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Whether for lending or accounting purposes, almost every property involved in a transaction must undergo a valuation. However, real estate valuation comes into play not only in buying and selling but also in other scenarios.
Real estate investment funds (REITs), for instance, conduct periodic valuations to determine the market value of a property for financial reporting. These valuations are used not only by the REIT’s managers and administrators, but also by their lenders, insurers, service providers, and, most importantly, their investors, to make strategic decisions.
"For the overall market, the valuation report is fundamental for supporting real estate negotiations, monitoring trends, and market strategies, asset management," explains Marco Aurélio Ribeiro, director at Capright, an American company specializing in commercial asset valuation with operations in Brazil.
Valuation reports are requested at both periodic intervals and strategic moments by companies. The appraiser doing this work must analyze all the details of the asset, its conditions, the market it is in, and the overall scenario to provide an accurate valuation for the client.
Ribeiro notes that there is no magic formula for valuing a property, it takes a great deal of in-depth analysis to arrive at a credible and well supported conclusion. Furthermore, the methodologies employed can vary according to the asset type, market, and reason for the valuation.
“Uses of valuations are diverse and include: arbitration of rent revisions, calculation of the at-risk value (insurance), management of investment portfolios, investor reporting, determination of collateral for bank guarantees and studying market feasibility”, reveals the executive.
"Specifically, more complex assets such as shopping centers, logistics/industrial properties, hotel developments, multifamily residential developments, and high-end corporate office buildings require frequent analyses and studies of their operations and financial information. This proactive approach provides clients with a deeper understanding of the performance of their investments, allowing for strategic adjustments and well-founded decisions to optimize results in a dynamic and competitive environment," explains Ribeiro.











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