Goo Beng undertakes property valuations for various reasons, depending on the client’s requirements and instructions. Our valuations satisfy the following purposes;
Market Value
The Market Value or the value for which a property will transact on a particular date, is derived through the valuation process. While it is common in the market that investors consider their perception of the ‘worth’ of their property as the Open Market Value, the two should be distinguished. Our valuers owe a duty of care to their clients, and to avoid any ambiguity, the two concepts will be clearly explained to the clients; and the valuers will maintain their professional integrity throughout the process.
Sale Purposes
In an instance where a property is to be sold on the open market, a valuation is usually undertaken to determine the best sale / asking price. A qualified valuer will use recent comparative market and sales analysis of similar properties and transactions in the location, which they will use to derive a sale figure that they will suggest to the seller or buyer.
Loan Security
Valuations are commonly carried out to determine the value of an asset that will act as collateral for a loan. Most of our banks finance 60% - 90% of the value of the Market Value of the property.
Accounting Purpose
Most corporate companies carry out property portfolio valuations regularly for accounting purposes. Our valuations will be undertaken in accordance with International Financial Reporting Standards - IAS 16 and will include:
- Separate valuation of land
- Depreciated Replacement Cost of all improvements and movable assets.
- Residual Values of all asset categories excluding land.
- Estimated Remaining Useful Life (ERUL) of depreciated assets.
Insurance
In order to put in place an appropriate insurance cover on their investments, owners require the services of a Valuer to advise on the Insurance Replacement Value of their assets, which is derived from the Gross Replacement Cost of the property.
Residual value
The residual value determines the amount for which an asset can be sold at the end of its useful life. The useful life relates to the number of years over which the asset is depreciated.
Compulsory Purchase
The Government may acquire properties for the good of the nation (expropriation), for example for infrastructure development; and in the bid to make the compulsory purchase of a property more equitable, expert advice may be sought from Property Valuers.
Market Rent
Market rent is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
Property Valuation Methodologies
There are several methods of property valuation, and the method adopted for each property will be dictated by its suitability. In valuing developed properties, we shall consider the Comparable Method, Investment / Income Method, and the Contractor’s / Cost Method. In the instance of the valuation of undeveloped land, we will apply the Residual Valuation Method or Comparable Method. The Profit Method is applicable to trading properties, eg restaurants, petrol stations, hotels, etc.