• ®IBBI REGISTERED VALUER - REGISTRATION NO: IBBI/RV/04/2020/13367
Property Valuation

Dhawan Associates

Dhawan Associates

IBBI Registered Property Valuer

What is a property valuation

A property valuation is a type of report that outlines the assets a property has and potential elements that could affect the value of the property. Assets include things like the square footage, bedrooms, bathrooms, kitchen amenities, backyard amenities and proximity to well-known locations.

The valuation of real estate is central tenet for all businesses. Land and property are factors of production and, as with any other asset, the value of the land flows from the use to which it is put,and that in turn, is dependent upon the demand (and supply) for the product that is produced. Valuation, in its simplest form is the determination of amount for which the property will transact on a particular date.

The objective of this paper is to provide a brief overview of the methods that used in real estate valuation with a particular emphasis on the valuation of specialised property.Specialised Properties are properties that are more heterogeneous than homogonous. That is, the nature of the property is such that the type of property concerned don’t transact sufficiently to be able to determine value by comparison of previous sales. In such circumstances the valuer needs to resort to a valuation model that addresses the underlying fundamentals of that property so that its value can be determined by reference to the wealth producing qualities of the asset.

The valuer looks at each property individually, beginning with an objective inspection of the interior and exterior of the home or building, as well as driving through the surrounding neighbourhood. The valuer looks for the assets, as well as the detriments, of the property. For homes, gross living space, quality of construction, location, layout, the number of bedrooms and bathrooms, the lot size, condition of the home and land, heating, landscaping, decks, fencing, recent renovations, amenities provided by the surrounding neighbourhood, are all considered by the valuer.Living space is calculated by measuring the outside of the home. It does not include such areas as the garage, porches, sheds, and so on. Basements are generally calculated separately from the living space. The contributory value of basements is determined by the local market, local regulations, if it is finished or not (and the quality of the finish), and so on.

Dhawan Associates

IBBI Registered Property Valuer

Price, Worth and Market Value

A property valuation is a type of report that outlines the assets a property has and potential elements that could affect the value of the property. Assets include things like the square footage, bedrooms, bathrooms, kitchen amenities, backyard amenities and proximity to well-known locations.

The valuation of real estate is central tenet for all businesses. Land and property are factors of production and, as with any other asset, the value of the land flows from the use to which it is put,and that in turn, is dependent upon the demand (and supply) for the product that is produced. Valuation, in its simplest form is the determination of amount for which the property will transact on a particular date.

Different Methods of property Valuation

Land and Building method for Bungalows/Flats

Valuation of Land to be considered

Guide lines from Registrar’s Department (Circle rates).Price paid within a reasonable time, in bonafied transactions of purchase of lands acquired.Demand, locality, characteristics like shape, size and location of Roads and Parks.Opinions of relevant person such as Neighbors, Brokers and recent sales and prevailing trend.

Valuation of Building to be considered

Plinth area rates bases on CPWD or State PWD and adjusted by Index cost. Present Value of Building.

Rental Capitalization Method

It consists of capitalizing the net annual Rental Income (NAR) at an appropriate rate of Interest and rate of Capitalization (80% as per Wealth Tax rules for Delhi / NCR) Net annual Rent income equals to Gross Rental Income – outgoings like Property tax, repairs, maintenance service charges, Insurance premiums, rent collection and management charges etc. app. 40%.

Development Method

This method is used to evaluate such property where there is a developmental potential, so that value of property after development will be increased more than the expenditure incurred, for example large portion of land can be divided in small plots and developed fully so as to provide plots of land for residential societies, or a large complex of multistoried buildings, shopping / commercial complex etc. In such case the cost is decided per acre (4840 Sqyd).

This is a vast subject and shall be taken up separately.

Profit Method

This method is applicable to Hotels, Cinemas, PVRS, and Marriage Halls. This method as the name suggests deals in working the profit from the property subsequently capitalizing, the same at appropriate rate based on factors.

AV of Net Profit for last three years Good will of the Property