What term is used to describe a property's potential to generate income?

The term that describes a property's potential to generate income is "gross potential income." This concept refers specifically to the total revenue a property could theoretically generate over a specific time period, typically one year, if it were fully leased at market rent rates without any vacancies or operational expenses considered. This figure provides a baseline for assessing the income-producing capabilities of a property and is crucial for investors and property managers as they analyze the investment and make operational decisions.

In contrast, while market value refers to what a property is worth in the current market, it does not directly relate to its income-producing potential. Investment yield, on the other hand, is more about the return on investment based on actual income and expenses over a period of time, rather than the maximum income that could be derived. Capital growth pertains to the increase in the property’s value over time and is not directly linked to income generation. Thus, the focus on gross potential income specifically highlights the earning capability of a property, making it the accurate term in this context.