Glossary - Welcome

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Adverse Possession: Obtaining legal rights to real estate by occupying it for a certain period and paying rates and taxes.

Airspace Rights/Air Rights: Rights granted by the owners of land to another party to permit use of the air space above the surface or a specified stratum of airspace of the owners’ land. Also potential floor space rights that exist particularly over a heritage property and which can be sold and transferred to another development.

Amortisation: The process of recovering, over a period of time, the capital investment through scheduled, systematic repayments at regular intervals. Periodic contributions to a sinking fund to discharge a debt or make a replacement at a future date.

Anchor Tenant(s): The prime tenant(s), for example, a supermarket in a shopping centre, which is a main attraction to the centre.

Annuity: Means ‘Annual Income’. It is used to refer to an arrangement under which periodic payments are made to a person in return for the investment of a lump sum, usually for the purpose of providing retirement income.

Appraisal: American term for valuation.

Appreciation: Increase in value due to many factors directly and indirectly impacting externally or internally on assets.

Area: The surface extent of a site, building, suburb, farm, or region, measured in square units, usually in square metres or hectares.

Asset Register: A record of items considered work of identification as discrete assets. An asset register includes information about each asset, such as type of construction, technical details, date of acquisition, original cost, accumulated depreciation, written down value, etc.

Asset Or Assets: To assist in the readability of the standards and to avoid repetition, the words “asset” and “assets” refer generally to items that might be subject to a valuation engagement. Unless otherwise specified in the standard, these terms can be considered to mean “asset, group of assets, liability, group of liabilities, or group of assets and liabilities”

Assumed Use: A Premise of Value or Assumed Use describes the circumstances of how an asset or liability is used.

Base Rent: The minimum acceptable rent provided in a net lease. The commencing rent in a lease usually with the addition of a ‘percentage rent’ based on turnover.

Benchmark: The statistic against which performance is measured. Benchmark can be median, weighted average or another performance statistic.

Betterment: The enhancement in value of real estate due to the implementation of a town planning scheme or a public work. An insurance term generally used to identify the potential improvement inherent in replacement assets following a loss. Such potential improvements are not usually allowed when assessing the insurable value of an asset either pre or post loss.

Building Approval: Approval from the relevant authority for construction.

Building Area (Gross): The total enclosed and unenclosed area of the building at all building floor levels measured between the normal outside face of any enclosing walls, balustrades and supports. The unit of measurement for building areas is the square metre or square feet.

Building Code: Sets minimum standards for building in terms of health, safety and amenity in buildings for regulatory purposes.

Buyer’s Market: When prices are relatively low giving buyers an advantage in the market. (eg. oversupply of particular housing/office stock occurring).

By-laws: Published rules and regulations for the administration and management of a local/county government area. It includes rules for land use and development, planning and building.

Capital Cost: The cost associated with the acquisition of fixed assets, the accumulation of data or the gaining of intellectual rights. The strict definition of capital relates to the proprietorship or owner’s equity.

Capital Gains: The amount by which the net proceeds from resale of a capital item exceed the book value of the asset.

Capital Value: The capital sum which a property unencumbered by any mortgage or other charge might in ordinary circumstances be expected to realise at the time of valuation if ordered for sale on reasonable terms and conditions.

Capitalisation: The process of determining the yearly net income in terms of the amount of capital it would be necessary to invest in order to receive that income, calculated at a given rate of interest. It is the method of determining the value of a property by reference to net income and an expected percentage yield.

Capitalisation Rate: The rate at which Net Operating Income is discounted to determine the value of a property. It is one method that is utilised to estimate property value. The calculations are as follows:
Property value estimate = net operating income / capitalisation rate

Cash Flow: That financial flow which is being discounted, which may be:
Net operating income and net proceeds from sale (before tax and before financial flows);
Before tax and after finance (equity flows);
After tax and after finance (true cash flow).

Catchment Area: The geographical area from which a shopping centre may draw its potential customers. They are usually divided into Primary (60%-65% of customers), Secondary (20%-30% of customers) and Tertiary (balance).

Caveat: A notice on title proclaiming a possible interest other than that of an owner.

Certificate of Title: A document issued by a title office under a Torrens System of Title, showing ownership and interest in a parcel of land.

Chattels: Items such as machinery, implements, tools, furnishings, fittings, which may be associated with land use, but which are not fixed to the land or premises or, if fixed, may be removed without causing any structural damage to the building.

Commercial Premises: A building or part of a building used as a business office or for other commercial or business purposes.

Commission: The fee or payment made to an agent for services rendered, such as the sale of a property, often calculated with reference to the value of property.

Common Areas: The fee or payment made to an agent for services rendered, such as the sale of a property, often calculated with reference to the value of property.

Common Areas: For lease purposes, the areas of a building and its site that are available for non-exclusive use of all its tenants; e.g. lobbies, corridors, parking lots, etc.

Compliance: Where real property conforms to statutory requirements.

Compound Interest: Where interest is calculated on a sum that includes previous interest payments.

Compulsory Acquisition: Where an asset is acquired by a statutory authority through legislation.

Consequential Loss: An unintended loss which arises from the initial action or change of circumstances. Insurance term relating to loss of profits as a result of business interruption following the occurrence of an insured peril.

Contiguous Property: Adjoining property.

Contingency: Allowances for unforeseen eventualities, generally as a percentage cost which reduces with progress through the phases of a project.

Conveyance: An instrument (i.e. document) which transfers property or a right in property from one person to another.

Covenant: An agreement between two or more parties to adhere to certain terms, conditions or restrictions regarding property, often written into a deed or other legal instrument such as a Certificate of Title.

Client: The word “client” refers to the person, persons, or entity for whom the valuation is performed. This may include external clients (i.e., when a valuer is engaged by a third-party client) as well as internal clients (i.e., valuations performed for an employer).

Cost Approach: The cost approach provides an indication of value using the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction, unless undue time, inconvenience, risk or other factors are involved.

DCF (Discounted Cash Flow): A method of analysing investment opportunities in which annual cash flows are discounted and accumulated to arrive at their Present Value (PV). Also used as a basis in certain types of property valuations.

Deferred Income: An income, which is paid after a laps of time.

Demised Premises: The area held under the terms of a lease.

Depreciable Asset: A non-current asset having a limited useful life.

Depreciated Replacement Cost Approach: A valuation method where the value of an asset is determined by reference to the new cost (replacement or reproduction cost including fees) of the asset less depreciation for physical, functional, technological and economic obsolescence.

Depreciation: In accounting terms, the writing down of the original cost of an asset systematically over the life of that asset. An effect caused by physical deterioration, or obsolescence, or both;
Accrued: the difference between the original cost of the asset and the written down value;
Book: the amount reserved upon the books of an owner to provide for the retirement or replacement of an asset, as distinguished from Accrued Depreciation;
Straight Line Depreciation: the provision each year of a fixed proportion of the original cost of the asset;
Diminishing Value Depreciation: the provision by annual instalment of a diminishing amount computed by taking a fixed percentage of the book value of the asset as reduced by previous provisions.
In valuation terms, the writing down of the current cost of an asset to calculate its current value. The accumulated effect on the value of an asset due to physical, functional, technological and economic obsolescence.

Developers Profit/Risk Margin: Profit calculated as a percentage of the total cost of development before income provisions.

Development Cost: The cost to create a project including direct costs of labour and materials, contractor’s overhead and profit, plus indirect costs such as taxes and development loan interest.

Disbursements: Recoverable costs.

Disclosure Statement: A schedule of information, as required under retail lease legislation that must be provided by a lessor prior to the new lessee’s lease or assignment to lease.

Discount: A reduction in a payment and includes reduction of future payments to present worth.

Discount Rate: The interest rate used to discount future cash flows to determine Present Value.

Disturbance: Any loss sustained by a dispossessed owner that flows from compulsory acquisition.

Due Diligence: An investigation of the legal, financial and physical nature and characteristics, including the entitlements and liabilities attaching to and arising from a real estate asset or assets, usually for acquisition or compliance purposes.

Easement: A right to use the land of another. Most commonly used where Government authorities have the right to run, for example, electrical mains or drainage through private property.

Economic Life: The effective life of an asset which, due to economic reasons, will be less then the assumed physical life.

Effective Rate of Return: The actual rate of return obtained after adjusting for rental concessions or impending vacancies.

Encroachment: Where a building extends beyond its surveyed boundary.

Encumbrances: A charge or liability on a property; for example, a mortgage or a special condition on the use to which it may be put (e.g. easements, restrictions and reservations).

Enhancement: Where a change (e.g. re-zoning) or some other external factor increased the value of an asset.

Environmental Audit: The review of environment management practices; in particular, the evaluation of a site for environmental liability.

Equitable Value: The estimated price for the transfer of an asset or liability between identified knowledgeable and willing parties that reflects the respective interests of those parties.

Face Rent: The rent shown on a lease document which may not include outgoings or the effect of incentives.

Facility Management (FM): The purposes of planning, managing, maintaining, rationalising and accounting for facilities and associated services while simultaneously seeking to reduce the associated overall costs. The primary focus of facilities management is to provide the optimum level of facility for the least financial outlay.

Feasibility Study: A financial analysis usually included in a report of a proposal to change or develop an asset. A project is ‘feasible’ when analysis indicates that there is a reasonable likelihood of satisfying explicit objectives and when a selected course of action is tested for fit to a context of specific constraints and limited resources.

Fee Simple: The fullest and highest possible interest one can possess in real estate. Ownership of unlimited duration. Upon owner’s death, real estate will pass to their heirs.

Fittings: Installed items that may be removed from real estate without causing irreparable damage to the land, structure or use of the premises.

Fixed Assets: Non-current assets intended for use on a continuing basis in the operations of an entity. Fixed assets include tangible assets (such as property, plant and equipment), intangible assets (such as goodwill, licences and contracts) and financial assets. The term is something of a misnomer as it includes ships, aeroplanes, locomotives, rolling stock and motor vehicles as well as land, buildings, plant and machinery.

Fixtures: Appurtenances affixed to structures or land, usually in such a manner that they cannot be independently moved without damage to themselves or the property housing, supporting or pertinent to them.

Floor Area: Generally means the useable floor space of a building. Can be defined in a number of different ways depending upon the type of building.

Forced Sale Value: Defined by the IVSC as ‘the amount which may reasonably be received from the sale of (an asset) within a time frame too short to meet the marketing time frame of the market value definition’.

Freehold: The highest form of interest in land, and the nearest the law allows a real property owner to approach property ownership. A freehold estate is one which is of unlimited duration, that is to say, it cannot be said of an estate of freehold at the time of its creation when it will come to an end.

Frontage: Refers to the boundary of land that abuts a roadway.

Furniture: Moveable articles, such as tables, chairs, desks, beds, cabinets, wardrobes, etc. required for functional or ornamental purposes in buildings.

Future Value: The value of an asset at a specified date in the future. The value of an asset today is the Present Value of its future value discounted at an appropriate rate.

Fair Market Value: The price a willing buyer would pay a willing seller in a transaction on the open market.

Forced Sale: Circumstances where a seller is under compulsion to sell and that, as a consequence, a proper marketing period is not possible, and buyers may not be able to undertake adequate due diligence.

Going Concern: A continuous business. Typically where the owner of the real estate is the operator of the business, the title of all interests is transferred with the land and the value of the property comprises the real estate, the business goodwill and the furniture, fittings and plant and equipment used in the operation of the business.

Goodwill: An intangible, saleable asset arising from the reputation of a business and its relationship with its customers.

Gross Annual Value: The annual income producing capacity of real estate before deduction of outgoings.

Gross Building Area (GBA): Total square metres of floor space within a building envelope.

Gross Effective Rent: Gross potential rent less vacancies and credit losses.

Gross Lettable Area (GLA): Used for calculating tenancy area in warehouses, industrial buildings, free standing supermarkets, and showrooms.

Gross Rent: The rental reserved/derived where all operating costs of the property are included in the rental.

Ground Lease: A lease which gives the right of use and occupancy of land; normally on the condition that the lessee erect buildings of a certain nature and standard.

Ground Rent: The net rent paid for the right of use and occupancy of a parcel of unimproved land, or that portion of the total rental paid that is considered to represent return upon the land only.

Head Lease: A lease between the freeholder of land and buildings and the main lease holder, who may not be the occupier.

Highest and Best Use: The permissible property use that at a given point of time is deemed likely to produce the greatest net return in the foreseeable future, whether or not such use is the current use of the property. The most likely use of an asset which is physically possible, appropriately justified, legally permissible, financially flexible and which results in the highest value of the asset being valued.

Historical Cost: The actual cost or first cost of an asset at the time it was originally constructed.

Holding Costs: Often used to refer to a property awaiting further development. Expenses, charges or costs which are met in order to keep real property from year to year, including both fixed charges and variables such as taxes. (Also known as Carrying Charges).

Holding Period: The time period for which an asset is held by an investor.

Hypothetical Development: A method of feasibility analysis in which the development of land is envisaged in a hypothetical exercise and all the estimated costs of the proposed development are taken into consideration. The probable net returns from the development are then calculated as a test for its economic viability.

Improvement: Works undertaken on a site (usually buildings) which enhance its value.

Improvements: Buildings or alterations (e.g. dams) to land. Improvements may be to the land (such as drains, levelling, clearing, removal of stone), or on the land (such as buildings and fences).

Income Capitalisation Value: The indication of value derived for an income-producing property by converting its anticipated benefits (cash flows and reversion) into property value in one of two ways; direct capitalisation of expected income or discounting the annual cash flows for the holding period at a specified yield rate.

Indemnity: A form of contract arising where a person undertakes to compensate another for loss he may suffer as a result of a transaction with a third party.

Industrial Property: Improved real estate used for the purpose of manufacturing, processing or warehousing goods.

Initial Yield: The initial yield is the percentage return on price or value derived from current net passing income. This is merely a statement of the ratio between the initial income and price or capital value, expressed as a percentage. No allowance is made for any future rent growth.

Injurious Affection: Loss or damage of non-physical nature to land remaining with a dispossessed owner after a partial compulsory acquisition. Excludes any sentimental value.

Instruction: A verbal or written advice to undertake professional services.

Interest In Land: A legal right to enjoy land whether wholly or in part.

Inventory: A detailed list of stock held in a store or department.

IRR (Internal Rate of Return): The discount rate that equates the Present Value of expected future cash flows to the cost of the investment outlay. A measure of investment yield.

Income Approach: The income approach provides an indication of value provided by converting future cash flow to a single current value.

Intended Use of the Valuation: The use(s) of a valuer’s reported valuation or valuation review results, as identified by the valuer based on communication with the client.

Intended User of the Valuation: The client and any other party as identified, by name or type, as users of the valuation or valuation review report by the valuer based on communication with the client.

Investment Value/Worth: The value of an asset to a particular owner or prospective owner for individual investment or operational objectives.

Land Economist: A practitioner of property economy, the study of and administration of all land and property matters.

Land Tax: A tax payable annually in respect of the beneficial ownership of land, the rate of which is determined by the assessed valuation. Usually based on unimproved value of land.

Lease: A contract whereby possession and use of land or property is transferred for a limited period in return for rent and under certain specified conditions.

Leasehold: Possession and use of a property by virtue of a lease.

Leasehold Value: The value of the lessee’s interest. Where the rent paid is lower than the market rent, the capital value of the lessee’s interest is the Present Value of the profit rent for the unexpired lease term or until the next rent review.

Leasing Incentives: Inducements offered by landlords to attract tenants to lease space. Typically occurs when supply exceeds demand but in order to maintain value by not lowering face rent or contract rent, tenants are given incentives such as rent free periods, cars and other gifts. Often such inducements are secret. The discount or contribution offered to the lessee at the commencement of a lease which may be applied at the start, during, or at the end of the lease term and is outside the lease terms. The incentive may include cash contribution, a tenancy fit-out or a rent free period.

Lessee (Tenant): A person/legal entity who receives the right to occupy and use a property under the terms of a lease.

Lessor (Landlord): The owner of a property who transfers the right to occupy and use property to another by way of a lease agreement.

Liquidity: The ability of an investment to be easily converted into cash with little or no loss of capital and minimum delay.

Listing: A term commonly used by agents for obtaining an instruction to sell or lease real estate.

Loan To Value Ratio: The ratio of the whole loan principal amount divided by the property’s value amount.

Location: A characteristic of land referring to linkage and exposure relationships with other sites and their uses.

Liquidation Value: The amount that would be realised when an asset or group of assets are sold on a piecemeal basis.

Maintenance: All actions necessary to keep an item or asset in operational condition.

Make Good: The obligation of a lessee at the end of occupation to ensure that premises are returned in the same condition as at the commencement of the lease; for example painting, partitions, etc.

Market Comparison Approach: A method of valuation whereby the evidence derived from the analysis of sales or leasing of similar assets is used to demonstrate value.

Market Price: The price actually paid, or agreed in a contract to be paid, for an asset. It differs from market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved. Market price may involve circumstances not normally included in market value.

Market Rent: The likely market rent that an asset could command on the open market as indicated by current rents being paid for comparable assets. Can also be known as open market rent or fair market rent.

Market Rental Value: The estimated amount for which an asset should rent, as at the relevant date, between a willing lessor and a willing lessee in an arm’s length transaction, wherein the parties had each acted knowledgably, prudently and without compulsion, and having regard to the usual terms and conditions for leases of similar assets.

Market Review: A review of rental levels under the terms of the lease (often periodic) with reference to prevailing market rents. Market review varies from lease to lease due to the specifics in the lease which state what factors are to be incorporated into the market review.

Market Value: Market value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after property marketing, wherein the parties had each acted knowledgably, prudently and without compulsion.

Mechanical Services: All those services in buildings that involve motors, machines, or the flow of heated or cooled fluids, usually in conjunction with electrical or electromechanical controls. The terms ‘building services’ and ‘mechanical services’ overlap to some extent.

Mezzanine: An intermediate floor within a room;
A low storey between two other storeys of greater height; also called ‘entresol’; or
A partial story between the ground floor and first floor of a building.

Monthly Tenancy: A lease of property from month to month and determinable on a month’s notice. Often arises after a longer lease expires.

Market Approach: The market approach provides an indication of value by comparing the asset with identical or comparable (that is similar) assets for which price information is available.

Market Rent: Market Rent is the estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Market Value: Market Value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

Net Income: At a property level, gross income less total outgoings on an accrual basis.

Net Lettable Area (NLA): Used to refer to tenancy areas in office buildings, and office and building parks. Can apply to whole or part of building.

Net Rent: The rent to the owner free of all outgoings (i.e. gross rent less outgoings).

NPV (Net Present Value): The aggregate Present Value of the projected cash flows less the opening amount. The capital amount equivalent to the sum of the periodic net cash flows discounted by the required rate of return. That is, the capital sum a hypothetical purchaser would be willing to pay for an expected net income stream that would provide that purchaser his/her required return. The Net Present Value is calculated as the sum of the Present Values of all periodic cash flows excluding any ‘opening value’ or ‘initial purchase price’, using a constant discount rate to find the Present Value of each periodic cash flow.

Occupancy Cost: The total of cost incurred by a tenant to provide space for operations. It includes net rent, operating costs (outgoings), capital costs, taxes, insurance and depreciation allowances.

Occupancy Rate: Represents occupancy expressed as a percentage of total capacity available during a survey period; e.g. for the period providing that, for establishments closing (other than for seasonal reasons) or opening during the survey period, the denominator of the expression below includes only operating periods.
Calculation for room occupancy rate (%) = room nights occupied ÷ [(guest rooms) x (no. of days in the period)] x 100.

Outgoings: Total annual costs involved with owning or operating real estate, e.g. rates, insurance, cleaning, agent fees, etc. (Income tax is not an outgoing).

Owner: In relation to land, the owner includes every person who jointly or severally whether at law or in equity:
1. is entitled to the land for an estate of freehold in possession, or
2. is entitled to receive rent or profits thereof, whether as beneficial owner, trustee, mortgagee in possession or otherwise.

Practising Valuer: A licensed valuer who is registered and licensed to practice by the Valuers Registration Board.

Party Wall: The wall between two adjoining buildings or occupancies which provides common structural support and (fire) separation.

Passing Rent: The current rental being paid by the lessee as specified by the terms of the lease

Passing Yield: The yield based on rent being paid at date of calculation.

Plot Ratio: A measure of the intensity of the permissible use of a piece of land. It is the ratio between the total permissible floor area of a building and the area of the site of that building. If a planning scheme provides that the maximum plot ratio is 10 that means that the total floor space of the building must not be more than 10 times the area of the site of that building.

Practical Completion: The stage reached when a project has been essentially completed and is fit for its intended purpose, except for minor omissions and defects that do not prevent its use, and with tests required under the contract having been carried out. Practical completion is market by the issue to the contractor of a certificate of practical completion by the superintendent (usually architect).

Premises: A house, building or other structure together with the surrounding grounds that form part of the title. Also, the real estate forming the subject of a conveyance or license.

Present Value (PV): Current value of future amounts or the value today of a future payment, or stream of payments, discounted at the appropriate discounted rate.

Professional Indemnity: A form of insurance against negligence or defalcation by a professional adviser.

Profit Rent: The difference between the market rent and the current rent or ground rent resulting in a leasehold interest.

Property: At law, property consists of the private rights of ownership. To distinguish between real estate (realty), a physical entity, and its ownership, a legal concept, ownership of land is known as real property. Physical items other than real estate are legally termed ‘personalty’ and their ownership is known as ‘personal property’. The word ‘property’ is used without further qualification or identification may relate to real estate, personalty or a combination. Colloquially, property is anything that can be owned or in which an interest can be held, over which control can be exercised, which can be traded or left in an estate or from which current or future rights to receive benefits can be held. Property can include, but is not limited to, real estate and associated interests therein, personalty, intellectual property, rights, licences and options, plant and machinery, art and jewellery, goodwill and shares.

Public (Open) Space: Parks, recreation reserves, sports grounds and the like available for use by the public generally are public spaces.

Participant or Market Participant: The word “participant” refers to the relevant participants pursuant to the basis (or bases) of value used in a valuation engagement. Different bases of value require valuers to consider different perspectives, such as those of “market participants” (eg, Market Value, IFRS Fair Value) or a particular owner or prospective buyer (eg, Investment Value).

Purpose of Valuation: The word “purpose” refers to the reason(s) a valuation is performed. Common purposes include (but are not limited to) financial reporting, tax reporting, litigation support, transaction support, and to support secured lending decisions.

Rates: Levies by Local and County Government instrumentalities, (e.g. water, etc.)

Real Estate: Physical land and those human-made items which attach to the land. It is the physical, tangible ‘thing’ which can be seen and touched, together with all additions on, above or below the ground. Local laws within each State prescribe the basis for distinguishing real estate for personal property or personalty. Although these concepts are not recognised in all States, they are adopted here to distinguish important terms and concepts.

Rent: A payment made periodically by a lessee to a lessor for the use of premises. (May be effective, gross, face, market, etc.)

Rent Review: A periodic review of rental under a lease using a predetermined method

Rent Schedule: A list of details shown in a lease or sales document which includes the lessor, lessee, description of premises, lease term, etc.

Rental Determination: A valuation report by an independent valuer fixing a rent, in circumstances where a lessor and lessee have been unable to negotiate an agreement.

Replacement Cost: The estimated cost at the date of valuation to replace or build the existing improvements to provide the same standard of utility and appointments, using the most comparable modern materials and construction methods.

Restrictive Covenant: An undertaking to adhere to a specified restriction on the use of real property or (loosely) the restriction itself.

Return on Investment (ROI): One of many ratios used to measure profitability where the return on each dollar invested by the owner is measured.

Reversionary Interest: A deferred interest in property. Often used where property is subject to life tenancies, ground leases, etc.

Reversionary Yield: The percentage return on today’s price or value that will be derived when the current market rent becomes payable. This yield relates the future growth in net income to the historic cost or value of the asset and it is normally quoted together with the date from which it will apply.

Riparian Rights: Rights possessed by the owner or occupier of land on the banks of a stream, river or lake, to use the water there for certain purposes such as fishing and irrigation.

Riparian land: Riparian land refers to the strip of land adjacent to rivers, streams, lakes, or other water bodies. Statutorily, riparian land is defined as stretching at least 6 meters and up to a maximum of 30 meters on both sides of a watercourse from the highest watermark.

Sale And Leaseback: A transaction whereby an existing owner sells an asset to another who then leases it back to the original owner on pre-determined terms and conditions for the mutual advantage of each party.

Special Value To The Owner: A value amount above market value that reflects the particular value an asset has to the owner and the use to which the owner can or does put it to. Excludes any sentimental value.

Stamp Duty: The duty or tax payable on a real estate transaction or lease registration which is calculated on a scale.

Subdivision: Division by a land owner, of all or part of a parcel of land, into separate allotments (or sections), each with a separate title, in accordance with a ‘plan of subdivision’ approved by the planning authority.

Sub-Lease: A contract whereby the whole or part of the property is let to another person, the party letting being themselves a lessee. The obligations of the lessee are not, however, diminished.

Summation Approach: Refers to the addition of the value of the parts of real estate to obtain the value of the whole (i.e. land and buildings). May refer only to a value prediction using the depreciated replacement cost approach.

Subject Property Or Subject Asset: These terms refer to the asset(s) valued in a particular valuation engagement.

Synergistic Value: Synergistic Value is the result of a combination of two or more assets or interests where the combined value is more than the sum of the separate values.

Tenancy In Common: Where two or more persons are entitled to property in such a manner that they have an undivided possession but several freeholds. No one party is entitled to the exclusive possession of any part of the land and the interest on land is transmitted by will, at the death of an individual.

Tenancy Schedule: A listing of each premise in a property including tenancy name, number, area, lease commencement and expiry dates, rental, rental review date and type, outgoings and rent review mechanism, etc.

Tenant: A person paying rent in exchange for the occupancy of a building or dwelling.

Term: The length of period of projection of detailed cash flows.

Title: The form of ownership of real estate.

Turnover Rent: That amount of rental produced by a given percentage of the gross sales less the base rental. (Also known as Percentage Rent)

Under Construction: Buildings which are currently being developed. A building is deemed to be under construction when development proceeds beyond the laying of footings.

Vacancy: Areas of buildings available for occupation. Space which is empty but unable to be occupied is not included in the calculation of vacancies and marketable stock. Vacant space is designated as being available either on a direct or sub-lease basis.

Vacancy Factor: The percentage of total marketable stock that is vacant. The ratio of total vacancy to total rentable area, usually expressed as a percentage.

Valuation: The prediction of the value of an asset, depending on the purpose for which the valuation is required.

Valuer: A person who is registered/licensed by the Valuers Registration Board to carry out property valuations under the Valuers Act Cap 532.

Vendor: The seller of the property.

Valuation: A “valuation” refers to the act or process of determining an estimate of value of an asset or liability.

Valuation Reviewer: A “valuation reviewer” is a professional valuer engaged to review the work of another valuer. As part of a valuation review, that professional may perform certain valuation procedures and/or provide an opinion of value.

Valuer: A “valuer” is an individual, group of individuals or a firm who possesses the necessary qualifications, ability and experience to execute a valuation in an objective, unbiased and competent manner. In some jurisdictions, licensing is required before one can act as a valuer.

Weight: The word “weight” refers to the amount of reliance placed on a particular indication of value in reaching a conclusion of value (eg, when a single method is used, it is afforded 100% weight).

Weighting: The word “weighting” refers to the process of analysing and reconciling differing indications of values, typically from different methods and/or approaches. This process does not include the averaging of valuations, which is not acceptable.

Yield: The derived percentage return of a property calculated by applying the income produced by a property against the market value. Calculated by dividing realised net income by the opening capital value.

Zoning: The statutory description of allowable uses of land as set out by a planning authority.