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Valuing Commercial Land in NSW

Determining an accurate value for vacant commercial land is key to making smart investment and development decisions. Here are the main methods and factors to consider when valuing commercial land in NSW:

Comparable Sales Analysis

Analysing recent sales of comparable commercial land parcels in similar areas is a key valuation method. The sales prices per square metre of similar land sales indicate the potential value of the subject land. Allowing for location and land variations gives a market value estimate.

Development Feasibility Studies

For commercial land with development potential, feasibility studies calculate the end value of potential built projects on the land. This estimated completed project value, minus construction costs, provides the residual land value.

Income Capitalization Approaches

Commercial land value can be estimated by capitalising the annual income the land could generate if leased. The market income rate per square metre is capitalised to determine land value.

Corner Land and Road Frontage Premiums

Corner blocks and extra road frontage attract premiums in commercial land values. Valuers adjust for extended exposure and access in corner and road frontage situations.

Land Size and Dimensions

Larger commercial land parcels command higher per square metre rates. Valuers make adjustments for unusual land shapes and dimensions that affect developing potential.

Location Attributes

Key location factors like proximity to transport, highways, population and economic hubs impact the value. Land values generally decrease further from commercial centres.

Zoning, Approvals and Allowed Uses

Land zoned for higher density, mixed-use or commercial development has greater potential value than low density or residential zoned land. Development approval status also affects value.

Demand from Buyers and Developers

Locations and land types seeing high demand from developers and commercial buyers will achieve higher values. Market demand dynamics are a core valuation input.

Accurately valuing commercial land requires weighing all these key factors. Valuation professionals combine analysis of these inputs to reach the land’s true market value for different uses.