Discounted cash flow (DCF) valuation

This page, the DCF practice information above, training products below and revised content in the RICS Valuation – Global Standards (Red Book) effective from 31 January 2025, reflect the coverage of valuation methods and models in the Valuation Review.

Given the breadth and diversity of RICS valuers in the UK and around the world, we recognises the importance of bringing about lasting change through a range of proportionate and supportive measures on DCF, over an appropriate timeframe, rather than through any one single regulatory intervention.

No. It is the valuer's decision, based on their professional judgement, which valuation approach, method and model is used. Use of DCF is not mandatory (see Global Red Book VPS 3). RICS is encouraging valuers to be more explicit and transparent in valuation through appropriate consideration and application of method(s) and model(s).

Valuers should apply professional judgement around the selection and application of method(s) and model(s). Valuers should select valuation method(s) and model(s) that are suitable for the task. This can evolve over time and valuers should keep up with appropriate market considerations and practice. RICS is encouraging valuers to be more explicit and transparent in valuation through appropriate consideration and application of method(s) and model(s).

The RICS coverage is designed to be proportionate and mindful of the different valuation purposes and range of investment assets globally. In some markets and locations DCF is already the most commonly adopted method for valuing investment property – irrespective of firm size. The proposals for upskilling, the DCF hub and practice information are intended to facilitate the appropriate use of DCF, but the Red Book Global standards allow flexibility for the valuer to reflect the valuation purpose and market circumstances in their choice of valuation method and model.