Valuation Flashcards
The Global Red Book is being updated through 2024, what is being reflected in this?
- implementation of Valuation Review recommendations
- practice and process changes driven by evolving areas such as ESG and technology
- information related to developments in other relevant global standards and regulation such as IFRS and Basel 3.1
- administrative updates to align the standards with wider RICS objectives
When will the new Red Book be effective from?
1 January 2025
What type of valuations does the Red Book not apply?
- Valuations for statutory purposes
- Valuations for internal purposes, not to be relied on by third parties
- Valuations for the purpose of activng as advocate
- Valuations for the purposes of acting as expert witness
- Valuations for the agency or brokerage
What are the 5 methods of valuation?
- Comparable
- Investment
- Profits
- Contractor’s
- Residual
Red Book - PS 1
Compliance with standards where a written valuation is provided
Red Book - PS 2
Ethics, competency, objectivity and disclosures
Red Book - VPS 1
Terms of engagement
Red Book VPS 2
Inspections, investigations and records
Red Book - VPS 3
Valuation reports
Red Book - VPS 4
Bases of value, assumptions and special assumptions
Red Book - VPS 5
Valuation approaches and methods
L2: Commercial, Guildford
What did you determine to be the market rent for the office space in your valuation?
£200/m2
L2: Commercial, Guildford
What did you determine to be the market rent for the retail space in your valuation?
£600/m2 ITZA
L2: Commercial, Guildford
What yield did you use and why?
10.5%
This was slightly higher than the market evidence to reflect the increased risk of the location of the subject.
L2: Commercial, Guildford
Did you use NIY or GIY?
NIY (CHECK?)
What’s the difference between NIY and GIY?
L2: Commercial, Guildford
What did you determine the total market rent of the property to be?
£33,900 pa
L2: Commercial, Guildford
What amount did you allow for refurbishment costs?
£55,000
L2: Commercial, Guildford
How did you calculate refurbishment costs?
Using BCIS - default period, ‘rehabilitation/conversion’, ‘320. Offices with shops, banks, flats etc.’, lowest (£468/m2)
L2: Commercial, Guildford
What was the final value?
£250,000
L2: Commercial, Guildford
What value significant features did you note on inspection?
Poor condition and inferior location to comparables.
L2: Commercial, Guildford
How did you account for value significant features noted on inspection in your valuation?
Market rent and yield adopted
What RICS document relates to using the comparable method of valuation?
Comparable Evidence in Real Estate Valuation, 1st Edition (2019)
(Guidance Note)
When would you use the investment method of valuation?
When valuing an income producing property i.e. a rented property.
