What is a yield?

The Polish Real Estate Management Act established four methods to value real estate. On the retail, office and industrial investment markets, the use of the income method is one of the most widespread. Properties generate an income which can be forecast so the following formula can be used to estimate a property’s value from its fixed income: property value = fixed annual income from the property / capitalisation rate The capitalisation rate on the commercial real estate investment market is also called the yield. As an income generated by a property is normally relatively stable, its final price can be determined by its yield. In fact, you can say that an investor is in fact purchasing the income stream generated by a property. For an investor, the yield is actually the expected gross rate of return from an investment. What determines whether a yield is high or low and whether the income stream is cheap or expensive to acquire is the investment risk of a property and the sta