Commercial Real Estate Valuation
Purpose of Commercial Valuation
Commercial valuation depends on the income the property generates. Whether it is a complex, shopping centre, investment building, or development project, the value is an essential factor for the purchase, sale, borrow, or lease of the property. The valuer calculates the value based on criteria, such as rental or income forecasts, facilities, location, etc.
A property’s value is defined as the current worth of potential future financial benefits measured by the projected sum of all net income streams that may arise from owning the property, assets need an extended or longer period of years. Thus this long-term analysis must need a deep analysis of all the political, social, and economic factors of the current scenario which affect the future.
Commercial Valuation usually is for
Income capitalization approach
This approach is based on the income amount an investor can expect to get from a property which can be derived from the comparison of other similar local properties, property that has income-generating potentials like retail centres, multifamily housing, office buildings, and other properties in which future benefits are expected Investors are essentially buying the cash flow stability of an asset.