HOW TO VALUE A LAND LOCKED LAND?

KNOWLEDGE BANK FROM B KANAGA SABAPATHY

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Message from B. K. sir 28.03.2023

Question :

It is a vacant land measuring 1 acre. It’s a NPA case. As per documents, the subject property is a landlocked one but on physical inspection I found an approach road but through another gated community layout. Is it advisable to release valuation report for such properties?. If so what is the value I can consider?

My opinion :

1. As a theory, the market value of landlocked land is considered as 25% of the prevailing market rate.

2. In this case, there is an approach road but that road is through a gated community. But, it is not known whether the public is legally permitted to use that road to go to the subject land.

3. If such permission is available, you can think about valuing based on the prevailing trend.

4. But, practically such permission will not be available. In such case, the subject land remains to be only land locked land legally and you can certify suitable market value after analysing various factors affecting the auction under SARFAESI.

5. Before certifying, it is to be remembered that the gated community people will be there as a potential buyer of the land since it is adjacent. An adjacent property may enjoy special value for the buyer.

6. Take a suitable decision depending on the circumstances and exact purpose of valuation.

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With best wishes,

B. KANAGA SABAPATHY
bkvaluer@gmail.com
www.bkanagasabapathy.com

About the Author:-

Mr. B. Kanaga Sabapathy born in 1951, is a Civil Engineer who belongs to the 1972 batch of Regional Engineering College, Tiruchirappalli in Tamilnadu.
He is a Registered valuer of the Central Board of Direct Taxes, a Professional Engineer and also a Chartered engineer. Valuation is his main profession..
He was the National Vice-President of the Institution of Valuers (India) for 11 terms.
He is a regular contributor of articles in the Indian Valuer Journal from the year 1985. His articles especially his regular column “Questions & Opinions” are very popular among the practising valuers in India.
His book “Guidelines on Valuation for Banks” (2002) is used to be referred by many banks. The valuation formats designed by him were accepted and adopted as the formats by many banks in the country.
His son K. Arun and daughter B.K. Aruna are also approved valuers and they also contribute articles to the Indian valuer journal.
His guru: Mr. C.H. Gopinatha Rao, Chennai.
His mentor: Mr. R.K. Gandhi, Mumbai.
His role model: Mr. S. Rajaratnam, Chennai.
His best students: Thousands of valuers in the country