Real Estate Investor Magazine South Africa May/June 2015 | Page 38

ACQUIRING

Inside the mind of a

Valuator
Finding The Value Of An
Investment Property… Part 2

BY RICHARD WADE

A

fter having followed the guidance in Part
1, you have located a suitable investment
property and have a tenant paying a marketrelated rent. You will now want to know how much to
pay for it. To do that, you need to divide the market
rent by the yield (or capitalisation rate, or ‘cap’ rate,
depending on terminology). How does the valuator
inspecting your property assess the yield?
To a valuator, the yield is all about quality: location,
structure and tenant. The best point to start is prime
yields, the best in all three categories. As examples, we
will take the new head office of Discovery in Sandton,
scheduled for completion in 2017, and FNB’s new
Portside building in the Cape Town Central Business
District (which happens to not be an investment
property,