Value
Rental capitalisation method
Valuation method based on rental income.
This method capitalises the market rent at a market yield (gross initial yield or net initial yield) to determine the investment value. It is the most widely used method for let commercial property.
See also
Commercial property valuationFrequently asked questions about Rental capitalisation method
What does Rental capitalisation method mean?
Valuation method based on rental income.
How does Rental capitalisation method work in commercial real estate?
This method capitalises the market rent at a market yield (gross initial yield or net initial yield) to determine the investment value. It is the most widely used method for let commercial property.
Related terms in value
Gross initial yield
Gross rent divided by the investment.
Net initial yield
Yield after deducting the owner's expenses.
Commercial property valuation
Formal valuation by a valuer.
DCF method (discounted cash flow)
Valuation based on future cash flows.
Letting potential
The extent to which a property can be let quickly and at a market rent.
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