ratio rent v value

maestroamado

Just wonder if anyone on here has any idea of this.
The question is what multiplier of the annual rental value be the actual value of the property?
We are talking about shop or office accommodation in a good location.

Many thanks...

DubCount

Usually, its a stat that I have heard quoted the other way around (annual rent over property value). This is yield. For commercial property, I would say 7-8% yield is pretty normal. Over 10% is high, under 5% is low.

That would give you a multiple in the 10-20 times range the way you quoted it, with an average of 15 times.

Browney7

DubCount wrote: »

Usually, its a stat that I have heard quoted the other way around (annual rent over property value). This is yield. For commercial property, I would say 7-8% yield is pretty normal. Over 10% is high, under 5% is low.

That would give you a multiple in the 10-20 times range the way you quoted it, with an average of 15 times.

Like everything, it's all relative. A modern Dublin office block would be lucky to yield 5% along with prime retail like Grafton St etc especially in the current climate with 10 year interest rates at 1%.

I assume the op is talking about say small shops in regional towns though

Spark Plug

maestroamado wrote: »

Just wonder if anyone on here has any idea of this.
The question is what multiplier of the annual rental value be the actual value of the property?
We are talking about shop or office accommodation in a good location.

Many thanks...

If the shop/office is currently vacant you'll need to established what the expected rental value is once you have this figure a yield is applied to it and as other posters have said this can range from 3% for prime D2 retail to 9-10% for provincial assets. A mulititude of factors will influence the yield including comparable investment transactions, the strength of the covenant and unexpired term on the lease. Once the rental figure has been capitalise you'll need to make a deduction for rent free periods, voids, etc and deduct standard purchaser costs of 4.46% and hey presto there's your value

maestroamado

Thanks for helpful replies, as luck would have it i found a recent article in local paper to compare with and that was 7% which is more or less what the experts on here say...

Many thanks.