Chapter 3:

Real Estate Valuation

Định giá tài sản (Asset Valuation) 1

Example of adjusting comparison factors (cont.)
No. Comparison Appraised Comparable Comparable Comparable
factor real estate real estate 1 real estate 2 real estate 3

1 Price ??? 1,1 bil VND 980mil VND 1,35 bil VND

2 Total area 56m2 50m2 49m2 60m2

3 Price/m2 ??? 22 mil VND/m2 20 mil 22,5 mil

VND/m2 VND/m2

4 Legal status Land using Land use rights Land using Land using
right have not been right right
certificate legalized certificate certificate
5 Business Lane front Lane front 10m Lane front 8m Bordering 2
advantages 10m sides of 8m
lane

2
 Example of adjusting comparison factors (cont.)
No. Comparison Appraised real Comparable real Comparable Comparable
factor estate estate 1 real estate 2 real estate 3
6 Infrastructure Stable electricity, Stable electricity, Stable Stable
good water good water electricity, electricity,
supply, poor supply and good water good water
drainage, often drainage supply and supply and
flooded during drainage drainage
heavy rain
7 Direction West East South East North

8 View Overlooking a Overlooking a Overlooking a Overlooking a

densely densely densely park
populated area populated area populated
area
9 Payment One-time cash Cash payment in One-time One-time
conditions payment upon 2 installments: cash payment cash payment
purchase 60% upon upon upon
purchase, 40% purchase purchase
after 1 year
3
Example of adjusting comparison factors (cont.)
In addition, through market surveys, the following information
was also collected::
▪ The cost of legalizing land use rights for comparison plot 1 is
1 million VND/m2.
▪ Correlation of land prices related to alley surface:
▪ Land price for 10m lane : 100%
▪ Land price for 8m lane : 90%
▪ Land price on 2 sides of 8m lane: 105%.
▪ The price of land overlooking a park is 5% higher than the
price of land overlooking a residential area.
▪ Land prices in well-drained areas are 10% higher than in
poorly drained areas.
▪ Correlation of land prices related to direction :
▪ West and North: 90%
▪ East: 95%
▪ Southeast: 100%
▪ The 1-year bank loan interest rate is 20%/year. 4
 Example of adjusting comparison factors (cont.)
No Comparison factor Appraised real Comparable real Comparable Comparable
. estate estate 1 real estate 2 real estate 3
A Price ??? 1,1 bil VND 980mil VND 1,35 bil VND
B Total area 56m2 50m2 49m2 60m2
C Price/m2 ??? 22 mil VND/m2 20 mil 22,5 mil
VND/m2 VND/m2
D. Adjust for comparison factors
D1 Payment Payment now Pay 2 times Payment now Payment now
conditions
Adjustment level -1,47mil đ/m2 No adjustment No
adjustment
Price after 20,53mil đ/m2 20mil đ/m2 22,5mil đ/m2
adjustment

5
 Example of adjusting comparison factors (cont.)
No Comparison factor Appraised real estate Comparable Comparable Comparable
. real estate 1 real estate 2 real estate 3
D2 Legal status Using certificate Not certified Using Using
yet certificate certificate
Adjustment level + 1mil đ/m2 0 0
Price after 21,53 mil 20mil đ/m2 22,5mil đ/m2
adjustment đ/m2
D3 Location, business Lane 10m Lane 10m Lane 8m 2 sides of
advantages lane 8m
Ratio 100% 100% 90% 105%
Adjustment rate 0 11,11% -4,76%
Adjustment level +2,22 mil -1,0mil đ/m2
đ/m2
D4 Infrastructure Flooded when it rains Good Good Good
Ratio 100% 110% 110% 110%
Adjustment rate -9,09% -9,09% -9,09%
6
Adjustment level -1,96trđ/m2 -1.82trđ/m2 -2,05trđ/m2
 Example of adjusting comparison factors (cont.)
No Comparison factor Appraised real Comparable real Comparable Comparable
. estate estate 1 real estate 2 real estate 3
D5 Direction West East South East North
Ratio 90% 95% 100% 90%
Adjustment rate -5,26% -10% 0
Adjustment level -1,13mil đ/m2 -2mil/m2 0

D6 View Overlooking Overlooking the Overlooking Overlooking

the residential residential the residential the park
Ratio 100% 100% 100% 105%
Adjustment rate 0 0 -4,76%
Adjustment level 0 -1,07mil
đ/m2
E Indicative price/m2 18,44 mil đ/m2 18,44 mil 18,31 mil
đ/m2 đ/m2

7
Cost method

❖ Content:

The cost method is a valuation method based on the cost

of reproduce/replace a similar property..

Value Reproduct
Value
of Real ion/Replac Deprec
of land
Estate ement iation
plot
cost

8
Cost method (Cont.)
❖ Stages:

1. Separately estimate the value of the plot of land

2. Estimate costs for new construction, reconstruction, and

replacement of structures on land

3. Estimate the accumulated depreciation value of the

project

4. Estimate the remaining value of the project (steps 2-3)

5. Estimate the value of real estate to be valued (steps

1+4)
Methods to determine reproduction/replacement costs
Apply 1 of the following 3 methods:

1) compares by unit

2) estimates costs by project item

3) quantity survey.

→ Based on the type of project and the information

available to choose the appropriate method.

→ See valuation standard No. 9 + appendix

Định giá tài sản, 2022 11

Methods to determine reproduction/replacement costs
estimates costs by project item
• Estimate costs of each component of the project.
• Types of construction cost:
• Direct costs: Raw materials, labor, other direct costs
• Indirect costs: Construction service costs, management
costs at the construction site, enterprise management
costs, other indirect costs…
• Profit of investors
• Taxes and fees paid according to the provisions of law

Unit comparison method

• Calculate by m2 of construction floor: use the price of a
number of similar projects, divide by the construction floor
area to find the price/m2
• Calculation in m3: suitable for industrial projects. Example:
Warehouse
Định giá tài sản (Assets Valuation) 12
Estimate depreciation

❖ Types of depreciation on real estate

Depreciation

Physical Functional Economic

depreciation Depreciation Depreciation

Định giá tài sản (Asset Valuation) 13

Methods of estimating depreciation
3 main methods:
1) Comparison method: Compare with the depreciation rate
of similar products
2) Age-life method: Effective age compared to economic age
3) Total method=
1) Physical depreciation: Usage rate, age, expert
2) Functional depreciation can be fixed
3) Functional depreciation cannot be fixed
4) Economic depreciation

(See details of Valuation Standard No. 9 on determining

depreciation and methods of estimating asset depreciation
value)
Định giá tài sản, 2022 14
 Example: Comparison method
Determine the depreciation rate of a 2-storey house, with an
effective life of 22 years (called Real Estate A). Through
market investigation, the valuation department obtained the
following information :
Valuated Comparison Comparison
asset asset 1 asset 2
Price
3.55 3.1
(bil VND)

Effective life (year) 22 20 21

100% new construction

cost (after adjustment
1.765 1.8
compared to Real Estate
A) (billion VND)
Price of land use rights
2.485 2.015
(billions dong) 15
Methods of estimating depreciation (cont.)

Method 2: Age-life method

Effective life
Depreciation rate= x 100%
Economic life

16
Example: Age-life method

❖ Determine the economic life, remaining economic life, actual

life, effective life and depreciation rate of a house base on
following information::
▪ Construction completed in year 2000.
▪ According to technical standards, the house will exist for 70 years
(by 2070 it will be demolished). Value of the house contributing to
the overall value of real estate will gradually decrease, it is
estimated that by 2068 the value of the house contributing to the
value of real estate will be 0 VND and from 2068 the house will
contribute negative value (cost of repairing is greater than the
value brought to the real estate).
▪ In 2006, the house was upgraded and overhauled. Due to the
upgrade, the economic life of the house is extended by 8 years.
▪ In 2014, value appraisal was conducted.

17
 Example: estimate curable functional depreciation

❖ A construction project has an unreasonable design of the

kitchen + dining room system. After using for 2 years, repair
and recovery costs must be incurred as follows:

Repair Item Cost

• Replace wood heating system with gas stove 20.000.000đ
• Replace 20-liter water heater 8.000.000đ
• Relocate the dividing wall and renovate the
32.000.000đ
dining room
• Total cost of repair 60.000.000đ
• Benefits brought due to curing functional
>60.000.000đ
depreciation
• Curable functional depreciation 60.000.000đ
18
Example: estimate economical depreciation

Consider 1,500 square meters of retail space in a commercial

center of a market where supply exceeds demand. In a balanced
market, net operating income is 1,000,000 VND/m2. However,
since the oversupply began, net operating income decreased to
800,000 VND/m2 due to too much construction volume. The
capitalization rate of retail real estate on the market is 10%

19
Methods of estimating depreciation (cont.)

Cách 3: Estimated depreciation based on the damage

and wear of major parts

where:
H: Depreciation rate of real estate calculated in (%)
Hi: Depreciation rate of part i
Ti: Proportion of part I in total value of the project
n: Number of main parts in the project

20
Methods of estimating depreciation (cont.)
2. Functional depreciation:
▪ The device does not conform to the original design

▪ The project design is incorrect.

▪ How to determine
▪ Costs to overcome the functional depreciation of the project
▪ Or the excess cost that must be spent to repair and
overcome that obsolescence compared to the cost if the
design was reasonable from the beginning.

21
Methods of estimating depreciation (cont.)
3. Economic depreciation (due to external factors)
▪ Economic depression
▪ Changes in supply and demand of the real estate in the
market
▪ Discount due to location
▪ Pollution (air, noise, garbage,...)
▪ Incompatible land uses
▪ Planning and changing regulations on construction and renovation

22
Method of deduction

❖ Content: Determine the value of land use rights of a plot of

land with assets attached to the land by excluding the value
of assets attached to the land from the total value of real
estate (including the value of land use rights and the value
of assets attached to the land).
❖ Applicable case: Often applied to determine the value of
land use rights of vacant land plots in cases where there is
not enough market transaction information on similar vacant
land plots, but only transaction information on land plots with
assets attached to them that is similar to the appraised land
plot. 23
Method of deduction: stages
❖ Step 1: Survey and select at least 03 real estate properties
whose land plots have similar characteristics to appraised real
estate, specifically the characteristics of location, area, shape,
land use purposes, legal characteristics, technical and social
infrastructure factors, and other factors affect land prices. In
addition, collect information about assets attached to land of
comparable real estate.

▪ What are the requirements for the 03 selected comparable

real estate properties?

24
Method of deduction: stages
❖Requirements for the 03 selected comparable real
estate properties?
▪ has successfully traded or been offered to buy or sell on
the market;

▪ The location of transactions, offers to buy, and offers to

sell are similar to the appraised assets.

▪ at the time of appraisal or close to the time of appraisal

but not more than 2 years from the time the price is
specified in Vietnam Valuation Standards on market
approach.
25
Method of deduction: stages (cont.)
❖ Step 2: Determine the value of assets attached to land
of comparable real estate (real estate selected in Step 1)
at the time of valuation.
New construction value
Value of assets Depreciatio
of assets attached to
attached to land = - n value at
land of comparable real
of comparable the time of
estate at the time of
real estate valuation
valuation

Định giá tài sản, 2022 26

Method of deduction: stages
where:

▪ New construction value of assets attached to land of

comparable real estate at the time of valuation: calculated
by the cost of reproduction/replacement cost of creating
assets attached to land.

▪ reproduction/replacement cost and depreciation value of

assets attached to land of comparable real estate at the
time of valuation: determined according to the guidance in
Vietnam Valuation Standards on the cost approach.

Định giá tài sản, 2022 27

Method of deduction: stages (cont.)
Step 3: Determine the value of land use rights of comparable real
estate at the time of valuation.

Value of land Transaction Value of assets

use rights of = prices of - attached to land
comparable real comparable of comparable
estate real estate real estate
where:

▪ Transaction price of comparable real estate: is the successful

transaction price or unsuccessful transaction price that has been
adjusted to a price capable of successful transaction.

▪ The value of assets attached to land of comparable real estate has

28
been determined in Step 2.
Method of deduction: stages (cont.)
Step 4: Determine the value of land use rights of appraised
real estate.

▪ The value of land use rights of the appraised real estate is

determined based on the value of land use rights of comparable
real estate after adjusting for main differences such as payment
conditions, legal characteristics, location, area, shape, elements of
technical infrastructure, social infrastructure and other factors
affecting the value of land use rights, according to the guidance in
the Vietnam Valuation Standard on market approach.

▪ Need to explain how to choose the adjustment rate of factors

affecting land prices..
29
 Method of deduction: Example

floor New
The remaining
Area area construction
Price (đ) quality of the
(m2) of ​buildi unit price
house (%)
ng (m2) (d/m2)

Appraised 100
asset ??? (4*25)
150 80 1.800.000

Real estate 80
1
614.400.000 120 90 1.800.000
(5*16)
Real estate 60
2
591.000.000 180 85 2.000.000
(3*20)
Real estate 150
3
1.142.200.000 200 95 2.200.000
(5*30)

30
Định giá tài sản (Asset Valuation)
Method of deduction: Example (cont.)

By market investigation, the correlation of land prices on

the market according to the following factors: width, length
and land area was collected:
Width:
From 3m to 3,8m : 95%
From over 3,8m to 4m: 100%
From 4m or more : 105%
Length
From 25m or less : 100%
From over 25m to 50m : 96,71%
Area size
From 60m2 to 100m2 : 100%
From over 100m2 to 200m2 : 95% 31
Method of direct capitalization (Income method)

❖Content: real estate valuation based on the

present value of the expected future income
stream generated by the real estate

→ Applicable to investment real estate

32
Method of direct capitalization (Income method) (cont.)

❖ Stages:

▪ Step 1: Estimate the risk level of the real estate

investment and estimate the discount rate based on that
risk level.

▪ Step 2: Estimate the expected cash flow generated from

the real estate over the lifetime of that real estate.

▪ Step 3: Discount the expected cash flow determined in

step 2 to the time of valuation according to the appropriate
discount rate in step 1.
33
Method of direct capitalization (Income method) (cont.)

❖ Example 1:

Appraise the market value of a house located in street X,

Currently, the owner is renting the entire house, revenue is
360,000,000 VND/year, annual renovation and repair costs
are 10,000,000 VND, taxes are 98,000,000 VND,
capitalization rate through market investigation shows that
the expected interest rate for popular house rental activities
on the market is 12%/year.

34
Method of direct capitalization (Income method) (cont.)

❖ Example 2:
Appraise the market value of a property lease contract,
payment is made once a year at the end of the year with
the following information: :
❖ Lease term: 5 years
❖ Rental income is 252 million VND/year, discount rate is
10%/year.

35
Method of direct capitalization (Income method) (cont.)

❖ Example 3:
Appraise a commercial store with a construction floor area of
2,000 m2, the rental area is 80% of the construction floor
area. Rental price is 1,100,000 VND/m2/month (including
value added tax). Depreciation, repair, and maintenance
costs are 3 billion VND/year, management costs are 1 billion
VND, and value added tax is 10%.
The lease expires in 4 years, the new rental price is expected
to increase by 15%, depreciation, repair and maintenance
costs increase by 5%, management and operating costs
increase by 10% and then stabilize. The discount rate and
capitalization rate are 12%. Payments are made at the end of
each year. 36
Method of direct capitalization (Income method) (cont.)

❖ Example 3: Hints
- Determine the net income over the 4-year rental period
→ Convert to present value according to discounted cash flow
formula
- Determine the value of the asset after year 4: use the
direct capitalization formula
→ Discount to present value.

37
Method of surplus

❖ Often applied to determine the value of real estate with

development potential

❖ Examples:
▪ Vacant land for construction;

▪ Land with structures on the land that can be renovated or

demolished to build new structures on the land for the best
and most effective use.

38
 Method of surplus (cont.)

❖ Stages
▪ Step 1: Determine the business goals, the best and most effective
way to exploit the project, in accordance with legal regulations,
financial conditions and bring the highest value to the project.

▪ Step 2: Estimate the total development revenue of the project,

convert that total revenue to value at valuation time.

▪ Step 3: Estimate investment costs to generate development

revenue of the project, convert that investment cost to value at
valuation time.

▪ Step 4: Determine the value of land: step 2 minus (-) step 3.

39
Method of surplus (cont.)

❖ Content:
Determining the value of real estate with development potential
based on the estimated value of the assumed development of the
property (total development revenue) minus all expected costs
incurred (including investor profits) to create that development.
❖ Formula:
V=R–C
where:
• V: Appraised asset value;
• R: Total development revenue;
• C: Total development cost.

Định giá tài sản, 2022 40

Method of surplus (cont.): Cases
Case 1: Assuming real estate development revenue and real
estate development costs only arise in the same year. Then,
revenue and real estate development costs are calculated
according to the price level at appraised time.

V = R – C (at appraised time)

Case 2: Assuming the real estate development process lasts

many years, after construction, the owner leases it or partially
rents it out for business or sells parts of the real estate over
many years.
𝑛 (𝑅𝑡 −𝐶𝑡 )
V= σ𝑡=0
1+𝑟 𝑡
41
 Method of surplus (cont.)
❖ Stages:
▪ Step 1: Determine the best and most effective use of the land plot.

▪ Step 2: Determine the future cash flow forecast period.

▪ Step 3: Estimate total real estate development revenue. For Case 2, it is

necessary to convert total real estate development revenue to appraised
time.

▪ Step 4: Estimate the total development costs to create the development

value of the real estate. For Case 2, it is necessary to convert the total
real estate development costs to appraised time.

▪ Step 5: Determine the value of land use rights: step 3 minus (-) step 4

42
Method of surplus (cont.)

❖ The best and most effective use of the land plot is

determined on the basis of:
▪ Characteristics of the land plot;
▪ Information on land use planning, construction planning,
regulations on changing land use purposes and
construction regulations approved by competent authorities;
▪ Guidance on analyzing the best and most effective use
of assets at Vietnam Valuation Standards on valuation
process.

43
 Method of surplus (cont.)
❖ Total development revenue of real estate:

▪ is the total expected revenue of the appraised real estate in

accordance with the best and most effective use of the land plot

▪ Estimated on the basis of investigation and survey to collect

information on transfer prices, rental prices and other factors that
impact the revenue of real estate properties with similar
characteristics to the project expected to invest in appraised land
plot or a profitable area with equivalent technical and social
infrastructure conditions.

▪ Appraiser needs to take into account the trends and fluctuations of

transfer prices and rental prices, and other factors that affect
revenue of projects expected to invest in the future. 44
Method of surplus (cont.)
❖ Total development revenue of real estate:
- Determined through the market approach or the income approach.
- Case 1: Development revenue is calculated according to the price
level at the time of real estate valuation after construction investment
and sale of all products at the time of valuation or in cases where the
appraiser cannot predict the selling price or rental price of each stage
of real estate project development in the future.
- Case 2: The conversion of total development revenue of real estate
to appraised time is carried out according to the following general
formula:
▪ R : total development revenue of the project
𝑅𝑡 ▪ Rt : estimated revenue of the project in year t
𝑛
σ𝑡=0
R= ▪ n : time or life of the project
1+𝑟 𝑡 ▪ r : annual discount rate of the project (usually
calculated based on bank loan interest rate)

45
Method of surplus (cont.)
❖ Total development costs: are all necessary development
costs expected to invest in a real estate with development
potential, in accordance with the provisions of law (on
economic-technical norms, consumption of raw materials and
accounting for production and investment costs) and meet the
best and most effective use purpose of appraised land plot.

❖ Total development costs include the following items:

▪ Development investment costs

▪ Investor’s profits

46
Method of surplus (cont.)
❖ Total development costs include:
▪ Technical infrastructure costs and other related costs;
▪ Construction costs: including costs of demolishing construction
works, costs of leveling construction sites, construction costs of works,
construction items, construction of temporary works, auxiliary works for
construction;
▪ Equipment costs: includes costs for purchasing construction
equipment and technological equipment; training and technology transfer
costs (if any); installation, testing and adjustment costs; shipping and
insurance costs; taxes and other related fees and costs;
▪ Project management costs: include costs to organize and carry out
project management tasks from the project preparation stage, project
implementation and completion of construction and putting the project's
works into operation and use;
▪ Construction investment consulting costs: including survey
consulting costs, preparation of Pre-Feasibility Study Report (if any),
Feasibility Study Report, preparation of Economic-Technical Report,
design costs , project construction supervision consulting costs and other
47
related consulting costs;
Method of surplus (cont.)
❖ Total development costs include (cont.):
▪ Contingency costs: include contingency costs for the amount
of work incurred (if any) and contingency costs for price inflation
factors. Contingency costs for price inflation factors are applied
during project implementation in cases where the project lasts for
many years;;
▪ Other costs (such as costs for verifying total investment,
project insurance costs, etc.);
▪ Business costs;
▪ Interest costs, taxes …
▪ Compensation and site clearance costs include
compensation, resettlement support, and funding for organizing
compensation and site clearance, not included in the total
development costs.

48
Method of surplus (cont.)
❖ Total development costs include (cont.): some notes…
▪ When calculating these cost items, price appraisers must
comply with current regulations of competent authorities on
methods for determining total project investment costs, economic
and technical norms (raw materials, fuel, machinery, equipment,
labor...), the unit price for each year is forecast in accordance with
the real estate project construction progress
▪ Appraiser must justify the use of cost items based on
comparison with cost items of similar projects and market price
levels (raw materials, fuel, unit price of machinery and equipment,
unit price of wages...) at appraised time and related contents
specified in Vietnam Valuation Standards on cost approach.
▪ Total development costs are determined through the market
approach or income approach.

49
Method of surplus (cont.)
❖ Total development costs include (cont.):
▪ Case 1: development costs are calculated according to the
price level at the time of valuation for real estate after construction
investment and sale of all products at the time of valuation or in
cases where the appraiser cannot estimate the unit price, price of
raw materials, fuel, machinery, equipment, and labor in the
forecast years of each stage of real estate project development..
▪ Case 2: converting the total development cost of real estate to
appraised time is carried out according to the following general
formula:
▪ C : total development cost of the project
𝐶𝑡 ▪ Ct : estimated cost of the project in year t
𝑛
σ𝑡=0
C= ▪ n : time or life of the project
1+𝑟 𝑡 ▪ r : annual discount rate of the project (usually
calculated based on bank loan interest rate)

Định giá tài sản, 2022 50

Method of surplus (cont.)
❖ Investor's profit: determined in the following order of priority:
1) Determined according to the regulations of the competent
authority (if any).
2) Determined based on the average profit ratio in the market
calculated on the total costs (including direct costs, indirect
costs and excluding financial costs) of at least 03 similar real
estate business project locally.
3) Determined as the average of profit before corporate income
tax (audited or settled) on total costs of at least 03 real estate
businesses in the market.

51
Method of surplus (cont.)
❖ Discount rate:
▪ The annual discount rate of the project is based on the
average medium-term interest rate of real estate business
loan from 04 state-owned commercial banks (including:
Agribank, BIDV, VCB and Vietinbank) with headquarters or
branches in the provincial area at appraised time.

Định giá tài sản, 2022 52

Method of surplus (cont.): Example
❖ Appraise a land plot to advise real estate investors to
develop investment plans: The land has an area of 15,000
square meters in a city that is a class II urban area. The land is
currently being used for industrial production purposes but is
now allowed to be used to build housing for sale. Currently on
the land there is a factory with an area of 7,000 square meters
(ground floor, brick walls, steel trusses, corrugated iron roof,
cement floor), experts assess the remaining quality to be 30%.
❖ According to regulations applicable to this project, the
maximum proportion of land area used for housing construction
is 60%, equivalent to a total construction area of 9,000 m2; Of
which 60% of the land area (5,400 m2) is for building a 16-
storey apartment building; 40% of the remaining land area
(3,600 m2) is for building townhouses (divided into 36 lots, each
lot has an area of 100 m2).
53
Method of surplus (cont.): Example
❖ Assume the project will be completed within one year and the
investor only has to compensate the factory value for the
enterprise whose land is recovered.
❖ Based on the planning, detailed design of the project and
data provided by the investor, as well as survey and analysis of
the real estate market and construction market, the appraiser
collected the following information at the time of valuation:
- The cost of demolishing the old factory is 300 million VND,
the recovered scrap is equal to 25% of the remaining value of
the factory.
- Unit price to build a new factory with a similar structure is
1,000,000 VND/m2.
- Average cost of infrastructure construction investment is
1,000,000 VND/m2
- Project design and planning cost is 1,000 million VND.
- Average cost of building an apartment is 6,000,000 VND/m2.
Method of surplus (cont.): Example
- Investors must borrow 70% of the costs incurred at the start of
the project from the bank with an interest rate of 13%/year.
- Advertising and home selling costs are equal to 1.5% of
revenue.
- Project management costs are equal to 10% of the total
construction cost of the project (including costs of infrastructure
investment and apartment construction)
❖ The investor's profit is expected to be equal to 14% of the
total development cost at the present time (including direct
costs, indirect costs and excluding financial costs)
- All apartments and subdivided land are sold out at the end of
the year. The average selling price of an apartment is 15 million
VND/m2, the total area of the apartments accounts for 80% of
the total floor area of the apartment building; Subdivided land is
expected to sell for 23 million VND/m2. The above price does
not include value added tax.
55
- Discount rate is10%
Other real estate valuation:
1) Residential real estate

2) Commercial real estate

3) Industrial real estate

4) Other real estate.

Định giá tài sản, 2022 56

Residential real estate valuation
❖ Residential real estate is understood to be used for
living, serving the daily needs of households and
individuals (rather than investing for profit).

❖ Include:
▪ Apartment,

▪ Individual houses (single/detached/high-end villas, townhouses

with street frontage, townhouses with gardens, traditional rural
houses…).

Định giá tài sản, 2022 57

Residential real estate valuation
❖ Main methods used:
▪ Comparison method:
• Applicable: houses in crowded populated areas and
information about similar real estate are available in the
market.
▪ Replacement cost/reproduction cost method:
• Apply in combination with comparison method.
• Comparison method to determine the value of land use
rights; replacement/reproduction cost method to
determine value of construction works attached to
residential land.

Định giá tài sản, 2022 58

Business house real estate valuation
❖ Commercial real estate?
▪ Combination of residence and business, rental, lease
purchase
▪ Example: above-mentioned houses and tourist villas.
❖ Valuation methods:
▪ Direct capitalization method
▪ Discounted cash flow method
▪ Comparison method
▪ Replacement/reproduction cost method (usually used for
checking and comparing)

Định giá tài sản, 2022 59

Commercial real estate valuation
❖ Commercial real estate includes:
▪ Shopping mall;
▪ Office buildings;
▪ Hotel.
❖ Valuation method:
▪ Direct capitalization method
▪ Discounted cash flow method
▪ Comparison method
▪ Replacement/reproduction cost method (usually used
for checking and comparing)

Định giá tài sản, 2022 60

Industrial real estate valuation
❖ Industrial real estate includes Land and construction works
suitable for land use purposes according to government
regulations.
▪ For example: Cement factory, non-ferrous metallurgy
factory, seafood processing factory, food processing
factory…
❖ Main characteristics of Industrial Real Estate:
▪ Industrial real estate construction projects are often designed
and used for specific purposes, and have a higher than normal rate
of depreciation.
▪ Location factors greatly affect the value of industrial real estate
(power source, water, roads, slope, soil treatment below, pollution
treatment...).
❖ Valuation methods:
▪ Direct capitalization method/Discounted cash flow method
▪ Replacement/reproduction cost method
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