Commercial Property Valuation Guide Philippines

Commercial Property Valuation Guide Philippines

Philippines condoned the IVSC computation benchmark for computation and estimation of real estate property under the framework of the Philippines directives. Real estate entrepreneurs use it as a standard for valuing land based properties.

frequently applied approaches under this frame of reference are :
Sales Comparison practice : in this method theevaluator queries data in connection with the lately sold houses in that vicinage to use that info as a benchmark. The assessor uses the data to find value patterns and trends in the market. The assessor also gathers data about other buyer profiles,extent of time on the market, number of comparable cataloged properties accessible during this time. These data are used by the agent to appraise a market estimate. It is one of the most accepted approaches to real estate market valuation. And it holds good for residential properties.Thisapproach is usable to all forms of real property. However it is not sound for commercial properties & it does not hold sound when market is shaky and there is inadequate market transactions.

Cost Approach : In this practice a player of a real estate should not pay further for a property than the cost of substituting it with an equivalent property minus the applicable depreciation.Three methods are used practically in this method.They are:

Reproduction cost method : This method is suited when the cost of a latest similar asset is more than the cost of building a clone of the subject asset,
Replacement cost method: it involves valuing the price that a market player would pay and the substitution cost is corrected for physical decline and all appropriate forms of degradation.
Summation method : Mainly used for investment companies, the steps involves evaluating each of the elementary assets and summing the value to find the main asset value.

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