Which principle of value relates to the concept of 'highest and best use'?

The concept of "highest and best use" refers to the most profitable use of a property that is legally permissible, physically possible, financially feasible, and maximally productive. This principle ensures that the value assigned to a property reflects its potential to yield the highest return when utilized in the most effective way.

Surplus productivity is related to the concept of highest and best use as it describes the additional income that a property can generate when it is used in its most efficient manner compared to less optimal uses. When a property is used to its highest and best use, it can achieve a level of productivity that surpasses other potential uses, thereby enhancing its overall value.

Understanding the interplay between highest and best use and surplus productivity is crucial for real estate valuation, as it directly influences investment decisions and property development strategies.