A Detailed Process of Property Valuation

By contrast the UK economy continues to perform relatively well, although 2005 marked a slight downturn in output growth with GDP totaling 1.8%. The UK economy has continued to outperform the Eurozone as a whole, and in particular the other large and established European nations.Growth in Asia’s emerging economies remains strong, although in 2005 output growth fell to 7.3% and is expected to fall back further in 2006 to 6.9%. The downturn in the rate of growth is primarily due to the planned tightening of fiscal policy in China and a potential slowdown in global demand. Regional disparities have continued to widen, as growth in China and India continues to forge ahead, while expansion in other parts of the region remains relatively muted.

Growth in India has remained robust, partly due to the continued expansion of the service sector bolstered by outsourcing from Europe and North America. Economic activity in India is expected to moderate from the strong pace experienced over the previous two years to growth of 6.3% in 2006.The expansion of China has continued to exceed expectations and boost output for the region, with GDP growth expected to reach 9.0% in 2005, and forecast to ease moderately to 8.2% in 2006.

The continuing recovery of the Japanese economy also provides encouraging news for the region, driven by an upturn in domestic demand. Recent surveys suggest that this will continue with signals of growing business confidence and investment. The latest forecasts for the region as a whole project solid growth, aided by strong exports and domestic demand.GDP growth in sub-Saharan Africa is expected to have totalled 4.8% in 2005, marginally below previous IMF forecasts. Rising oil prices have impacted upon the oil importing countries, although overall the effect on output has not been considerable.

More positively, there appear to have been improvements in the region’s macroeconomic stability, aided by ongoing structural reforms. Growth is forecast to accelerate to 5.9% in 2006 which, if achieved, would be the strongest expansion since the early 1970s.The office property sector enjoyed solid performance in 2005 in most of the North American regional markets. Vacancy rates declined and rental rates began to move higher. Of course, the pace of improvement was not uniform across all of the regional markets.

This technique for business valuation amount of improvement mirrored, to a substantial degree, the basic economic conditions in the respective markets. The markets situated along the Atlantic and Pacific coasts of the US continued to experience robust absorption of office space, which in some cases exceeded expectations. In the interior of the continent, regional markets that had languished since 2001 finally began to show improvement.

The overall US national office vacancy rate ended 2005 at an estimated 12.1%, down from 13.5% at the end of 2004. Again, for the nation as a whole, average quoted rents were up about 2%. These averages mask a wide divergence of performance at the regional level. In New York City, for example, the vacancy rate declined by three percentage points in 2005, ending the year with a vacancy rate that is well below 10%. In contrast, the vacancy rate in Detroit remained nearly four percentage points above the national average, with few signs of improvement on the horizon. At the national level, approximately 125 million sq ft of office space was absorbed.

Property valuation process is performed to calculate property’s price

Prospects for the industrial sector within the EU appear healthy as confidence improves and growth accelerates in the continent’s major economies. During December 2005, manufacturing growth grew at the fastest rate in 16 months – largely due to greater export volumes fuelled by a weakening of the euro against the dollar in 2005.

Despite high oil prices, there is a growing belief among manufacturers and economists that the economic outlook for both EU and non-EU countries is positive after a sustained period of stagnation. The outsourcing of logistics functions to accession and pre-accession countries continues to fuel demand for third party logistics service providers across Europe. This factor has been driven by increasing cost pressure upon manufacturers and retailers and is a key driver of demand for large units.

The UK warehouse investment market remains the most active in Europe. Total returns over the 12 months to January were at their highest in over five years at 18.4%. The market outlook also remains positive, as occupier demand strengthens and rents are anticipated to pick up in 2006.

The key Benelux markets, the major gateway to the Western European economies from the UK and beyond, are strengthening. In Belgium, Brussels and Antwerp are enjoying an improvement in occupier demand, although the impact of any recovery is yet to reach many secondary markets.

Prime distribution rents now stand at circa € 592 per sq m per annum with prime yields currently in the region of 7.5%. Occupational markets in the Netherlands are also picking up. Demand has emanated out from the traditional core markets, primarily the Amsterdam Airport Area and Rotterdam, with occupiers who were once focused on these areas willing to take premises elsewhere in the Netherlands or over the Belgium and German borders. Prime distribution yields in the Amsterdam area currently stand at 7.5%.

The weight of domestic and foreign capital chasing limited stock continues across Europe, placing downward pressure on yields. The low cost of borrowing within the Eurozone is helping to maintain strong investor demand, with the regional French and Spanish markets two of the principal targets.

Property valuation solves all complexities which comes in the process

Eastern European yields have continued to converge with those in the more established markets. Prime yields in Prague now stand at 8.25%, having fallen 100 basis points over the last year, while logistics yields in Warsaw have tightened by the same margin.Bolder investors are investigating opportunities amongst the next round of accession countries such as Bulgaria, Romania and beyond to Russia, albeit with caution, as a fundamental lack of local market knowledge as well as political and economic uncertainty remain as barriers.

2005 saw sustained industrial growth across Asia Pacific, driven by solid performance from key economic centres. The island state of Singapore continues to benefit from its advantageous geographical position. Industrial rents in the market remained stable in 2005 as a surplus of supply kept rental values in check. However, the market is forecast to witness a return to growth, as global demand for high-tech and electrical goods are anticipated to increase.

The Sydney industrial market looks set to continue to strengthen. Incentives are reducing and strong tenant demand led to the overall vacancy rate falling sharply over the last year. The opening of the M7 corridor in particular helped to fuel tenant demand.Strong tenant demand in the Melbourne market has already led to an escalation in rental values on larger units, while smaller occupiers have demonstrated a preference for owner-occupation. The limited availability of high grade investment opportunities and strong demand has continued to produce downward pressure on yields across both the Sydney and Melbourne markets.

Business sentiment among Japan’s manufacturers has improved and third party logistics operators are likely to become active in the Tokyo industrial market again, buoying demand after a long period of stagnation.