Methods of Valuation of a Building | Building Estimation and Costing | Civil Engineering Projects 4/26/17, 03:59

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Subscribe via Email Valuation of Building

Valuation of a building depends on the type of the building, its structure and durability, on the situation,
Subscribe size, shape, frontage, width of roadways, the quality of materials used in the construction and present
day prices of materials. Valuation also depends on the height of the building, height of the plinth,

Ads by Google thickness of the wall, nature of the floor, roof, doors, windows etc.

Building Code The valuation of a building is determined on working out its cost of construction at present day rate and
Stock Valuation allowing a suitable depreciation.

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Methods of Valuation of a Building | Building Estimation and Costing | Civil Engineering Projects 4/26/17, 03:59

Public Versus Private Participation | 4. Valuation based on the cost

5. Development method of Valuation
General Economics
6. Depreciation method of Valuation

Rental Method of Valuation

In this method, the net income by way of rent is found out by deducting all outgoing from the gross rent.
A suitable rate of interest as prevailing in the market is assumed and Years purchase is calculated. This
net income multiplied by Years Purchase gives the capitalized value or valuation of the property. This
method is applicable only when the rent is known or probable rent is determined by enquiries.

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This method may be adopted when the rental value is not available from the property concerned, but
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property is fixed by direct comparison with capitalized value of similar property in the locality.

Valuation based on profit

This method of Valuation is suitable for buildings like hotels, cinemas, theatres etc for which the
capitalized value depends on the profit. In such cases, the net income is worked out after deducting
gross income; all possible working expense, outgoings, interest on the capital invested etc. The net
profit is multiplied by Years Purchase to get the capitalized value. In such cases, the valuation may work
out to be high in comparison with the cost of construction.

Valuation based on cost

In this method, the actual cost incurred in constructing the building or in possessing the property is taken
as basis to determine the value of property. In such cases, necessary depreciation should be allowed
and the points of obsolescence should also be considered.

Development Method of Valuation

This method of Valuation is used for the properties which are in the underdeveloped stage or partly
developed and partly underdeveloped stage. If a large place of land is required to be divided into plots
after providing for roads, parks etc, this method of valuation is to be adopted. In such cases, the
probable selling price of the divided plots, the area required for roads, parks etc and other expenditures
for development should be known.

If a building is required to be renovated by making additional changes, alterations or improvements, the

development method of Valuation may be used.

Depreciation Method of Valuation

According to this method of Valuation, the building should be divided into four parts:

1. Walls
2. Roofs
3. Floors
4. Doors and Windows

And the cost of each part should first be worked out on the present day rates by detailed measurements.

The present value of land and water supply, electric and sanitary fittings etc should be added to the
valuation of the building to arrive at total valuation of the property.

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This entry was posted by BenzuJK on October 28, 2011, 2:10 pm and is filed under Civil Projects. You can

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Depreciation method of Valuation, Development method of Valuation, Direct Comparisons of the capital
value, Methods of Valuation, Rental Method of Valuation, Six Methods of Valuation, Valuation, Valuation

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Methods of Valuation of a Building | Building Estimation and Costing | Civil Engineering Projects 4/26/17, 03:59

based on the cost, Valuation based on the profit

Financing of Projects | Economics related to Architecture and Engineering

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COMMENTS (7)

#1 by sSearch enigne optimization on August 26, 2010 - 4:05 am

Whether a company is public or private, built to last or to flip, the stock price or corporate valuation can be
driven from both the bottom and from the top of the company P&L thanks for sharing it

#2 by odongo edward eyak on April 10, 2012 - 3:04 am

please alway when there is some thing new concerning building estimate and costing and the new method
developed for costing notify me

#3 by BenzuJK on April 10, 2012 - 4:03 am

You can subscribe for the updates. It is just a click away.

Heres the link:
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#4 by francis on September 14, 2012 - 6:32 am

Notify me of follow-up comments by e-mail.

#5 by kumar shashwat on March 7, 2013 - 6:10 am

nice

#6 by Thamanna Jahan on December 17, 2015 - 12:19 am

thanks.it ws helpful

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Methods of Valuation of a Building | Building Estimation and Costing | Civil Engineering Projects 4/26/17, 03:59

#7 by G.K.SURYA PRAKASH on February 13, 2016 - 10:27 pm

nice

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