Land and building valuation is a crucial aspect of architecture, real estate development, and investment planning. The valuation process helps determine the fair market value of a property based on factors such as location, structure, income potential, construction cost, and market conditions.

Major Valuation Methods

Several key methods are used to evaluate land and buildings:

Market Comparison Method (Sales Comparison Approach)

• Determines the value by comparing similar properties recently sold in the same area.
• Adjustments are made based on location, size, amenities, and infrastructure.

Income Capitalization Method

• Used for properties that generate rental income.
• The value is calculated based on expected future income and a capitalization rate.

Cost Approach

• Determines the value based on the cost of reconstructing the property at present rates.
• Depreciation is subtracted to estimate the current value of an older building.

Residual Method

• Used for land intended for future development.
• The value is derived from the potential profitability after deducting development costs.

Development Method

• Assesses value based on the possible development potential, such as residential or commercial projects.