Contents in Brief

• Introduction
• Principles of Development and Valuation
• Nature of Real Estate and Its Value
• Development of an Urban Land
• Market Value of a Building
• Annexures

Sample Tip

Market Value of a Building

A building is for use or return on investment. The building, its environment and facilities available in the neighbourhood and the nearby localities affect the value of a building. The market value of a built-up property is determined as the sum of the market values of land derived from sale instances of vacant sites and the reproduction cost of the building less depreciation. It may or may not reflect the true market value.

It depends on the stage of development in a neighbourhood and the condition of the building.

As the land rates increase in a locality, buildings are constructed with up-to-date specifications; plinth area rates increase. The market value of an old building is derived from the current replacement cost with corresponding specifications. Value of the building is reduced due to the mismatch between the class of the neighbourhood and the class of the building.

Each building component can be constructed with any of the alternative set of materials. To compare and decide the minimum cost of at which a function can be performed, the cost of each building component (such as walls, roof or finish) is considered separately.