How is a commercial investment property valued?

Commercial property is typically valued based on:

• Income approach – capitalising the current or estimated market rent at an appropriate yield.
• Comparable evidence – analysing recent sales of similar commercial properties.
• Development potential – considering alternative uses or extensions.

Professional valuations are usually carried out by qualified surveyors and form a key part of the lending and purchase process.

It is important to note that the lease will have a profound effect on the value of the property. A strong lease with a strong tenant will add a lot to the value of the property and the reverse also applies.