Looking to buy or sell an office or shop? How do you know what the property is worth? Our London commercial valuation surveyors value properties such as shops, offices and warehouses on a daily basis and are experts at determining a fair value.

While residential property valuations are usually based on an owner occupier basis and direct comparable sales information, a commercial valuation report is created using a number of different methods depending on the type of property. One of the most common is the investment method.

What is the Investment Method for commercial valuations?

The investment method of valuation is generally used for property which has a tenant in-situ and is being valued with the benefit of the rental income. The commercial valuation surveyor first considers the level of rent being paid, the prospects for rental growth and the length of the lease.

The valuer then uses comparable market information, paying special attention to instances where similar neighbouring properties have been let. This allows the commercial valuation surveyor to derive an estimated Market Rent. The Market Rent is subsequently compared to the passing rental, while making appropriate assumptions related to future rental streams and potential voids.

Subsequently, the valuer makes an assessment of the security of the income. Investing in property is no different to any other investment. As an investor, you would always seeks a return on the money you put in, and taking the associated risks into account helps you determine whether it is worthwhile.

For example, a large retail chain would be considered to be a much better risk than a sole trader, who is not as established. A property investor would therefore generally be prepared to pay considerably more for an income from the retail chain.

Using judgement, based once more upon comparable evidence, a yield can be applied to the rental stream and this commercial property value calculation produces a capital value. This is commonly referred to as the Market Value.

How AWH can help

With over 20 years of experience in the commercial property market in London and the South East our commercial valuation surveyors are specialists with experience covering shops, offices, warehouses, going concerns (restaurants and pubs), nursing homes and more.

We advise clients on a multitude of different facets of property and would be delighted to help you with yours. Call us on 0800 071 5517 or email admin@awh.co.uk.

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