Market value in a sea of values: re-examining the theory of value of land and property through the lens of capability theory

Real estate appraisal has so far been narrowly focusing on ‘value' as the transaction price of land and property. Standard appraisal practices fail to assess the value of land/property in a ‘non-standard' setting such as when the land is not registered; when land is acquired compulsorily (as opposed to wilful exchange); and when there are multiple stakeholders of the land with varying levels of claims, such as in case of community-owned land. This is attributed to inadequate attention to the theory of value; and also, the inadequacy of theories to fully comprehend plurality and multidimensionality of value of land and property. This chapter re-examines the theory of value and the possibility of using the theoretical framework of ‘capability', by Amartya Sen, to fully comprehend the plural value of land/property and explain why land is more valuable than its transaction value; and why is the value of land different for an individual, community, and the market. While paving the way for future research on above-mentioned problems concerning the ‘value' of land, this chapter revitalises the discussion on the ‘theory of value' and initiates the debate whether Sen's ‘capability theory' can provide a comprehensive, theoretically rational framework to land/property value.