In real estate, the term 'value in use' typically refers to what?

The term 'value in use' specifically pertains to the value of a property based on how it is currently utilized by its owner. This concept takes into account the current operational benefits, revenue generation, and specific use of the property, reflecting the value it holds to the owner in meeting their needs.

In practical terms, this means that two identical properties could have different 'values in use' depending on the way each owner utilizes them. For example, a warehouse that is being actively used for storing goods may have a higher 'value in use' to a business owner than a similar warehouse that is vacant, regardless of the potential market price of the property.

Understanding 'value in use' is crucial for real estate investors and appraisers, as it helps determine the intrinsic worth of a property based on its current function rather than merely its potential sale price or tax assessment figures.