Skip to main content

Revealed: How we performed a comprehensive Valuation of a Property within a Special Economic Zone(SEZ)

By December 26, 2022Case Studies2 min read
a comprehensive valuation of property within a SEZ

Introduction

A Software/IT company had a land parcel at SEZ(Special Economic Zone) with specific benefits of consumption of FSI (Floor Space Index) within a speculated course of time.  

The Situation

  1. The company has consumed very less FSI in comparison to the potential/ benefits of FSI approved by SEZ.
  2. Timelines for consuming the benefits of FSI approved by SEZ have lapsed.
  3. There are many other land parcels available at SEZ with the benefits of FSI.
  4. Allotted land should be used for Software/IT exports only.
  5. Developed property cannot be rented/sold if not developed allotment of land stands canceled by SEZ. 

The Burning Question

How do we arrive at the value of existing developed property (Land & Building)?

Answers we wrote down

After several discussions held internally, we managed to conduct the exercise & provide the value of the assets. We also ensured that the assets are correctly valued.  Our response to the question that arose was as follows:

  • We have arrived at the value of land based on FSI-based valuation considering total available/potential FSI over its less lapsed FSI area which gives us an exact value of land with its consumed FSI.
  • The value of the building was arrived at by cost approach as developed property cannot be rented/sold.

Also Read, Valuation of a partially-constructed Thermal Power Plant