BOVAEP Valuer TPC key terms

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.

The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm's length transaction, after marketing, and where the parties had each acted knowledgeably, prudently and without compulsion.

The most probable use of a property that is physically possible, legally permissible, financially feasible and results in the highest value; it underpins market value where existing use is not the optimal use.

The statement of the fundamental measurement assumptions on which a valuation is reported, such as market value, market rent or investment value; it defines what the valuer is measuring, not the method used.

The value of an asset to a particular owner or prospective owner for individual investment or operational objectives; it reflects the investor's requirements, risk profile and expectations rather than the general market.

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; used in financial reporting and distinct from fair value in expropriation law.

A method of valuation for specialised assets where the current cost of replacing the asset is calculated, then adjusted for physical deterioration and functional and economic obsolescence, because direct market evidence is unavailable.

A valuation method that derives value by comparing the subject property with similar properties recently sold or let in the market, adjusting for differences in location, size, condition, tenure and time of transaction.

A valuation method that converts a property's expected future net income into capital value by applying a capitalisation rate derived from market evidence, reflecting yield expectations and risk.

The ratio of a property's net operating income to its capital value, expressed as a percentage; it reflects investor yield requirements, growth expectations, risk and comparable market evidence.

A valuation method that estimates value as the current cost of replacing or reproducing the improvements, less accrued depreciation, plus the value of the land; commonly used where market evidence is scarce.

The total estimated market value of all completed and saleable units in a development, calculated at current prices before deducting development costs, finance charges and developer's profit; used in residual appraisals.

A technique that estimates land value by deducting all development costs, including construction, fees, finance and developer's profit, from the gross development value of the completed scheme.

The value of a business as an operating entity, including goodwill, licences, trained workforce and assembled assets, over and above the sum of the individual assets valued separately.

Property that is rarely, if ever, sold on the open market except as part of a continuing business, because of its unique design, construction or use, such as hospitals, refineries and public buildings.

The valuation of machinery, equipment, fixtures and processing plant, often for financial reporting, insurance or going-concern purposes; it requires engineering knowledge and may use cost, market or income approaches.

Land and buildings used for farming, forestry or livestock, valued by reference to market sales, productive capacity, soil quality and the profitability of the agricultural enterprise, sometimes constrained by statutory tenancy protections.

The compulsory taking of private land by a public authority for public purposes under statute, which triggers a right to compensation determined by law and often referred to the courts.

Payment required by law to a landowner whose interest is compulsorily acquired or injuriously affected by public works, assessed under statutory heads such as land value, disturbance and severance.

The estimated gross annual rental value of a property, often used as the basis for local authority rates and property tax; it may be gross or net of repairs and outgoings depending on the statute.

A nominal annual land tax levied by the state on alienated land under the National Land Code, calculated by reference to land area and category of use, distinct from assessment rates.

An estate in land of unlimited duration, held in perpetuity by the owner, subject only to statutory restrictions, planning controls and the rights of the state; it is the highest form of private tenure.

An estate in land held for a fixed term of years under a lease or grant, after which the interest reverts to the freeholder or state; value declines as the unexpired term shortens.

A form of ownership of individual parcels within a subdivided building, coupled with an undivided share in common property; regulated in Malaysia by the Strata Titles Act and Strata Management Act.

A legal right to use another person's land for a specific purpose, such as access, drainage or support, without possessing it; it runs with the land and may affect value.

An obligation registered on a land title that restricts how the land may be used or developed, such as a ban on certain trades or a building line; breaches may allow re-entry or enforcement by the state or beneficiary.

Formal consent from the local planning authority required before development or a material change of use may proceed; it defines the permitted use, density, height and other controls affecting value.

Designation of land by planning authorities for particular uses, such as residential, commercial or industrial, together with density and plot ratio controls that shape development potential and property value.

The ratio of permitted total floor area to the site area on which it is built; a key planning control that determines building bulk and the development value of a site.

A statutory levy imposed when planning permission increases land value, payable to the planning authority as a condition of approval; it reduces the residual value of the site to the developer.

The sum of expected future cash flows discounted to present value at a required rate of return, less the initial investment; a positive NPV indicates an investment adds value.

The discount rate at which the net present value of an investment's cash flows equals zero; it expresses the annual return on capital and is compared with a hurdle rate.

The amount of a loan expressed as a percentage of the appraised value or purchase price of the property; it is used by lenders to manage credit risk and set borrowing limits.

An income capitalisation measure that blends initial and reversionary yields into a single rate, allowing comparison of properties with different lease profiles and income growth prospects.

A situation where a valuer's personal, financial or other interests could improperly influence professional judgement or advice; it must be identified, disclosed and managed or the engagement declined.

The professional duty not to disclose client information obtained during an engagement to third parties without authority or legal requirement, subject to limited exceptions such as court orders.

Insurance covering a valuer against claims for negligence, errors or omissions in professional work; most professional bodies and regulators require adequate cover as a condition of practice.

A written agreement between valuer and client setting out the purpose, basis and scope of the valuation, assumptions, limitations, fees, timetable and responsibilities, and protecting both parties.

A formal written communication of the valuer's opinion, containing the identification of the property, basis and date of value, methods, key inputs, assumptions, limitations and a signed certification.