Mr. John Moran:

It is an opinion of market value on the date of valuation. It is important that it is done on a specific date because property is not a static asset. It changes so it is only a snapshot in time. It is our best assessment of the open market value that would be agreed by a willing seller and willing buyer acting without compulsion. That is the definition contained within the Red Book.

It has to be based on an appraisal of evidence of current sale prices, current rental values, current property yields and real transactions in the marketplace at the time. It must use the most up-to-date and relevant evidence for the specific property involved. We then take that evidence into account. We adapt it for location, the size of the property and the type of the property. In an investment, we will analyse the length of the lease and look at the strength of the covenant. We ask whether it has the ability to pay the rent and the potential for future rental growth. We determine whether the property itself is over rented or under rented. All those components are taken into account, and that will deal with most investment values.

Development land values are slightly different. We use an approach called the residual valuation approach. What we do is estimate what the completed value of the development will be, less the cost to bring it there, and that generally gives the residual value, which should be the land value. We test that against market evidence, which is based on the value per square foot and per acre being paid for sites. That is the general process.