RATE OF RETURN IN RENT CAPITALISATION METHOD

KNOWLEDGE BANK FROM B K SIR

LET KNOWLEDGE SPREAD

“Questions and Opinions – 03/04/2023”.

QUESTION & OPINION

Question :

While doing valuation by rent capitalisation method, can I use the bank’s interest as the rate of return?

My opinion :

No. You cannot use. The prevailing market yield for the right property and for the respective location alone must be used.

Request

The readers may highlight the errors if there are any. Suggestions for further improvements are certainly welcome. Similar topics may also be suggested.

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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