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Valuing Commercial Real Estate

How Certified Property Valuers Develop Their Final Figure

How Certified Property Valuers Develop Their Final Figure

Certified property valuers bring together a complex mix of considerations into their final valuation of a property, whether this is for refinancing, selling, purchasing or insurance purposes. We take a brief look into the specialist area of commercial property valuation services and which factors contribute most towards the final figure.

 

Land and location
Primarily the valuer will visit and measure the land itself, recording its location, land area, topography, any environmental considerations and other physical measurements. Land can account for the vast majority of the property’s final value as it generally appreciates, while structures and buildings tend to depreciate. The final valuation will outline major advantages and disadvantages of the property’s location, available services as well as a description of the applicable planning zoning.

 

Building structures
The property valuer will take into account all building structures on the property and what these may be used for when valuing commercial real estate. A property valuer does not complete a whole-building assessment, so factors such as plumbing, electrical systems and so forth will not be valued or assessed.


Commercial property returns
There is one figure that all commercial property investors will be keen to know. The final commercial real estate valuation will include a calculated basis of return in the form of commercial rent per square metre of floor area. This figure will be compared to market rental research to ensure the figure is reasonable and fair for the location.

Your commercial property valuation will clarify recoverable and non-recoverable outgoings that can or cannot be passed onto the tenant, enabling you as the landlord to consider the net annual income receivable from the property. It will also include a yield figure that reflects returns for nearby comparable commercial properties: a calculation which could be crucial in your future investment decisions.

 

Other factors
Additional factors included within the valuation will typically include a statement of any proposed improvements to the property, as well as a section on “Assumptions Requiring Further Consultancy”. This will cover any assumptions that can be confirmed by consulting further with other experts such as surveyors, pest inspectors, engineers or architects. The report will also include comparable sales evidence, which covers recent similar sales in the area.

 

What should I look for in a property valuer?
When you’re choosing a commercial property valuer, confirm that they hold Certified Practising Valuer (CPV) status, which indicates that the valuation will be recognised by courts of law and other professionals and that the valuer holds the correct studies, experience and professional development to provide accurate property valuation services. At Burgess Rawson, all of our property valuers in Melbourne, Perth and Canberra are certified and widely experienced in their local areas.

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