Estimating the Market Value of the Land and Separately, the Building, of a Real Estate Property Designated for Office Space
Estimating the Market Value of the Land and Separately, the Building, of a Real Estate Property Designated for Office Space

Summary/Abstract: The main purpose of this article is to estimate the market value of the entire property by applying various valuation methods, such as the direct comparison method, the income approach, and the cost approach. The primary objectives of the project are: providing general information about real estate properties and their classification, describing the methods for valuing land and buildings, and conducting a case study to estimate the market value of the land and building.To estimate the market value of the land, the direct comparison method was applied, which involved collecting and analyzing data on comparable sales and adjusting this data to reflect distinct characteristics between the comparable properties and the subject property. For estimating the value of the property, the income approach was used, through which data on its income, vacancy losses, and other expenses were collected. By applying the cost approach, the replacement cost of the building was estimated, and depreciation was subtracted to estimate the market value.In the case study, I aimed to estimate the land and building separately, using appropriate valuation methods and techniques suitable for the type of property use. This type of property is based on the following legal aspect: the building and the land are owned by different owners. There is an agreement between the two owners that allows the building owner to use the land for free for the duration of the building's existence. The agreement also stipulates that, at any time, the building owner can decide to buy the land, and the landowner has the option to purchase the building.In this context, I estimated the special value that the building owner should pay to acquire the land, and similarly, the estimated special value that the landowner should pay to purchase the building. The results highlight the importance of a precise and well-founded valuation, demonstrating the relevance of the methodologies used.

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