Valuation of property
The value of property is a quantity that often affects the economic decision-making of investors. Each investor encounters the need to determine the value of assets. That may involve the valuation of real estate, machines, intangible assets and much more. We will take a closer look at real-estate valuation in the Czech Republic.
Investors face the need for valuation when deciding whether to buy or lease premises for their businesses. The investor also encounters the need for valuations of various types of corporate transactions, investment decisions, loan drawdowns, pledges and tax calculations for the acquisition of immovable property.
Price of real estate
Every property has several different price categories which vary according to the purpose and the user of the valuation. The market value for the purchase or sale of property may be different from the estimated value for a bank considering financing the purchase of the property or for the purpose of securing the property as collateral for a loan, or from the administrative value for calculating the tax on the acquisition of immovable property. The property price with respect to the purpose and user of the valuation can be determined either by an expert or an appraiser.
Real-estate valuation methods
Several methods are used to determine the value of real estate. Determination of the market value is most often used for the valuation of a property for the purpose of ownership transfer. The most commonly used methods of calculating market value include the comparative method and yield methods.
The comparative method compares the realised prices of a number of similar properties. It is important that this is the price actually realised, not just the offer price. This method is also applicable in practice to determine the usual rental rates.
There are several types of yield methods of property valuation. Their common denominator is the valuation of the benefit deriving from ownership of the property as rent collected by the owner or landlord.
Factors influencing the value of real estate
The key factor that is common to almost all real estate is location, which is not only the geographic location, but also the prestige of the locality, transport accessibility and the surroundings.
Specific factors that affect land prices are the land’s area, shape and slope, as well as its orientation. When it comes to building land, the presence of utility networks, or the possibility and difficulty of building them, is also important.
Specific factors that affect the cost of office buildings are the area of office space and its layout. The price is also influenced by the design of the building, number of parking places and the building’s equipment, such as air conditioning, blinds and distribution of electrical and data networks.
A particular factor for the price of production facilities and warehouses is their construction, including the height of the facility, the number of floors and the load-bearing capacity of the walls and individual floors, as well as the possible uses of the facility. A specific requirement regarding location is accessibility for freight transport, particularly proximity to motorways or railways.
Conclusion
Real-estate valuation has many specific details and the determination of a property’s value depends on many factors that can affect its price. Therefore, when a real-estate transaction is being planned and a calculation of the property’s value is needed, we always recommend contacting experts to help you determine the price in the most appropriate way.