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More About This Title Commercial Property Valuation - Methods and CaseStudies
English
A practical guide to the best approaches for commercial real estate value assessment
Commercial Property Valuation provides a comprehensive examination of principles and methods of determining the accurate value of commercial assets. This invaluable resource covers all key elements of commercial property valuation, including valuation queries, real estate report structure, market analysis, capitalization and discount rates estimation, and more. This book details the economic characteristics unique to commercial property and illustrates property-specific risk factors and mitigation strategies. Drawing from years of professional and academic experience, the authors provide accurate information on multiple valuation approaches suitable for commercial real estate such as sales comparison, income capitalization and residual land value. Favoring real-world practicality over complex formulas, this book provides a powerful set of tools to assist readers in selecting and applying the best valuation approach to various situations. Actual case studies of office buildings, hotels, high street retails, and residential developments allow readers to understand and apply appropriate valuation methodologies.
Commercial property is a major investment class that offers abundant opportunities but poses unique risks. Thorough and inclusive knowledge is essential to success in this complex and competitive sector of real estate. This book provides expert coverage of critical topics allowing readers to:
- Identify the unique economic characteristics and potential risks of commercial real estate valuation and investment
- Focus on methods specific to commercial real estate valuation
- Learn how to select and apply the appropriate valuation method in a variety of scenarios
- Access sample Excel spreadsheets and ancillary online resources including slides and useful Internet links
Commercial Property Valuation is an essential resource for investors, appraisers, consultants, accountants, and students in real estate courses.
English
About the Authors
Foreword by Andrew Baum
Foreword by Vincent Vinit
Preface
1 Introduction to Property Valuation
1.1 Determining the valuation requirement
1.1.1 The subject of the valuation
1.1.2 Purpose of the valuation
1.1.3 Value to be estimated
1.1.4 Valuation date
1.2 Definitions of value
1.2.1 Market Value
1.2.2 Investment Value
1.3 Valuation associations, codes and standards
2 Economic characteristics and elements of risks of properties
2.1 Characteristics of property investments
2.1.1 Building and Land
2.1.2 Use of Space and investment asset
2.1.3 Owners and Users
2.1.4 Business perspective
2.1.5 Location
2.2 Categories of property investments
2.2.1 Development Projects
2.2.2 Income-producing Properties
2.2.3 Trading Operations
2.3 Skills in asset and investment management
2.4 Economic classification of properties
2.4.1 Property classification criteria
2.4.2 Macro categories of properties
2.5 A simple definition of risk
2.6 Common risk elements in real estate investment
2.6.1 Capital market
2.6.2 Liquidity
2.6.3 Financial structure
2.6.4 Regulatory
2.6.5 Location
2.6.6 Intended use and type of properties
2.7 Development Projects
2.7.1 Authorisation
2.7.2 Environmental
2.7.3 Construction-related
2.7.4 Market
2.8 Income-producing Properties
2.8.1 Physical and technical features
2.8.2 Management and market
2.8.3 Rental and contractual situation
3 Market Analysis
3.1 Economic analysis
3.2 Analysis of the property market
3.2.1 Comparative data and valuation method
3.2.2 Characteristics of the comparative factors and information sources
4 A new simple classification of Valuation Methods
4.1 Choice of valuation method
4.2 Depreciated Cost Approach Methods
4.2.1 Introduction
4.2.2 Description
4.2.3 Use, advantages and limitations of the Depreciated Cost Approach
5 Sales Comparison Approach Methods
5.1 Approach and application criteria
5.2 Direct Comparison Approach
5.3 Hedonic Pricing Model
6 Income Capitalisation Comparison Approach Methods
6.1 Approach and application criteria
6.2 Direct Capitalisation Approach
6.2.1 The Direct Capitalisation Approach calculation algorithm
6.2.2 Profit and loss account of an Income-producing Property
6.2.3 Use, advantages and limitations of the Direct Capitalisation Approach
6.2.4 Application of the Direct Capitalisation Approach
6.3 Discounted Cash Flow Approach
6.3.1 Choosing the time horizon
6.3.2 Estimating the cash flows
6.3.3 Estimating the Terminal Value
6.3.4 Discounting the cash flows and calculating the asset value
6.3.5 Use, advantages and limitations of the Discounted Cash Flow Approach
6.4 Residual Value Methods
6.4.1 Introduction
6.4.2 Single Period Residual Value Approach
6.4.3 Multiple Periods Residual Value Approach
7 Property Return Rates
7.1 Measuring the return on a property investment
7.2 Rates and capital market
7.3 Cap rate
7.3.1 Definition and description of the cap rate
7.3.2 Going-in & going-out cap rate
7.4 Discount rate
7.4.1 Definition and description
7.4.2 Consistency between discount rate and cash flow
7.4.3 The components of the discount rate
7.5 How to estimate Property Return Rates
7.5.1 Market Extraction
7.5.2 Determining the discount rate from the cap rate
7.5.3 Build-Up Approach
7.5.4 Analysing the opinions of market players on the return expected
8 Structure of the valuation report
8.1 Executive Summary
8.2 Preamble
8.3 Description of the property
8.4 Market analysis
8.5 Valuation
8.6 Conclusions
8.7 Appendices
9 Office property appraisal
9.1 Description of the property
9.2 Choice of valuation method
9.3 Market analysis
9.4 Valuation
9.4.1 Choosing the time horizon
9.4.2 Estimating the cash flows
9.4.3 Determining the Terminal Value
9.4.4 Determining the discount rate
9.4.5 Calculating the Market Value of the Property
10 High street retail unit appraisal
10.1 Description of the property
10.2 Choice of valuation method
10.3 Market analysis
10.3.1 Estimating the ERV
10.3.2 Estimating the cap rate
10.3.3 Estimating vacancy and leasing time
10.3.4 Estimating refurbishment costs
10.4 Valuation
11 Hotel appraisal
11.1 Description of the property
11.2 Choice of valuation method
11.3 Market analysis
11.3.1 Macroeconomic climate
11.3.2 Supply and demand analysis
11.3.3 Forecast of average rate and occupancy
11.3.4 Projection of income and expenses
11.4 Valuation
12 Development Project appraisal
12.1 Description of the property
12.2 Choice of valuation method
12.3 Market analysis
12.4 Valuation of the Development Project
12.4.1 Choosing the time horizon
12.4.2 Estimating the cash flows
12.4.3 Determining the discount rate
12.4.4 Calculating the Market Value of the Development Project
Glossary
Bibliography
