Valuation of airports for financial reporting: fair value?

Purpose - The purpose of the paper is to investigate issues associated with the application of international and national accounting and valuation standards to owner occupied property for financial reporting purposes. Design/methodology/approach - The regulatory framework and relevant literature are reviewed and analysed in order to hypothesise a theoretical framework, comprising an order of classification and tests for application by valuers to owner occupied property. The hypothesised approach is then tested in principle for the valuation of airports and specifically for the valuation of a part building and underlying land. Findings - While the hypothesised approach requires development through the proposition of further tests, it is found to be supported in application to both a part building, being the retailing area within an international terminal, and to the operational land underlying an airport. Research limitations/implications - The research provides a theoretical framework for the application of accounting and valuation standards to owner occupied property for financial reporting purposes and highlights limitations therein for further research. Practical implications - The hypothesised approach provides valuers with a globally consistent theoretical framework for application to the valuation of owner occupied property for financial reporting purposes. Social implications - As airports grow and move from government ownership, the measurement of their value for financial statements becomes progressively more important if a robust basis for stakeholder decision making and the optimal allocation of capital is to be provided Originality/value - The paper seeks to improve property appraisal, finance and investment skills by promoting awareness of new theories, applications and related concepts and their implications to market conditions in the context of airports.