What best describes the capitalized ground rent method?

The capitalized ground rent method is best described as an income approach to property valuation. This method focuses on the present value of future income generated from a property, specifically by capitalizing the expected ground rent income. Ground rent refers to the payment made for the right to use the land, and in this valuation method, the assessor estimates the annual ground rent income potential and applies a capitalization rate to determine the property's value.

This approach is particularly useful for properties where ground leases are involved, allowing the assessor to derive the value based on the income stream generated by leasing the land. It reflects how investors might evaluate such properties by considering the income returns relative to their assessment of risk and return on investment.

In contrast, the other methods referenced do not accurately fit the definition. For example, methods primarily for assessing residential lots or those reliant on vacant land sales data would focus more on comparable sales or market conditions rather than the capitalized income from leasing. Non-income based valuation methods would disregard the income potential altogether, which the capitalized ground rent method explicitly considers.