Reducing operating expenses on business premises increases Market Value?

Posted On Tuesday, 05 March 2013 09:08 Published by
Rate this item
(0 votes)

When valuing a business premises i.e. offices, industrial or retail, we generally use the rental income to determine the value of the property.

Lourens_Nel_UNIQUECO_Property_Valuers

According to UNIQUECO Property Valuers, the simple valuation methodology is Market Value = Net Annual Income ÷ Capitalisation Rate. Net annual rental equals the deduction of basic overheads such as rates and taxes, general municipal services, basic building maintenance and service contracts, short-term building insurance, management fees and provision for sundries.

You can save on overheads by reviewing your municipal value versus actual market value, in order to gain on lower rates and taxes. And keep the premises well-maintained avoiding expensive renovations at a later stage. And regularly updating your building replacement cost for insurance valuation purposes in line with active markets trends.

Compare management fees with other competing agencies and make sure you have good reliable asset managers.

Lourens Nel, MD of UNIQUECO Property Valuers says: “Always depend on figures and market trends supplied by independent expertise not physically involved with the property. When income producing properties are well-established, well-maintained and well-managed, risk are lower and potential capitalisation ratios more supportive equals’ better market values.”

Last modified on Monday, 05 October 2015 13:08

Most Popular

Should you rent or buy your business premises?

Jun 23, 2022
Malusi Mthuli_FNB
This is a question that most business owners will face at some point in their journey.…

April 2022 Hotel Accommodation Income Statistics continue to show a very weak picture compared to pre-lockdown times.

Jun 23, 2022
Hotels Monthly Income 2022
The StatsSA release of April 2022 preliminary monthly tourism statistics show the Hotel…

South Africa’s inflation exceptionalism: can it last?

Jun 23, 2022
Carmen Nel
South Africa is often seen as a high-beta play, be it regarding financial market risk…

Hyprop continues to reduce debt and reposition its portfolios in SA and EE

Jun 30, 2022
Skopje City Mall Playground
Hyprop, which manages dominant retail centres in mixed-use precincts in key economic…

Vaal Mall rolls up its sleeves for pothole repairs

Jun 30, 2022
Vaal Mall crew busy repairing the various potholes making easier access to the Centre.
Vaal Mall is showing their commitment towards their community by stepping up to repair…

Please publish modules in offcanvas position.