What is the name for the process of calculating the estimated future value of real estate?

The process of calculating the estimated future value of real estate is referred to as real estate capitalization. This method involves evaluating the potential income that a property can generate in the future and converting that income into a present value. This calculation typically incorporates factors such as expected rental income, operating expenses, and the capitalization rate, which reflects the anticipated return on investment.

In real estate appraisal, capitalization is essential for determining the value of income-producing properties. By estimating future cash flows and applying a suitable capitalization rate, appraisers can assess the worth of property based on its ability to generate income over time. This approach is particularly relevant for investors and stakeholders seeking to understand the financial viability and value of a property in the market.