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Intermediate

Case Study: Valuing a Commercial Property Using Income Capitalization

A single, end-to-end valuation of a leased Grade-A office floor in Pune's eastern IT corridor, worked the way a disciplined buyer or a REIT's valuer would. You start with the seller's pitch and the lease deeds, build a stabilised net operating income line by line, derive a market cap rate from comparable sales, listed REIT valuation reports and the 10-year G-Sec yield, and capitalise the income into a value. You then stress that value with cap rate sensitivity and a discounted cash flow cross-check around the lease expiry, add stamp duty, registration and due diligence costs, and finish with an offer price, a walk-away price and a clear verdict. Built for experienced retail investors, HNIs and angel investors weighing a direct commercial property purchase. The property and its numbers are illustrative; the market context is real.

Income CapitalizationCap RateNet Operating IncomeCommercial Real EstateProperty ValuationCase Study

MODULES

5

DURATION

~3 hrs

TRACK

Alternative Investing

What You'll Master

How to read a commercial lease and rent roll for the clauses that actually move value: lock-in, escalation, CAM and renewal terms

How to build a stabilised NOI from gross rent, vacancy, non-recoverable expenses and capital reserves

How to derive a defensible cap rate from comparable sales, REIT valuation reports and the risk-free G-Sec yield

How to capitalise NOI into a value and measure how sharply that value moves with a small change in cap rate

How to cross-check a direct capitalization value with a DCF that models the lease expiry and a terminal cap rate

How to turn a valuation into an offer price and a walk-away price after stamp duty, registration and deal costs

Access Level

LEARNER

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Everything included

Full Text Playbooks

Actionable Exercises

Mobile Reading Mode

Lifetime Updates

Curriculum Breakdown

Chapter 1: The Property and the Brief

3 Lessons

The Case: A Leased Office Floor in Pune's IT Corridor10 min read

Income Capitalization on One Page: Value Equals NOI Divided by Cap Rate11 min read

Reading the Lease Deed and Rent Roll Like a Valuer13 min read

Chapter 2: Building the Net Operating Income

3 Lessons

Gross Potential Rent, Escalations and Vacancy Allowance13 min read

Operating Expenses: Property Tax, CAM Leakage, Insurance and Reserves13 min read

Stabilised NOI: Stripping Out One-Offs and Broker Optimism12 min read

Chapter 3: Choosing the Cap Rate

3 Lessons

Deriving a Market Cap Rate From Comparable Sales13 min read

Cross-Checking With REIT Valuation Reports and the G-Sec Yield13 min read

Adjusting the Cap Rate for Tenant, Lease and Building Risk12 min read

Chapter 4: Arriving at the Value

3 Lessons

Direct Capitalization: Putting NOI and Cap Rate Together11 min read

Sensitivity: What a 50 Basis Point Cap Rate Shift Does to the Price12 min read

DCF Cross-Check: Modelling the Lease Expiry and a Terminal Cap Rate15 min read

Chapter 5: From Value to Decision

2 Lessons

Acquisition Costs: Stamp Duty, Registration, Due Diligence and GST on Rent12 min read

The Verdict: Offer Price, Walk-Away Price and the Risks That Remain14 min read