A Guide to Property valuation in Cambodia
According to the Asian Development Bank (ADB), the projection for Cambodia’s economic growth forecast for 2023 was lowered from its initial projection of 6.5% to just a 6.2% growth rate as a result of the impact of the global economy. It indicates that the economy is uncertain and vulnerable to changes by both domestic and international factors. During economic uncertainty, the real estate market will face some problems including a decrease in real estate investments, an increase in foreclosures, an increase in rental property rates, a longer time to rent or sell properties, etc. Therefore, conducting a property valuation can be very beneficial in managing, investing, buying, or selling properties and determining further development advantages, etc. Property valuation does not limit only to residential property but is also applicable to land valuation, commercial building valuation, development valuation, and more. Check out our guide to property valuation in Cambodia to learn more and plan more accurately for a promising real estate investment!
What is Property Valuation in Cambodia?
Property valuation refers to the assessment of any type of property to find out the property’s value. Usually, a property valuation will be determined based on the property’s background such as location, building structure and condition, size and architectural style, and many more. Once all factors are considered, a valuation of the value of the property will be made. However, property valuation is different from the real estate market price. The valuation is essentially the opinion resulting from the valuation process that is compliant with International Valuation Standards. It is an estimate of either the most probable monetary consideration for an interest in an asset or the economic benefits of holding an interest in an asset on a stated basis of value. On the other hand, the market price is the amount asked, offered, or paid for acquiring an asset.
Why is Property Valuation Important?
Here are some benefits of property valuation:
- Sell or buy the property without settling for a price that is under or above the market value of the property
- Set a good price for leasing or renting the property with the help of the property valuation
- Get the right amount of mortgage loan since the loan amount may vary according to the property value
- Easier to file taxes information, transfer property to another person, do due diligence, auditing, and accounting or other joint-business venture as well
- Help to understand the strengths and weaknesses of the property
- Highlight where renovation should be done to help raise property value without overspending on renovation fees
- Ensure that the property has an adequate amount of insurance coverage
Who is Responsible for Property Valuation in Cambodia?
In Cambodia, if you want to have a valuation done for your property, property owners can reach out to an experienced surveyor, property valuation experts, or real estate agencies that offer property valuation services. In Cambodia, many trusted real estate agencies offer quality and legitimate property valuation services for those who need them. CBRE, for instance, offers leading valuation and advisory services in Cambodia on more than 470,000 real estate properties per year.
How is Property Valuation Done in Cambodia?:
There are multiple approaches that the property valuator can use when conducting a property valuation. Here are some of the methods that can be used:
- Market Approach: is based on comparing the subject property with identical or similar properties for which price information is available such as a comparison with market transactions in the same or closely similar type of properties within an appropriate time horizon.
- Income Approach: is based on capitalization or conversion of present or projected cash flow (inflow and outflow of cash) to assess the value of the property. The valuer will most likely consider the estimated gross income of the property, expense vacancy rates, net operating income, return rate, and market rate of the property.
- Cost Approach: is based on the economic principle that a purchaser will pay no more for a property than the cost to obtain one of equal utility whether by purchase or construction.
- Discounted Cash Flow Approach: is based on future cash flow or income made by investing or buying the property and proceeds to discount that amount to come to an estimate on the property value at the present time.
FAQ about Property Valuation:
What elements are considered during the valuation?
During property valuation, there are many elements taken into consideration. Besides considering location, size, building structure, and conditions, the valuer will consider the building’s age, and physical features such as the number of rooms, lot size, access to amenities, access to the property, type of property, and other economic factors..
What to prepare before putting assets for valuation?
If you want to increase the value of your property, it is recommended that before having an expert conduct a property valuation, property owners should take some time to clean and declutter the place to make it more pleasant and easy to consider all aspects of the property. It is also a good idea to have some paperwork ready for the valuation process, and have answers on what to do with the property.
What to expect when putting assets for valuation?
During property valuation, property owners should expect that the valuator will assess the property value fairly and independently. The valuator will thoroughly check both internal and external details of the property by doing a site inspection taking all the elements into account before giving you an estimated value of the property. The valuator will also provide property owners with some insight into the recent property sales and other property values to guide the property owners with their decision-making as well.
Ultimately, property valuation will be beneficial to both property owners and buyers, investors, and more when wanting to get an accurate estimation of the property value. By conducting a property valuation, everyone can have a better judgment on whether to sell or buy or rent the property. Moreover, the valuation will also help with financial reports, taxation, property transfer, and so on. If you are a property owner in Cambodia wanting to have a property valuation for any of your properties, you can refer to CBRE for their expert services and experiences in property valuation in Cambodia.