is the most suitable for residential properties, to determine Property Market Value.

We will research the property prices in the market for properties which are similar to the one being valued, comparing all the technical details about it. 

The logic of this method is based on the Principle of Substitution.

What it means is that a buyer will not be prepared to pay more for the property to be valued (the subject property) than it would cost him/her to buy a similar property of more or less the same standards and technical details.

The Income Capitalisation Approach is one of the three approaches we can use. It is not an independent system of valuation unrelated to the other approaches.

This method is based on the principle that the value of a property comes from its net returns, or what is known as the "present worth of future benefits." 

The future benefits of income-producing properties are the net income estimated by a extrapolation of income and expense along with the anticipated proceeds from a future sale. 

These benefits can be converted into an indication of market property value through a capitalisation process and discounted cash flow analysis. 

The Capitalisation approach looks the yearly net income of the property, assuming the property is fully let at market related rentals, and market escalations, with provisions made for vacancies (if required). 

Market related property expenses are then deducted, resulting in a net annual income which is then capitalised at a market related capitalisation rate.

uses the cost approach in assessing the value of property, where direct market evidence is limited or unavailable.

The current cost minus physical deterioration and all relevant forms of deductions and buyers resistance.

The value of the land, which will be determined by using the direct comparable methodology, will be added to the depreciated value of the improvements to obtain the Depreciated Value of the property.

applies to commercial property valuations, where the main component is the profitability of the businesses that occupy the buildings and not simply the land or buildings themselves. 

Situations where the profits method of valuation is used include hotels, guest houses, pubs,cinemas,business hubs,etc 

When market information is unavalable to reliably determine the value of a commercial property, then valuing the property using the profits method can be used to overcome the lack of data.

is a way of valuing a property that has development potential. 

Whether a particular property has good potential to be used in property development will depend upon the increase in property value exceeding the cost of building work. 

This kind of project can be studied to establish the overall financial viability of it before committing to a detailed financial analysis of costs and expected benefits of the property development.