Property Valuation
Property valuation is the estimation of what a building is worth, from comparable sales, from the income it produces, or from the cost to replace it.
Why It Matters
Valuations set loan limits and fund performance, and because they are assessed rather than traded, they can lag the market they claim to measure.
Related Terms
- Cap RateA capitalisation rate is a property's net operating income divided by its value, expressed as a percentage: the unlevered yield the building produces.
- NOINet operating income is the rental income of a property after operating costs, before financing and tax.
- LTVLoan to value is the size of a loan as a percentage of the value of the property securing it.
- Property MarketThe property market is where land and buildings are bought, sold and let, and where prices are set by supply, credit conditions and demand for space.
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