Market Rent Valuation

JK Valuation is experienced in undertaking market rent valuations and determinations with experience across all major property classes. ‘Market rent’ is defined by the International Valuation Standards Council (IVSC) as “the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

The accurate measurement of area is a critical step in assessing a market rent, noting that different property classes have different measurement methods, which can have a significant impact on the market rent. The Australian Property Institute recommends the measurement of area in accordance with Method of Measurement published by the Property Council of Australia and International Property Measurement Standards published by the International Property Measurement Standards Coalition. t is important for the Valuer to consider which measurement convention and metric is adopted by the market being assessed, as consistency across rental evidence and the subject property is an important step towards an accurate market rent valuation.

The majority of non-complex commercial holdings are valued on a direct comparison basis with the analysis of a market rate per square metre, however ‘trade related property’ such as hotels, nightclubs, service stations and theatres can be valued using the profits method (also known as the income approach).

Obtaining quality advice within this specialised field of valuations is imperative to ensuring a satisfactory outcome for both the lessor and lessee.