The process of valuing or obtaining an estimate of the worth of business property at the time of valuation is known as commercial property valuation.
There are several ways to value your commercial property. Here you will find ways to value that business of yours:
The cost to completely rebuild the structure is taken into account by this valuation approach. It is considered together with the expenses of construction materials and other charges that would be incurred if the existing structure were to be replaced.
It is simply adding the cost of the land on which the property was built, and adding the construction cost to it. The cost approach also adds any additional cost that was incurred after the property was built; like renovation costs.
It is also termed the market approach and it heavily relies on recent sales data for comparable properties. For example, a 10-unit office building might be compared to another that was sold in the same area just a few months earlier.
This approach is based primarily on the amount of income an investor can expect to derive from a particular property.
For example: Let's say a building costs £2 million, and local market analysis predicts a 10% yield. The £200,000 projected income could be increased by eliminating waste or charging the tenant for additional expenses like water or electricity use. The present value of all anticipated future income is adjusted for discount.
The Gross Rent Multiplier (GRM) valuation method calculates a property's potential value by dividing the purchase price by the gross rental income.
In other words, your GRM would be approximately 6.67 or £1,000,000 / £150,000 if you bought a commercial property for £1,000,000 and it produces £150,000 in gross rents annually.
This commercial property approach method is used primarily on multiple-unit buildings rather than single-unit structures. It simply determines the worth of the entire building based on the number of units. A building with 12 units priced at £3 million would be valued at £250,000 ‘per door’ irrespective of the size of each unit.
Usable square footage and shared spaces like stairwells and elevators that tenants can use together make up rentable square footage. Using this process, you may estimate the cost per rentable square foot, compare it to the average lease cost per square foot, and determine the building's value.
For instance, a building with 20,000 rentable square feet and an average annual rent per square foot cost of £15 will give a 12% gross rental return at a £2.5 million acquisition price.
A further expansion on how it was calculated is as follows:
Getting your commercial property value calculated here in the UK is a simple business. Many online tools give easy but comprehensive value to that business of yours in less than 5 minutes. A few pieces of information are generally needed from these online tools to help calculate the value of your business property
To find the cost of your commercial property:
Every commercial building valuation report must consist of the following:
Below is a summary of some important issues concerning the valuation of commercial property:
The price of an RICS valuation by a certified surveyor should range from £150 to £800 depending on your property's size, value, and location.
The amount of money your buyer's mortgage provider is willing to provide will change if they value your apartment or home, less highly than the accepted offer. This is so because the size of the mortgage a buyer is eligible for depends on the lower purchase price or the lender's value.
As of May 2022, the industrial multi-let, distribution, and London West End offices markets have the lowest prime yields in the UK (at 3.25 per cent, respectively). 7.5 per cent of the population was in shopping malls, in comparison.