Getting a property valuation: who needs one and what are the requirements?

Serena Lau is managing director of RHL International, a Hong Kong-based valuation firm. She talks about how property owners can get a valuation and what the requirements are to get one.

How can a property owner get a professional valuation?

It is not common in Hong Kong for buyers to request a valuation report from a real estate appraiser. Nonetheless, landlords, investors and listed companies would need a professional appraisal of the market value of their portfolios. For example, a big landlord may want to gauge how much his portfolio is worth on the market. It is a must for listed companies to publish a formal valuation report on their portfolio to meet accounting and auditing requirements. As part of due diligence, it is also common among buyers of luxury houses, whole-block buildings and development sites to assess the value of the premises they are looking to purchase before negotiations begin. In fact, most banks rely on us to provide valuations on properties so they can determine whether or not, or how much, they are going to lend to mortgage applicants.

How does the valuer assess a property’s value?

For most residential properties it is common to use the comparison method, because Hong Kong has a very transparent market and ease of access to market data and evidence. The underlying methodology is relatively simple. Market data such as transactions of comparable properties are analysed to provide evidence of the market value of the property. If it is an investment or commercial property we might use the income approach.

What sort of information is provided by the appraiser in the valuation report?