Commercial property valuations

March 7, 2024

Commercial property valuations – All you need to know | Frequently asked questions

A commercial property valuation refers to the professional assessment conducted by qualified valuers to determine the market value of a commercial property. This valuation process considers numerous factors such as the property’s location, size, condition, income potential, comparable sales, rental income, expenses, and prevailing market trends. It aims to ascertain the worth of the property in the current market scenario and is utilised for various purposes including sales, insurance, acquisitions, financing, taxation, lease agreements, and investment decisions related to commercial real estate.

A commercial property can also be assessed for its replacement cost for the purpose of obtaining adequate insurance cover.

Below are some of the frequently asked questions we receive regarding commercial property valuations.

Should you have questions, email us at info@mirfin.co.za and let’s explore the best approach for your unique situation.

All you need to know about Commercial property valuations.

Who conducts commercial property valuations?

Certified property valuers, often experienced in commercial real estate, perform commercial property valuations. Professional valuers possess expertise and experience in property valuations. They use standardised methods and have access to current market data, enabling them to provide an accurate estimation of your property's value. Their knowledge helps in considering various factors that influence property prices, ensuring a more precise valuation.

What does the valuation report include?

Mirfin’s professional commercial property valuation report includes:

A detailed description of the property and its environment
A detailed description of the building, including design, construction, building materials, etc.
Risk and maintenance observations such as overall state of maintenance, fire safety, security, retaining walls, etc.
A detailed breakdown of the building’s construction cost
An analysis of comparable sales and rentals
Income capitalisation calculation
Interior and exterior photographs
Supporting documents such as title deed information, site diagrams, aerial imagery etc.

What factors influence the valuation of a commercial property?

There are many factors that can affect the valuation of a commercial property, such as:

Location of the property
Size of the property
Condition of the property and the improvements thereon
Income capitalisation
Comparable sales & rentals in the vicinity
The property’s renovation potential
Nearby amenities
State of the economy

However, not only the factors, but also the valuation method used to assess a commercial property is essential to ensuring that it is priced correctly.

For example, consider a situation in which you want to get a bank loan and your property is going to be used as security in return for providing credit facilities. Which valuation method should be chosen? Your bank will typically insist on a valuation based on the market value. By understanding the property's market value, they gain insight into its potential resale value, allowing for a more accurate estimation of the funds they could recoup in case of a lender default.

But the market value approach is not the right choice in case you want to insure your commercial property, because in case of insurance, a replacement cost should be defined.

Read more about our property valuation methods.

How often should I get a commercial property revalued?

While South African legislation doesn't specify the frequency for commercial property revaluations, property owners bear the responsibility of conducting these assessments prudently. The timeline for reassessment can vary significantly based on multiple factors, including interest rate fluctuations, sectoral changes, market dynamics, alterations in property use, loan renewals, or policy adjustments by lenders.

Commercial property owners should also remain attentive to various local triggers necessitating property revaluation, such as shifts in local zoning regulations, emerging developments in the area, or substantial property improvements. These factors, alongside rapid macroeconomic changes, emphasize the importance of periodic revaluations.

Industry standards recommend reassessing commercial properties every 3 to 5 years as a benchmark. However, this timeline isn't rigid and should be adjusted based on specific property circumstances and market dynamics. Mirfin’s commercial property valuers stay informed about all these factors to be able to help property owners align valuations with current market realities and make informed decisions regarding their commercial assets.

Certain of the optimal valuation cycle for your commercial property? Our expert team is here to provide tailored advice to suit your unique needs. Contact us today and get a free quote for your property valuation needs.

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What is the difference between a commercial and residential property?

A commercial property is real estate that is used for business purposes, such as retail stores, office buildings, factories, restaurants, healthcare facilities, etc.

A residential property is specifically used for personal accommodation. Examples include stand-alone houses, apartment buildings, homeowner associations, etc.

Can I get a valuation for a mixed-use property?

Mirfin is experienced in determining the value of mixed-use properties.

Click here to learn more about our valuers.

What is Mirfin’s “Low-Price Guarantee”?

We pledge to beat any price for the same service offering. However, in the event of a reduced fee, Mirfin’s professional liability will be adjusted to that of its direct competitor.
But why put yourself personally at risk for the sake of saving the body corporate a few hundred rand?

Get a quote

Why choose Mirfin for your property valuation?

Best price guarantee

We will beat any price for the same service offering.

20 years

We are industry pioneers and industry leaders for over 20 years.

600 000 + clients

We’re a South African nationwide property valuation services provider for homeowners, property managers, insurers, brokers & attorneys.

One-click quotations

No time for filling in forms? Just click the button for an instant quote and share it with your clients.

98% service coverage

Our surveyors are situated in the densely populated areas of Johannesburg, Pretoria, Cape Town, Durban, Bloemfontein, Port Elizabeth, East London and Mossel Bay.

17% extra discount

Save on average 17% in premiums for your insurance broker with Mirfin’s property insurance valuation report .

Know how your property rates are calculated in South Africa

Property rates, also known as municipal rates or property taxes, are charges imposed by municipalities on property owners. These rates are a significant source of revenue for local governments, enabling them to provide essential services to residents, such as road maintenance, refuse removal, and local infrastructure development. The amount you pay in property rates is determined by the municipal valuation of your property.

Calculating Body Corporate Levies: A Comprehensive Guide

Many bodies corporate use inadequate three-column budgets, comparing the previous year’s budget with actual spending and the current year’s budget. Trustees may be biased when proposing levies, driven by personal reasons like financial difficulties or a desire to sell their unit. Typically, the managing agent suggests a levy based on the updated budget, approved by trustees before the AGM.