Different factors need careful consideration during a commercial valuation in London in the property market. These factors include the location, condition, and current market trend. The services in question is usually sought for specific reasons, including loan security, investment appraisal; the acquisition and disposition of property. Managed by an RICS-regulated valuer, a Chartered Surveyor, applying vast knowledge and experience to each valuation; whether for acquisition, disposal or loan, is necessary to achieve a thorough and accurate appraisal.
The valuation of a commercial property is a process, which usually involves a thorough inspection of the property, an understanding and consideration of any leases and tenancy agreements as they apply to the property, a basic consideration of the property’s condition, and analysis of the current market situation property by property. The resulting appraisal will normally yield the Market Value of the commercial property and, in addition, reveal considerable information which is pivotal within the strategy and decision process.
A commercial property – shop, office, industrial units – represent an investment type of incoming producing, normally owned assets, which are managed by investors to provide a return subject to their individual risk appetite within the capital market place. The numerous purposes of a commercial real estate valuation will include security for loans, for sale, development appraisal, taxation, property insurance, etc. in London.
Examples of why a commercial property valuation in London is required include the following:
Established by RICS Valuation, the global valuation standards, Chartered Surveyors assess the value of a commercial property using several different methods. The cost, income, and sales comparison approaches are the three primary techniques employed by Chartered Surveyors to evaluate a property’s market value. These approaches stand apart from those utilized by estate agents for residential properties because they provide a more nuanced perspective on the value of a commercial property.
This method uses data from recent sales of comparable properties. It takes into account separate factors such as age, location, and property condition. Value is calculated by considering differences in time of sale, geographic location, size of home, and proximity to amenities. This technique is most powerful in areas like North London, where there is a lot of sales transaction activity. It loses effectiveness in markets with very few sales.
This has 3 different sub-methods:
Gross Rent Multiplier: involves dividing the sales prices of comparable properties by annual gross rent, which will give you a ratio that can be used as a multiplier.
Direct Capitalisation: focuses on the net operating income of the property, using a capitalisation rate that is appropriate for the market in question. Valuers obtain the rate from comparable sales data, and then adjust it depending on the property’s location, condition, and other factors.
Discounted Cash Flow: forecasts net cash flow over time (usually 10 years) and estimates the sales price at the end. The cash is discounted to present value.
Although the value of a residential property mostly revolves around the condition, location, the potential for rental income, floor plan, and amenities, this approach looks at the cost of build. This may be more applicable to older buildings, where factors like physical deterioration and obsolescence come into play. Furthermore, this method take into account economic life.
