BOVAEP Valuer TPC cheat sheet

Market value is the estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing, with both parties acting knowingly and prudently and without compulsion.

Select the basis of value before choosing a method: market value for open-market transactions; market rent for lease interests; investment value for a specific owner; fair value for financial reporting; existing use value where continuation is assumed; depreciated replacement cost for specialised assets; forced sale or liquidation value where compulsion exists.

Comparison method: adjust each comparable for transaction date, location, size, tenure, condition, specification, and facilities; apply a time adjustment using a price index or market-derived rate; reconcile adjusted prices by quality and similarity of evidence.

Income capitalisation: value = net operating income ÷ capitalisation rate; capitalisation rate = net operating income ÷ capital value; derive the rate from comparable sales and adjust for risk, growth, and lease profile.

Discounted cash flow: present value = sum of net cash flow in year t divided by (1 + discount rate)^t, plus terminal value discounted at the end of the holding period; the discount rate reflects target return and risk.

Cost approach: value = land value + replacement cost new − physical deterioration − functional obsolescence − external obsolescence; depreciated replacement cost is used when direct market evidence is absent.

Profits method: maintainable gross profit − operating costs − operator's remuneration = surplus; capitalise the surplus at a rate reflecting risk; use for hotels, petrol stations, and specialised trading assets.

Residual method: site value = gross development value − construction cost − professional fees − finance charges − marketing and legal costs − contingency − developer's profit; test the result against comparable land evidence.

Reconcile methods by weighting evidence quality, not by simple averaging; disclose any departure from a standard method and explain why the chosen method best reflects the basis of value.

Residential valuation relies on comparison; adjust for floor area, number of bedrooms, floor level, orientation, renovation, car parking, tenure, and transaction date; strata schemes require share unit and management corporation data.

Commercial retail valuation considers passing rent, market rent, lease expiry, rent review pattern, turnover or percentage rent, anchor tenants, footfall, zoning, and vacancy; capitalise net income after deducting non-recoverable outgoings.

Office valuation considers net lettable area, specification, grade, occupancy, lease term, rent-free periods, incentives, service charge, and location; analyse effective rent rather than headline rent.

Industrial valuation considers clear height, floor loading, power supply, loading bays, ceiling and sprinkler systems, yard, access, and lease terms; specialised plant may require separate cost-based valuation.

Agricultural valuation considers soil, terrain, drainage, access, water, planting age, crop yield, tenure, and quotas; plantations are valued as land plus growing trees, with immature and mature areas treated separately.

Specialised property test: rarely sold, buyer cannot use without modification, and value depends on continued operation; use depreciated replacement cost or profits method and disclose the absence of market evidence.

Going-concern valuation includes real property, plant, licences, workforce, contracts, and goodwill; avoid double counting assets already reflected in the business value and state whether the business is valued as a continuing entity.

Hotel and leisure valuation uses trading potential: stabilised occupancy, average room rate, departmental and undistributed costs, management fees, furniture, fixtures and equipment reserve, and a capitalisation rate reflecting operator risk.

For all specialised assets, separate real property, plant and machinery, and business value; state the premise for each component and reconcile to the total going-concern value.

Malaysian land titles are registered under the Torrens system in the National Land Code 1965; the register is conclusive, and a registered proprietor's title is indefeasible except for fraud, misrepresentation, void instruments, or statutory exceptions.

Tenure types include freehold estate in perpetuity, leasehold estate for a term of years, Malay reserved land, native customary land in Sabah and Sarawak, and temporary occupation licence; tenure affects transferability, financing, and value.

Strata titles are governed by the Strata Titles Act 1985 and strata management by the Strata Management Act 2013; a parcel carries an undivided share in common property and membership of the management corporation.

Registered interests include charges, easements, and restrictive covenants; unregistered interests may be protected by a caveat; priority generally follows registration order, subject to statutory exceptions.

The Town and Country Planning Act 1976 controls development through local plans, development control, and planning permission; conditions may fix use, density, plot ratio, setback, parking, and infrastructure obligations.

The Land Acquisition Act 1960 empowers compulsory acquisition for public purposes; process includes notice, inquiry, award, and reference to the court; compensation heads are statutory.

Land use conditions, conversion, subdivision, amalgamation, and building consent are separate statutory controls; valuation must reflect the existing lawful use unless a special assumption adopts a different planning status.

Environmental and conservation controls, including the Environmental Quality Act 1974, may restrict use or require mitigation; contaminated land and protected areas require specialist evidence and disclosure.

Rating: rate payable = rateable value × rate in sen per ringgit of rateable value; rateable value is commonly the estimated annual value of the property, assessed by the local authority and entered in the valuation list.

Rating appeals follow the statutory procedure: check the notice, lodge an objection within the prescribed period, attend the objection hearing, and appeal further only on statutory grounds.

For rating, use rental evidence from comparable properties, adjust for location, size, condition, facilities, and lease terms, and deduct allowable repairs and maintenance where the rating statute permits.

Real Property Gains Tax under the Real Property Gains Tax Act 1976 applies to chargeable gains on disposal of real property and shares in real property companies; compute disposal price less acquisition price, incidental costs, and allowable improvements.

Stamp duty on transfers is ad valorem under the Stamp Act 1949; the chargeable instrument is assessed on consideration or market value, whichever is higher, so valuation evidence may be required.

Compulsory acquisition compensation under the Land Acquisition Act 1960 includes market value of the land, severance and injurious affection, and disturbance; the valuation date and statutory heads must be stated.

Apply the Pointe Gourde principle: disregard any increase or decrease in value caused by the public scheme; value the land as if the scheme did not exist, using comparable evidence outside the scheme.

Disturbance claims require proof: removal costs, business interruption, professional fees, and relocation costs must be reasonably incurred, causally linked to the acquisition, and supported by documents.

Check whether the acquisition is partial or total; for partial taking, assess severance and injurious affection to the retained land, and consider whether the residue remains economically viable.

Highest and best use requires four tests: legally permissible, physically possible, financially feasible, and maximally productive; the use must be probable, not merely possible.

Planning density controls include plot ratio = gross floor area ÷ site area, plot coverage = building footprint ÷ site area, and density in units per acre or per hectare; check the local plan and planning conditions.

Residual land value = gross development value − construction cost − professional fees − finance − marketing − legal fees − contingency − developer's profit; sensitivity test the result for cost and value changes.

Development appraisal cash flow: forecast construction and sales timing, apply finance cost on cumulative negative balances, calculate net present value and internal rate of return, and state profit on cost or on gross development value.

Land economics: bid rent theory holds that land is allocated to the use that can pay the highest rent; accessibility, agglomeration, infrastructure, and planning constraints shape land value gradients.

Supply elasticity differs by use and location; constrained supply with rising demand tends to increase land values and rents, while new supply and vacancy reduce rental growth.

Planning gain and development charges are statutory or negotiated obligations; they reduce residual land value and must be included in the appraisal as a cost.

Phasing and absorption analysis: estimate the rate at which units or floor space can be sold or let, align construction and marketing phases, and test the scheme against downside market conditions.

Feasibility is not valuation: a development appraisal tests whether a scheme meets a required profit; a valuation estimates market value of the land or completed asset on a stated basis.

Gross yield = annual gross rent ÷ capital value; net yield = annual net operating income ÷ capital value; initial yield uses current income, while reversionary yield uses market rent after lease expiry.

Capitalisation rate = net operating income ÷ capital value; it rises with perceived risk and falls with expected rental growth and liquidity; support the rate with comparable transactions.

Net present value = present value of cash inflows − present value of cash outflows; accept a project if net present value is positive at the required discount rate.

Internal rate of return is the discount rate at which net present value equals zero; compare it with the cost of capital or target return, and disclose the reinvestment assumption.

Return on equity = (net operating income − debt service) ÷ equity; leverage is positive when the property return exceeds the mortgage rate and negative when it does not.

Debt service cover ratio = net operating income ÷ annual debt service; loan-to-value = loan amount ÷ property value; lenders use both to size and price debt.

Market analysis tracks supply, demand, vacancy, absorption, rents, yields, and capital values; property cycles move through recovery, expansion, oversupply, and recession phases.

Diversification reduces unsystematic risk across sectors and locations; systematic risk from interest rates, inflation, and the economy cannot be eliminated by portfolio diversification.

Real estate investment trusts, listed property companies, and direct property differ in liquidity, gearing, management control, and valuation frequency; compare on a like-for-like basis.

BOVAEP regulates valuers, appraisers, estate agents, and property managers under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981; registration and practice requirements are statutory.

A valuer must act with integrity, objectivity, confidentiality, and professional competence; disclose conflicts of interest and decline instructions where independence cannot be maintained.

Fees must not be contingent on the reported value or on a transaction outcome; contingent fees are incompatible with independent valuation and undermine the credibility of the opinion.

Terms of engagement should be in writing and cover client identity, purpose, basis of value, valuation date, scope of inspection, assumptions, limitations, fee, timetable, and report format.

Maintain a working file with instructions, inspections, title searches, comparable evidence, calculations, correspondence, and the signed report; retain records for the period required by professional rules and law.

Professional indemnity insurance protects against claims for negligent acts, errors, or omissions; the limit should reflect the risk and value of instructions undertaken.

Continuing professional development is required to maintain competence; keep records of training and specialist knowledge relevant to the valuation work performed.

Anti-money laundering obligations under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 require customer due diligence and suspicious transaction reporting.

Malaysian Valuation Standards and International Valuation Standards apply; any departure must be justified, disclosed in the report, and not used to mislead the reader.

A valuation report must state the client, purpose, property identification, basis of value, valuation date, inspection date, report date, scope, assumptions, method, evidence, value, and limiting conditions.

Distinguish the valuation date from the inspection date and report date; value is expressed as at the valuation date, not the date the report is signed.

State the value clearly as a single amount or a range, with the currency; explain whether the value assumes vacant possession, existing use, or a special assumption.

Disclose special assumptions separately: a fact assumed to differ from the actual situation at the valuation date, such as planning consent or completion of works; state the effect if the assumption is invalid.

Limiting conditions should restrict reliance and use without negating professional responsibility; avoid blanket disclaimers that contradict the valuation opinion.

Comparable evidence should be identified, adjusted, and reconciled; include the source and date of evidence and explain why comparables were selected or excluded.

For court or statutory purposes, the report must be independent, signed by the registered valuer, and comply with expert evidence rules; distinguish facts, assumptions, and opinions.

Professional communication requires clear language, logical structure, consistent terminology, and confidentiality; keep the client informed of material changes before the report is issued.

The report should be signed and dated by the registered valuer and identify the firm; state whether the valuer has inspected the property and whether anyone assisted.