Property Valuation in Ukraine – independent Appraisal Reports in English for international clients

What is property valuation?

Valuation is the process of determining the value of property owned by an individual or legal entity or the state. These can be the physical assets including suburban homes, individual apartments and apartment buildings, commercial real estate including office, stores and restaurants and banks, infrastructure, equipment and land, as well as valuation of business and various forms of equity ownership like shares of stock and stock packages and intangibles such as brand names, music, movies and technologies. Independent certified valuations must always comply with methodologies and international standards of valuation that are appropriate for the type of property being valued, the purpose and use of the valuation report, and the date of the valuation.

When do we need property valuation?

There are many situations where we need property valuation. The purpose of the valuation depends on the needs of the client and can include selling or buying real estate; valuing assets to secure loans; investment projects; corporate mergers and acquisitions; insurance claims; litigation disputes involving assets; divorce settlements; tax filings; preparation of corporate financial reports for tax filings and reporting purposes; and obtaining financial compensation through international courts for damages to buildings, cars and other assets, resulting from war.

Valuation services for Clients from USA, Europe, Australia, Turkey, Kazakhstan, China and other countries include:

The American and Ukrainian Companies, IRE USA Inc, IRE Ukraine and Thomas & Simonova, support the financial decisions of our clients with expert valuations and accurate appraisal reports:

• Residential Property Valuation
• Commercial property Valuation
• Land valuation
• Business valuation
• Intangible assets valuation
• Mortgage valuation.

Companies specialize in valuation of large and complex property appraisals. Personal client references attest to the value, expertise, accuracy and reliability of appraisal reports.

Best Appraisers with International Certifications in Ukraine

Partners and staff are independent professional appraisers maintaining valuable memberships in the American Society of Appraisers (ASA) and with the Tangible Assets Board of IVSC. They prepare the highest quality appraisal reports for different purposes.
Our American, European and Asian clients value our global expertise and trust in the proven integrity of our American Appraiser Certifications.
For an appraisal report to have value, requires experience in valuing various types of assets and expertise in technologies and assets used in many sectors of the economy such as real property, financial services, energy, transportation, oil and gas mining industry, manufacturing of different goods and services, agribusiness etc

What methods do we use in the independent property valuation process in Ukraine?

1. Selection of the basis of valuation and general approaches to the valuation

The choice of the basis for the valuation depends on the purpose with which the property valuation, its features, and regulatory requirements are carried out.
According to National Standard No. 1 “General Principles of Appraisal of Property and Property Rights” property valuation is carried out using the principles of utility, demand and supply, replacement, expectation, marginal productivity of the contribution, and the most efficient use.
In determining the market value, the appraisal should be based on the following observations that are typical of the market at the valuation date:
• market prices for selling similar objects or offered for sale;
• influence of market conditions on the functioning of the object, based on the principle of its most effective use in forecasting cash flows or income rates.
The valuation methodology must meet the requirements of Ukrainian State legislation – the Law of Ukraine “On valuation of property, property rights and professional appraisal activity in Ukraine” and the National Valuation Standards, i.e. Standard 1 “General Valuation Principles”, as well as International Valuation Standards IVS-2020.
The following 3 approaches can be used to determine market value:
• approach based on a comparison of sales – a comparative approach;
• Cost (asset) approach;
• An approach based on capitalization of income – Income approach.
The valuation process must evaluate the application of each of these approaches in determining market value or fair value e of the various forms of assets under valuation

2. Comparative approach

This approach is based on comparing the Market Value of the same objects that have been sold or put up for sale, with objects being valued.
The application of this approach includes the following steps:
• Compile information about a sale or offer for sale;
• Research information about objects that are similar in nature and that can be recognized as analogues;
• Compare the objects being valued with the analogues;
• Estimate differences between objects and analogues and make corresponding adjustments in order to accurately compare the value of the object-analogue to the value of the object of valuation;
• Determine the value of the object of valuation.
The application of this approach is based on analysis of the market and the search for analogues with subsequent adjustment, taking into account differences that affect the cost, the current use of objects and if similar objects were acquired in an open, competitive market.
The comparative approach is the most reliable in valuing objects when it is necessary to sell the objects. This approach is particularly advisable when valuing movable property and real estate.

3. Cost (assets) approach

According to the cost approach, the value of assets is based on all costs of acquiring or constructing a new asset that is consistent with the functional use of the asset being valued. In this method, the residual value of replacement (RVR) is determined on the basis of the cost of the restoration or replacement, taking into account all types of physical, functional and economic depreciation.
The procedures in using the cost approach are as follows:
• Determination of reproduction value (replacement cost) RCN;
• Calculation of various types of depreciation;
• Determination of depreciated replacement cost DRC (taking into account all types of depreciation);

4. Income approach

The ability of some assets, particularly land and improvements to generate profits from leasing is one of the objective indicators of their value. The main source of such an assessment is the market terms of the property lease and the forecast of net operating income.
Net operating income is the difference between gross revenue and operating and maintenance costs.
Calculations are made as follows:
In the framework of the income approach, the value of an object can also be determined by the direct capitalization of net income (cash flow).
Formula used in the direct capitalization method:
PV= CF/ Ro

where:
PV – current market value;
CF – the value of the annual projected cash flow;
Ro – capitalization rate.

Read more about methodlogy of valuation here

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