-density housing).
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