Valuation & Appraisal
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Residential | Commercial | Industrial | Hospitality We provide bespoke property valuation advice across a comprehensive range of specialist sectors for lenders, funds, property companies, private individuals
- Commercial & Office Buildings
- Mixed-use Developments
- Shopping Malls
- Offices
- Retail / Shops
- Showrooms
- Labour Accommodation
- Mixed-use towers
- Under construction projects
- Master plan development Land
- Vacant Lands
- Individual Apartments
- Villas and Villa compounds
- Townhouses
- Factory building
- Warehouses
- Distribution depots
- Industrial land
- Factory sheds
- Storage and Distribution
- Industrial Units
- Manufacturing plants and, Industrial plants
- Hospitality
- Business hotels
- Leisure hotels
- Resorts
- Serviced apartments
Leisure & entertainment
Sports facilities
Waterpark
Amusement parks
Family entertainment centres
Our Expertise
There are five methods of valuation which have been recognised for a century and a half or more. The principles on which they are founded have not changed, although there have been some developments of detail.
- The five methods are:
- The Comparable approach (Market Approach)
- The Investment approach (Income Approach)
- The Residual approach
- The Profit Approach
- The Cost Approach.
The Comparable Approach (Market Approach)
Comparison can be defined as ‘the act of comparing’ and to compare as ‘to examine in order to observe resemblances or differences. The valuer isolates those characteristics of the object to be valued which in his view affect the value and then seeks another object of known, or ascertainable, value possessing some or all of those characteristics with which he may compare the object he is valuing. Where no directly comparable object exists, the valuer makes allowances of one kind or another, interpolating and extrapolating from his given data.
The Investment Approach (Income Approach)
This method rests on the thesis that the capital value of real estate property will relate directly to the income that it generates or is expected to generate cash flow. Values in the market will vary with:
- The quantum of income;
- The quality of security of the income;
- The duration of the income;
- Expectation about the future trends in the income.
The Residual Approach
This concept is employed in valuing building land/ development property, where a logical approach to land value is to estimate the ‘output’ value in terms of the price which can be expected for completed buildings and to deduct ‘input’ costs, such as site preparation, building costs, fees and finance charges.
There are various reasons why the direct comparison is inappropriate for the development property/land, such as Site and subsoil conditions, and the use and intensity of Proposed development vary between sites. For example, land use may be for offices, shops or shopping malls. Also, allowable heights vary, and range from the ground floor to hundreds.
For these reasons, the comparison is impracticable in many instances.
The selected valuation methodology considers the property from the point of view of the entrepreneur developer, whose reasoning may be hypothesised as ‘My bid for the land in its present state would be the market value after development, less the total of all costs, with a profit margin for own risk and reward’
The Profit Approach
valuation based on business profits is called in the RICS Valuation Standards ‘Trade-related Properties’. The land and building element is not separately valued because the premises are rarely sold except with the business continuing.
It is likely that if the business was not continuing, the value of the premises would be lower to take account of the need to re-establish the customer base.
Trade-Related Property means that the premises fully fitted out, furnished, stocked, and the business will be sold with the benefit of any goodwill it has accrued.
This approach requires answering the following 4 questions to determine the expected profit margin and capital value:
- What is the likely level of sales I can expect having regard to past records, trends and possible improvements in operation?
- What will be the cost of purchases, and all the various operating costs?
- What money will I have to employ in the business by way of working capital?
- How will I finance the purchase, and what return on capital do I need to cover capital costs and provide for a reasonable reward and risk in bad as well as good years?
The Cost Approach.
An approach that indicates value by using the economic principle that a buyer will pay no more for an asset than the cost to obtain a similar asset of equal utility, whether by purchase or construction. The relationship between the cost and value is rarely direct.
The cost approach will not normally be applied except where there is no market evidence, and/or profits and cash flows cannot reliably be determined.
This method does not reflect the Market Value, has limitations and is unsuitable for secured lending purposes; nevertheless, this method may be required by the financial initiations credit departments as a part of the risk assessment process.
It is properly treated as part of a test of the financial potential, risk, and financing required. All of this, which is part of the due diligence process, is aimed at testing the assumptions underlying the project.
The value of real estate investment is a subtle combination of several distinct features, the precise effect of each on the particular investment being a matter of mature judgement. Factors that impact real estate values depend on real estate asset class, whether residential, industrial or commercial. Some of those factors are:
- Design
- Location and accessibility
- Quality and specification
- Facilities
- Amenities
- Age
- Sustainability traditional
- View
- Condition (Shell and core, furnished)
- Operational expenses (I.e., Cleaning, utilities, security, periodical maintenance)
- Ownership type/quality
- Quality of lease terms and conditions (lease term, maintenance obligations, rent reviews, lease termination)
Property Valuation is a combination of both art and science. There are 7 (Seven) essential steps to value an asset.
- Determine client needs, requirements and gather documents
- Identify valuation purpose and intended users
- Check Conflict of interest and pervious involvement
- Singing terms of engagement
- Conduct due diligence and inspection
- Determine valuation method and market research
- Deliver report and discuss valuation
The job of a valuer is not simply to provide the client with a correct opinion of value. The valuer’s job is to provide a valuation opinion, which demonstrates to be reliable because it has been arrived at by following a comprehensive, structured, analytical, calculated and reasoned approach.
Property valuation for various purposes
Welcome to the world of property valuation, where numbers and potential collide to determine the worth of real estate. Whether it’s a bustling commercial space, a cozy residential abode, or an industrial powerhouse, understanding property valuation is key to making informed decisions in the ever-evolving real estate market. Join us as we delve into the different types of property valuation methods and explore why accurate valuations are crucial for various purposes.
Commercial Property Valuation
Commercial property valuation is a complex process that involves assessing the worth of properties used for business purposes. Unlike residential properties, commercial real estate’s value is often tied to its income potential. One common method used in commercial property valuation is the Income Approach, which considers factors like rental income and operating expenses to determine value.
Another approach is the Sales Comparison Method, where the property’s value is estimated by comparing it to similar properties that have been sold recently. The Cost Approach calculates a property’s value by considering the cost of replacing it with a similar one at current market prices.
Factors such as location, size, condition, and zoning regulations can all impact the valuation of commercial properties. It’s essential for investors, developers, and lenders to conduct thorough valuations to make informed decisions about buying or selling commercial real estate.
residential property valuation
Residential property valuation is a crucial aspect of the real estate market. It involves determining the worth of residential properties like houses, apartments, and condominiums. Various factors come into play when valuing a residential property, such as location, size, condition, and comparable sales in the area.
One common method used in residential property valuation is the comparable sales approach. This involves looking at similar properties that have recently sold in the same neighborhood to determine an accurate value for the subject property. Another method is the income approach, which is more commonly used for rental properties to assess potential income generation.
It’s essential to consider all aspects of a residential property when conducting a valuation to ensure accuracy. Factors like upgrades or renovations can positively impact the value, while issues like structural damage or poor maintenance can decrease it. Working with experienced appraisers or real estate agents can help ensure a fair and precise valuation for your residential property.
Introduction to Property Valuation
When it comes to property valuation, understanding the worth of a real estate asset is crucial for making informed decisions. Valuation is the process of determining the fair market value of a property, whether it’s commercial, industrial, residential, or hospitality. It involves analyzing various factors that influence the property’s value.
Property valuation plays a key role in buying, selling, leasing, financing, and investing in real estate. By assessing the current market conditions and considering the unique characteristics of each property type, valuers can provide accurate estimates that reflect its true value.
Different methods are used to determine property values based on its intended use and purpose. Whether it’s an income approach for commercial properties or a sales comparison approach for residential homes, each method has its own set of criteria and considerations.
Property valuation serves as a vital tool for stakeholders in the real estate industry to make well-informed decisions based on reliable data and analysis.
Types of Property Valuation Methods
Property valuation methods are essential for determining the worth of a property. There are various approaches used by appraisers to assess different types of properties accurately. One common method is the Sales Comparison Approach, which involves comparing the property to similar ones that have recently sold in the area.
Another method is the Cost Approach, which evaluates how much it would cost to replace or reproduce the property at its current state. The Income Capitalization Approach is typically used for income-generating properties such as rental units or commercial buildings, where value is based on potential income and expenses.
Each valuation method has its strengths and weaknesses, depending on the type of property being assessed and its purpose. It’s crucial for appraisers to consider all relevant factors when choosing an appropriate approach to ensure an accurate valuation result.
Importance of Property Valuation for Different Purposes
Property valuation is a crucial aspect for various purposes, whether you are dealing with commercial, industrial, residential, or hospitality properties. Understanding the value of a property plays a significant role in making informed decisions regarding investments, sales, purchases, or even insurance.
For investors and property owners, accurate valuation helps in determining the potential return on investment and setting competitive rental rates. It also assists in securing financing from lenders by providing them with an unbiased assessment of the property’s worth.
In terms of selling or buying properties, having a precise valuation ensures fair negotiations between buyers and sellers. It prevents underpricing or overpricing properties that could lead to financial losses for both parties involved.
Furthermore, property valuations are essential for tax assessments and estate planning purposes. By knowing the true value of assets, individuals can make strategic decisions to minimize tax liabilities and effectively plan their estates for future generations.
Factors Affecting Property Valuation
Property valuation is a complex process influenced by various factors that can significantly impact the final estimate. One crucial factor is the location of the property, as it plays a key role in determining its value within the market. The neighborhood, proximity to amenities, and overall desirability of the area all contribute to this aspect.
The size and condition of the property are also critical factors affecting valuation. Larger properties or those in pristine condition generally command higher prices compared to smaller or run-down ones. Additionally, age, architectural style, and unique features can either increase or decrease a property’s value.
Economic conditions such as interest rates, inflation rates, and job market stability can have a substantial impact on property valuations. Market trends and demand for certain types of properties can also influence their worth. It’s essential for appraisers to consider these external factors when evaluating a property accurately.
Common Mistakes in Property Valuation
When it comes to property valuation, there are several common mistakes that can significantly impact the accuracy of the final assessment. One frequent error is relying solely on outdated information or inaccurate data during the valuation process. This can lead to undervaluing or overvaluing a property.
Another mistake is overlooking important factors such as market trends, economic conditions, and zoning regulations. Ignoring these crucial elements can result in an inaccurate valuation that does not reflect the true worth of the property.
Furthermore, failing to consider the location and surroundings of a property can also be a significant misstep in the valuation process. The neighborhood, amenities, and proximity to schools or businesses all play a vital role in determining the value of a property.
Additionally, using inappropriate valuation methods or tools without considering all relevant aspects of the property can lead to errors in assessing its worth accurately. It’s essential to employ a comprehensive approach that takes into account all relevant factors for an accurate valuation.
Tips for Accurate Property Valuation
When it comes to property valuation, accuracy is key. Here are some tips that can help ensure a precise valuation of commercial, industrial, residential, or hospitality properties.
Consider hiring a professional appraiser with expertise in the specific type of property you need valuated. Their knowledge and experience can make a significant difference in determining the true value.
Additionally, gather all relevant documentation and information about the property being valued. This includes recent sales data of similar properties in the area, any renovations or improvements made to the property, and its current condition.
It’s also crucial to stay up-to-date on market trends and changes that may impact property values. Factors such as economic conditions, zoning regulations, and upcoming developments can all influence valuation outcomes.
Finally…
Conclusion
Property valuation is a crucial aspect of the real estate industry for various purposes such as buying/selling, financing, taxation, and insurance. Whether it’s commercial, industrial, residential, or hospitality properties, accurately determining their value is essential for making informed decisions. By understanding the different methods of valuation, considering the factors that can affect property value, avoiding common mistakes in the process, and following tips for accuracy, individuals can ensure they are getting an accurate assessment of their property’s worth. Property valuation helps stakeholders make sound financial decisions and plays a significant role in the overall health of the real estate market.
