The cost approach answers the question: What would it cost to rebuild the building today — and what portion of value remains after accounting for age and condition? Added to the land value, this yields the preliminary cost value, which is then adjusted to current market conditions by applying a cost value factor.
The method is standardized in the ImmoWertV 2022 (§§ 35–39). The cost basis is provided by the Normalherstellungskosten (NHK 2010, standard production costs), adjusted according to regional construction cost indices and building price indices published by the Federal Statistical Office (Statistisches Bundesamt).
Cost value — simplified formula:
Cost value = (production costs − age-related depreciation) × cost value factor + land value
The cost value factor (market adjustment factor) is published by the expert committee (Gutachterausschuss) or derived from collections of purchase price data.
The approach is embedded in the valuation as a whole, described on the page for the market value report.
Where remaining useful life is the decisive point in dispute, what helps is a Remaining useful life appraisal report.
