Key Decision Factors in Investment and Asset Management
Property valuation is the process of analyzing and assessing the value of various types of assets/property such as land, buildings, houses, condominiums, or other assets. The objective is to determine the values of the subject property as of the valuation date in the market condition.
Importance of Property Valuation
Property valuation is extremely important in various aspects, including investment, finance, accounting, and asset management. The main benefits are as follows:
- Investment Decisions: Property valuation helps investors make decisions effectively when investing in real estate/projects through the financial results, and values of the property/project and comparing with the asking price to ensure a feasible investment.
- Loan Applications: Banks and financial institutions use property valuation to consider loan approvals and credit lines by using the property value as collateral, which helps reduce the risk of lending.
- Insurance: Insurance companies use property valuation to determine appropriate insurance premiums and compensation payments in the event of property damage or loss.
- Taxation: Property valuation is used as a basis for calculating land and building taxes, inheritance taxes, and other taxes related to property.
- Property Management: Property owners can use property valuation to plan property management, sales, rentals, or development.
- Property Value Disputes: Expert property valuation can assist resolve disputes between parties regarding the value of the property.
- Litigation: Property valuation may be used as evidence in property-related court cases, such as inheritance cases or asset division cases.
Property Valuation Approaches and Methods
There are various approaches and methods for property valuation, each suitable for different types and characteristics of assets/properties to provide a market value opinion. Overall valuation approaches are classified into 3 (three) approaches.
Market Comparison Approach: Comparing the price of the property to be valued with similar properties, comparing prices agreed upon in recent transactions, and/or current asking prices using various appropriate techniques such as the Sale Adjustment-Grid Method or the Weighted Quality Score (WQS) technique.
Cost Approach: Calculating the new replacement cost or new construction cost of similar buildings and structures, along with considering depreciation of the buildings and structures based on factors affecting property depreciation, combined with the market value of the land to derive the Depreciated Replacement Cost.
Property Valuers
Property valuations should be conducted by valuers/appraisers who have knowledge, expertise, and are licensed by relevant organisations for instance the Securities and Exchange Commission of Thailand, The Valuers Association of Thailand, or Thai Valuer Association.
Considerations in Property Valuation
- Purpose of the Valuation: Different purposes may affect the methods and values.
- Type and Characteristics of the Property: Each type of property has unique characteristics that need to be considered in the valuation
- Market Conditions: Current real estate market conditions affect property values.
- Data Used in the Valuation: Accurate, up-to-date, and reliable resources should be used.
Our Valuation Expertise at Cushman & Wakefield Thailand
The Cushman & Wakefield group prioritizes ethical business practices to ensure compliance with all relevant laws and regulations, professionalism, and ethical conduct. We place importance on legal policies and oppose all forms of corruption, help building trust from stakeholders, and ensuring confidence in our clients as property valuers for professional quality service.
Property valuation is an important tool that helps you make investment and asset management decisions effectively and cost-effectively. It is crucial for the economic, social, and legal development of Thailand. Accurate, precise, and transparent property valuations will help build investor confidence, promote real estate market development, and create fairness for all parties involved.