What to Do If You Are Asked to Price a Commercial Property for Sale

In commercial real estate you are asked to price a property for sale almost every day. Price analysis and setting is different than valuation and is done for a different reason.

Pricing a property is usually done as part of taking the property to the market for sale. In this market the pricing of a property is quite hard given that the property market and the economy is changing week by week in some locations. The prices that properties sold at 2 or 3 years ago are not the prices of today; things have changed and property owners need to accept that. Prices have fallen across the board in most types of commercial, industrial, and retail property.

If you cannot price a property then it pays to let the market decide what the price should be. You can do that by using the following methods of sale:

  • Auction
  • Tender
  • Expressions of Interest

These methods of sale will let the market set the level of enquiry and the price. When you really do not have any idea about today’s property prices for a particular property then one of the 3 methods of sale is the best way to go.

If on the other hand you are to price a property today there are a number of factors that should really be considered in the process. Here are some of the main ones:

  1. Levels of enquiry currently for that type of property
  2. Quality of property improvements and age
  3. Upkeep of the property and structural integrity
  4. Environmental and heritage matters that can impact property upgrades or operation
  5. Tenant volatility or stability. Add to that the elements of anchor tenant occupancy.
  6. Current property usage and opportunity to change or redevelop
  7. Tenant mix and length of leases and how they impact the sale
  8. Existing lease incentives that are not discharged and that may impact the property cash flow at sale time
  9. Current building outgoings and relevance to the expenditure budget
  10. Vacancy factors in the property and the region
  11. Supply and demand for space in the area and for that property type
  12. Income performance from the property now and in the future, including rent review profiles and lease options expected
  13. Levels of current passing rent from the tenancies and if they are in line with market rent
  14. Comparable properties in the area
  15. History of the sales and rentals in the area
  16. History of the property and the ownership
  17. Zoning for the property and the current building codes that apply to the property usage

All of these things can impact the price that a property will achieve in the current market. It is easy to see why pricing a property today is a difficult task. Total property research is part of the price estimation process.

Residential and Commercial Property for Sale in India

India’s population is expected to be 1.3 billion in the year 2020. The demand for property for sale in India is surely going to increase. To supply the demand, developers started several projects in India. Recently affordable homes became popular because apartments are preferred by more people rather than bungalows. They are easy to maintain and affordable, before the need of big houses like villas and bungalows in India is preferred because families in India preferred to live in joint families. More and more families prefer to live separately on flats and smaller apartments in India the more reason for developers to create new projects. So this is the right time to purchase not only residential properties but also India commercial properties.

Affordable housing in India is the focus on development of real estate developers today. This is why most residential project while being developed all units is already sold even it is not yet completed or nearing completion. These new concept of home in India is becoming in demand because buyers consider them as international standard style of living at cheaper prices.

But some still prefer to buy traditional bungalows in India this is because investing on them could mean that value of the property will increase in time. This is why some developers are still coming up with projects of detached houses but are still trying to make them affordable. Developers are always putting in mind to jive with the international styles in designs and colors. This is a way how developers are attracting people to invest back in residential bungalows.

The commercial market in India has also increased a lot and investment on these kinds of properties is back on the rise. This is due to retail increase and it causes the big increase in value of the property. Commercial properties in India are on major upgrades in a huge way. Most businesses prefer to put shop in big malls rather than having traditional, individual and small shops. This only shows that India’s real estate industry is fast growing and this is the best time for investors to consider India as a prospect country to invest on.