Property valuation for the commercial properties is the vital move in making commercial property decisions and transactions. In this post, we will reveal the methods used by the commercial property valuers to evaluate the property value. When and how a commercial property valuer applies the methods and approaches to determine the exact and accurate value of the property.
As the investment, buying, selling, borrowing are the factors on which the real estate property business revolves. And property valuation is the part and parcel process before taking and making any decision related to the real estate property, and that too for commercial buildings it is even going tougher.
As for residential buildings the comparables are easily available and that is not the scene with commercial buildings, the availability of few comparables, high maintenance cost and fluctuation in the current market rental prices make the commercial property valuation process tedious.
Apart from the uncontrollable factors that make the commercial property valuation tough, there are the processes with which valuers can find the commercial property easily.
The most appropriate valuation method for commercial property analysis is cost approach -
If it is difficult to find the comparable for commercial property, it is good to go with the cost approach. In this approach, the cost to build the replica of the subject property is found which includes the land value, constructions cost, and the other cost to make the replacement of the subject property. Cost analysis method is generally applied when the subject property contains unique, upgraded or special features that make it different from other properties. The total cost calculated for the property is the value of the commercial property.
The most common method to evaluate the property value is the sales comparison approach -
If comparable is available then it is advisable to use this method for commercial property valuation method. In this method, valuer finds the recently sold commercial buildings similar to the subject property from the same area. Thus with the available comparables buyer can compare the properties and find out the property value.
The third one is the income capitalisation approach - This method is for those properties which generate rental income like offices, shops, storage houses, and buildings etc. It can be apply for those properties which include buildings that are not occupied by the owner like flats, duplex, apartments, houses, as they generate the income. The valuation of such properties based on the income generated by the properties. It is basically formula based - Market value = Net Income generated/ capital rate. The net income is evaluated from the gross income deducted by the expenses to maintain the property.
Thus the property valuer can evaluate the commercial property value, with these methods.
Finding the right property valuer for the property valuation services is a little bit difficult in Australia. But when we are here, you need to go nowhere. Trusted, reliable commercial property valuation services at your doorstep. Contact us we possess a solution to your every property related queries.