Sensitivity Analysis for Property

Summary Uncertainty in property appraisal is inevitable. However, the treatment of uncertainty has often raised a number of problems, particularly with analysis terminology and application of tech­ nique. Sensitivity analysis is one of the tech­ niques used by property appraisers in their attempts to obtain reliable projections. This paper discusses the methods of sensitivity analy­ sis in use generally and by the property appraisal profession and proposes a simplified structured and systematic technique of selecting critical or sensitive factors for sensitivity analy­ sis in property development and investment appraisal. The proposed methodology takes into account the sensitivity of variables (macro-sen­ sitivity), elements (micro-sensitivity) and time (longitudinal sensitivity).