Whether you have a commercial property you’re hoping to sell or lease, commercial property valuations can be extremely valuable? Here’s everything you need to know about obtaining one:
What Is A Commercial Valuation?
Commercial property valuations are appraisals of a property that is used for business proceedings. This may include offices, hotels, medical centres, retail spaces, warehouses and many more non-residential property formats. A commercial valuation will provide you with an understanding of the current market value of your unit. Furthermore, many commercial valuers are able to assume an advisory role by providing you with advice on how to boost the value of your commercial property before you list it on the market.
Why Do I Need A Commercial Valuation?
You do not need to be considering selling or leasing your commercial property to benefit from a valuation. For example, commercial property insurance companies will request details of your unit value in order to provide the most appropriate cover. What’s more, you will require an up to date valuation to provide to Inland Revenue so that they can deduce whether you need to pay capital gains tax, to determine stamp duty tax should you transfer your business, for SSAS and SIPP pension reviews, accounting purposes, and for lease renewals.
The valuation of your commercial property will tell you what your unit would fetch on the property market. However, valuations of any form are time-sensitive and will change based upon a number of factors, namely that impact market conditions such as demand and broader economic stability. Even if you had a commercial valuation carried out last year, the value of your unit will most likely have changed in the meantime. As such, this necessitates an updated appraisal.
What Is The Difference Between Residential and Commercial Property Valuations?
Whereas a residential valuation or agency market appraisal will look at the composition, location and socioeconomic factors that would make a home desirable, a commercial unit will be valued based upon its ability to provide a base for profit making businesses. A commercial valuation is therefore driven not just by the bricks and mortar qualities of the unit. The valuation will also consider the type of tenant and the amount of profit their business could make.
Residential valuations and agency market appraisals will largely draw upon comparisons to similar units within the same neighbourhood. This is referred to as the ‘comparable method’, yet commercial valuations can draw upon multiple different methods to arrive at a substantiated value. As with its residential counterpart, commercial units can be valued by using the sales comparison method. This takes into account the amount achieved for similar properties that were recently listed on the market. The income capitalisation approach is also commonly used to value commercial units. This divides the net operating income of the unit by its asset value to obtain the cap rate. This will provide valuers with an insight into how much profit your commercial unit has the ability to generate, which will inform the value of your unit.
Alternatively, the cost approach method could be utilised. This is based on the principle that a commercial buyer will not be willing to pay more for a unit than it would cost to build one from the ground up, including purchasing land, materials and labour. Valuing a commercial property is a far more arduous task when compared to valuing their residential counterparts. This is because different methods are employed to produce the most accurate valuation figure. This isn’t to say that agency market appraisals are not of value. In fact, they provide an insightful view into the value of your unit, and are helpful in making decisions regarding your future property decisions. If you wish to book a free, no obligation market appraisal as opposed to a RICS valuation, contact the Centrick team by clicking the banner below.
What Are RICS Commercial Property Valuations?
Whereas residential valuations can be provided by most estate agents, commercial valuations must be conducted by a RICS accredited valuer. The Royal Institute Of Chartered Surveyors is a leading institution in the realm of property, land and construction. RICS valuations are recognised as having legal status thanks to the exceptionally thorough nature of their valuation process. Accreditation takes years to obtain, making these valuations the most trusted form of commercial property valuation.
These valuations will vary in cost depending on the size of the commercial unit in question. As such, we advise contacting a member of our valuations team for a more specific valuation fee. To do so, please fill out the form at the end of this blog.
How Do You Obtain Commercial Property Valuations?
Commercial property agencies can offer instant valuations or estimates of your commercial property’s value. However, it is strongly advised that you invite a local property professional to carry out a comprehensive in-person valuation to obtain the most accurate appraisal of your unit. As a result, your valuer will be able to gather a much better understanding of your property and its value if they physically visit the site. This will provide them with a better view of the local area, available space, and room for improvement.
Understand The Value Of Your Unit With Centrick
With years of experience across the commercial property sector, Centrick are able to provide reliable commercial variations across all types of units. Centrick’s RICS accredited valuers carry out Red Book valuations for a range of clients. We have been appointed to provide valuations for the UK’s leading valuation panel managers, including Connells and VAS. To obtain a RICS Red Book valuation, fill out the form below and we will contact you shortly.
