Introduction
- A company had a factory land which was later redeveloped as an IT Park.
Situation
- The property was completely developed and there was no balanced potential development over the said land parcel.
- The entire IT Park was on lease to different lessees.
- The valuation was to be done only for land as building was separately considered in the books of accounts of the company.
- There were no comparable available or sale land transactions.
Q&A
Question Arise –
- How to arrive at the Land Value?
- What is the best approach to valuation?
Answers written down –
After having several discussions with the client, observations during physical inspection and detailed analysis, we managed to conduct the exercise and provide the value that it is neither overvalued or undervalued. We broadly worked as follows:
- We had observed that the market had available comparable transactions for office spaces.
- Hence, we have valued the land by FSI basis under market approach where rates of available comparable transaction for office spaces were considered for the entire developed area and suitable discounts were applied for site size and developer’s profit.
Read More: Valuation of an under-construction commercial project by Discounted Cash Flow (DCF)