Valuation Reports, once known as 'Sworn Valuations' are legal documents prepared by a Certified Practicing Valuer who are members of the Australian Property Institute.
Relied upon by Banks, Accountants, Lawyers, Insurers and many other industries to formally document the value of real estate without an actual transaction taking place.
Valuation Approach
Ensure Group will generally adopt two valuation approaches to establish the Highest and Best Use Market Value. The valuation approaches include the:
Direct Comparison Approach which involves comparing the subject property to comparable sales and letting transactions, usually on a rate per square metre of lettable building area basis; and the
Investment Income Capitalisation Approach which involves estimating the net maintainable income receivable from the property and capitalising this to derive a value. In the case of the Investment Income Capitalisation Approach we draw on elements of Direct Comparison as to the input parameters for this approach.
To consider our investment Income Capitalisation Approach we would:- • Analyse and adopt an appropriate market rental amount; • Capitalise net maintainable income • Deduct letting up allowances; (if vacant) • Deduct vacancy allowances; (if vacant) • Deduct incentives in the form of rent free period.
In selecting the most appropriate primary approach to valuation, we are mindful of the following determining factors as to the suitability of each approach.
If the property is currently leased as an investment property, we would adopt the Investment Income Capitalisation Approach as the primary valuation method. However if the property is vacant or owner occupied, we would be guided by the manner in which similar properties are transacted in the market i.e. whether or not they are sold predominantly on an investment basis or, alternatively, owner occupier basis, in which case the direct comparison approach may be more appropriate.
