Which valuation approach would be most appropriate for valuing a new office building purchased as an investment property?
Correct Answer
C) Capitalisation of the building's net rental income
For income-producing investment properties like office buildings, the capitalisation approach is most appropriate as it values the property based on its income-generating capacity. This method capitalises the net rental income to determine present value.
Why This Is the Correct Answer
Investors buy office buildings for their income, so value is best measured by capitalising the net rent at a market-derived rate. Sales and cost evidence serve as checks.
Why the Other Options Are Wrong
Deep Analysis of This Valuation Question
Background Knowledge for Valuation
Memory Technique
Exam Tip for Valuation
Real World Application in Valuation
Common Mistakes to Avoid on Valuation Questions
Related Topics & Key Terms
Key Terms:
More Valuation Questions
In applying the summation approach to value a heritage-listed property in Sydney, which additional factor must be specifically considered?
In Queensland, the statutory land valuation that councils use to levy rates is made by:
The comparable sales method of property valuation involves:
A Queensland property owner disagrees with the Valuer-General's valuation of their land. The owner may:
When valuing an income-producing property in Queensland using the capitalisation approach, a valuer primarily considers:
- → In Queensland, the 'highest and best use' principle in property valuation refers to:
- → A registered valuer in Queensland is valuing a specialised property such as a church with no comparable sales data available. The most appropriate primary valuation method would be:
- → A Comparative Market Analysis (CMA) prepared by a Queensland real estate agent differs from a formal valuation in that:
- → A developer in Queensland is considering purchasing a site for a residential subdivision. A valuer using the residual (hypothetical development) method would calculate the site's value by:
- → Which of the following factors would typically DECREASE the market value of a residential property in Queensland?
- → A Queensland seller asks an agent what her house is likely to sell for, and the agent decides to answer. What must he give her?
- → A Queensland agent recommends a reserve to a seller and must back it with a comparative market analysis. What should the CMA compare?
- → When conducting a property valuation in Queensland, what is the most critical consideration regarding comparable sales data?
- → What is the difference between 'site value' and 'capital value' as used by the Valuer-General in SA?
- → When valuing a rural property in SA, which of the following is a key factor that distinguishes it from suburban residential valuation?
People Also Study
Property Law & Legislation
110 questions
Agency Practice & Law
138 questions
Contracts & Conveyancing
106 questions
Property Marketing & Sales
129 questions