Similar to Hotels, Motels and Child Care Centres, the concept for valuing caravan park going concerns starts with the measurement of value concepts established by the International Valuation Standards (IVS).
IVS 2007 details the definition and application of valuation approaches for valuation reports as follows:-
Valuations of any type, whether undertaken to estimate market value or a defined non-market value, require that the Valuer apply one or more valuation approaches. The term “valuation approach” refers to generally accepted analytical methodologies that are in common use. In various States these approaches may be referred to as “valuation methods”.
Market based valuations normally employ one or more of the valuation approaches by applying the principle of substitution, using market-derived data. This principle holds that a prudent person would not pay more for a good or service than the cost of acquiring an equally satisfactory substitute good or service, in the absence of the complicating factors of time, greater risk, or inconvenience. The lowest cost of the best alternative, whether a substitute or the original, tends to establish Market Value.
In most instances, caravan parks and MHEs are valued utilising a Capitalisation of Net Operating Profit. This assessment of a net profit requires a great deal of market knowledge and reference to industry benchmarks. As the valuation methodology applies a yield or capitalisation rate to net operating profit (adjusted for owner specific income and expenses), over or under assessment of the net profit can significantly affect the level of value. The benchmarking or comparison amongst properties is not publicly or commercially available for valuers and our 30 year history in this asset class provides unparalleled benchmarking opportunities in this sector.
Direct Comparison is utilised as a secondary check method only for caravan park valuation due to mixed usage and site variation of each business at hand. However, this method is more reliable in the valuation of MHEs due to the consistent trade achieved for each site within an estate/village. Yield and direct comparison determination can also be affected by the variation in asset class being:
The caravan park and MHE market is tightly held and requires specialist valuers to have complete market knowledge when approaching a valuation. For more information please direct your enquiry to Stuart Strong or Lachlan Robertson.
Stuart Strong
Robertson & Robertson has 38 years experience in providing specialised valuation advice. If you are a business owner looking to sell or purchase or are seeking valuation advice for mortgage, taxation or legal purposes, our specialist valuers can assist you.
To enquire about obtaining a caravan park valuation or for valuation advice in general, please CONTACT US.
