When valuing an income-producing property in Queensland using the capitalisation approach, a valuer primarily considers:
Correct Answer
D) The net income the property earns and a market-derived capitalisation rate
The capitalisation (or income) approach determines value by dividing the property's net operating income by an appropriate capitalisation rate. This method is commonly used for commercial and investment properties where income is the primary value driver.
Why This Is the Correct Answer
The capitalisation approach divides the property's net income by a capitalisation rate drawn from sales of similar investments: value = net income / cap rate. Both inputs must be supported by market evidence.
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