Valuation

Question 1

When was Comparable evidence in real estate valuation published and from when was it effective?

Answer 1

The professional statement was published October 2019 effective from 9 October 2019. It was reissued in April 2023 as a professional standard.

Question 2

What is a comparable?

Answer 2

A comparable can be defined as an item of information used during the valuation process as evidence to support the valuation of another, similar item. (Comparable evidence in real estate valuation, 1st ed.)

Question 3

What should comparable evidence ideally be? (Comparable evidence in real estate valuation, 1st ed.)

Answer 3

• comprehensive - there should be several comparables rather than a single transaction or
  event.
• very similar or, if possible, identical to the item being valued.
• recent, i.e. representative of the market on the date of valuation.
• the result of an arm’s-length transaction in the market.
• verifiable.
• consistent with local market practice.
• the result of underlying demand, i.e. comparable transactions have taken place with
  enough potential bidders to create an active market.

Question 4

What are the key inputs in a DCF valuation?

Answer 4

• rent.
• rental growth rate.
• discount rate.
• costs.
• disposal price at the end of investment.

Question 5

What are some of the principal factors affecting the value of rural property (land)?

Answer 5

The value of agricultural land will be strongly influenced by its ability to produce income. Its quality in terms of soil fertility, accessibility and ease of cultivation will therefore be important. Development potential can also affect value.

Question 6

What are some of the principal factors affecting the value of offices?

Answer 6

Location, building quality, layout, facilities, service costs, building efficiency and sustainability credentials are among the significant factors.
With advances in technology and the aging of costly building plant, obsolescence of older premises is an important consideration.