RICS Draft Update to the Global Red Book

Red Book Global Update 2022 - Proposed Changes

VPGA 4 Individual trade related properties

  1. Background 

1.1 Certain trade related properties are valued using the profits method (also known as the income approach) of valuation. The guidance below sets out the principles of this method of valuation but does not concern itself with the detailed approach to a valuation, which may vary according to the property to be valued. 

1.2 This VPGA relates only to the valuation of an individual property that is valued on the basis of trading potential. IVS 230 Inventory focuses on the valuation of physical goods that are not real property and which will be used in future production processes (i.e. raw materials, parts, supplies, goods used in the production process and goods awaiting sale). 

1.4 Other types of properties, such as car parks, garden centres, caravan parks and crematoria, fulfil the requirements at 1.3 and are valued in some jurisdictions with reference to trading potential using a profits approach. This list is not intended to be exhaustive. A further subset of properties includes those where the adaptation in use or restraint on flexibility is less marked, but a valuation based on an income approach, including many aspects of this VPGA, may still be regarded as the best indicator of value. A non-exhaustive list of examples includes self-storage, flexible workspace, purpose-built investment student housing and data centres. The choice of method will be a matter for valuer judgment having regard to the specific type, form and use of the property and market circumstances prevailing, and evolving, at the time.