SUBMITTED BY- SAURABH AGARWAL
4D
VALUATION
In the valuation of buildings, the usual method employed is to
ascertain the prime cost of a building and to deduct therefore
depreciation to give the present-day market value. The prime cost is
the value a similar structure will cost to erect considering all the
ornamental features which have a market value.
Six Methods of Valuation
1. Rental Method of Valuation
2. Direct Comparisons of the capital value
3. Valuation based on the profit
4. Valuation based on the cost
5. Development method of Valuation
6. Depreciation method of Valuation
DEPRECIATION
Depreciation is the decrease in value of the property due to wear,
tear, decay and obsolescence. The depreciation cost is worked
out on the basis of its cost of reproduction at the present time
and deducting, therefore, the necessary depreciation for the age
passed, as well as the cost of the immediate structure and
general repairs.
APPROACH
For valuation of buildings, generally, the cost approach is
adopted.
In cost approach, several engineering methods have been
employed in estimating the building cost such as unit in Place
methods or inventory of the quantities of material and labor,
plinth area and cubical content methods, which generally depend
on the total length of exterior and interior walls, height of each
floor, the type of the structure i.e. R.C.C framed structure or
wooden framed structure or load bearing walls type, type and
number of doors and windows and fittings used, nature, area and
type of roof, quality of water supply and sanitary fittings, quality
of electrical fixtures, ornamental and decorative features, age of
the building, the original cost of construction of building, cost of
major capital repairs carried out, if any, the maintenance of the
building, present condition of the building, general wear and tear
of the building, cost of major immediate capital repairs required if
any, efficiency of carpet area quality of materials and
workmanship etc.
It also depends on services available like water supply, drainage,
electricity, underground water tank, overhead water tank, pumps,
provision of borewell, type of electrification, compound wall and
gate approach road, provision of lift, capacity to raise further
floors over the existing buildings etc.
Factors on which value of Building depends:
In general, in arriving at the estimated market value, one should
take into consideration, inter alia, the following factors:
The present depreciated value of the building, its age, and
useful economic future life.
The prevailing value of the land similarly situated round about
this area.
The situation, shape, size, topography, elevation and frontage
of the plot of land.
The extent of end use and utility.
Services available such as schools, market, hospitals,
recreation centers, parks etc.
Communication and transportation facilities such as posts,
telegraphs, telephone, electricity, roads, railways, buses etc. and
their locations in the vicinity.
Type of locality i.e. industrial, residential or commercial and
also the status of locality i.e. poor class, middle class or upper class.
