What principle states that value is created by the expectation of future benefit?

The principle that states value is created by the expectation of future benefit is the Principle of Anticipation. This principle is fundamental in real estate appraisal and property valuation, as it hinges on the idea that the potential for future benefits, such as rental income, appreciation in property value, or the utility derived from the property, plays a critical role in its current value.

When buyers are considering purchasing a property, they do not just look at its present state; rather, they factor in the expected future benefits that the property may provide. For instance, a property that is likely to appreciate due to upcoming developments in the area will be valued higher than one that offers no such prospects.

This concept is essential for understanding market dynamics, as it reflects how expectations about the future can significantly influence current property values. It's about recognizing that investors and owners are not solely focused on today’s benefits but are indeed motivated by predictions of what the property could yield in the future.