The following defined words and terms have particular relevance to the API and the property industry. Other words and terms are also defined in the International Valuation Standards Glossary (see www.ivsc.org) and the following list of definitions is intended to be consistent with the concepts and definitions contained in the IVS Glossary and Standards. Please refer to the IVS Glossary for the full list of definitions. There may be definitions not contained in the IVS Glossary which are in use by the API to reflect local Australian and New Zealand property practice.
|ABS GFS Manual 9||Australian Bureau of Statistics (ABS) publications Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2005 (ABS Catalogue No. 5514.0) and Amendments to Australian System of Government Finance Statistics, 2005 (ABS Catalogue No. 5514.0) published on the ABS website.|
|Advocate 12||A person who represents the cause or interest of another, particularly to a third deciding party, even if that cause or interest does not necessarily coincide with one’s own beliefs, opinions, conclusions or recommendations. (Refer, regarding the difference between experts and advocates, ANZRPTIP1).|
|Agribusiness 14||In the context of ANZVTIP 9, Agribusiness is considered to represent those enterprises / properties with an element of ‘post-farm gate’ production, most likely involved in some level of vertical integration. Examples range from family operated grain farms with their own packing and distribution capabilities through to large scale abattoirs and packing facilities. Valuation of these enterprises can often require a higher level of expertise and experience than other rural properties. Specific instructions regarding valuation approach should be sought from the instructing party, however will often include analysis of financial performance (refer 3.20 Trading Performance for further description).|
|Agricultural Activity 12||Management by an entity of the biological transformation of biological assets for sale, into agricultural produce, or into additional biological assets. (See International Accounting Standard 41 [IAS 41], Agriculture, para. 5).|
|Balcony 7||An external platform at an upper level with a balustrade to the open sides projecting from or recessed from an External Wall and including in this definition generally accessible rooftop terraces, external galleries and loggia.|
|Biological Asset 12||A living animal or plant. (IAS 41, para. 5). |
The table below provides examples of biological assets, agricultural produce, and products that are the result of processing after harvest:
|Building 7||An independent Structure forming part of a Property.|
|Business Combination9||A transaction or other event in which an acquirer obtains control of one or more businesses. Transactions sometimes referred to as ‘true mergers’ or ‘mergers of equals’ are also business combinations as that term is used in this Standard (AASB 3).|
|Business 1||A commercial, industrial, service, or investment entity (or a combination thereof) pursuing an economic activity.|
|Carrying Amount 9||The amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses.|
|Catwalk 7||An internal or external walkway above the surrounding area that is used to provide higher level access.|
|Certified Practising Valuer (CPV) 6||A Valuer meeting the requirements for Certified Practising Valuer as defined by the API.|
|Clearance Height 7||The maximum height within a Building or section of a Building measured to the lowest point of the roof structural element, roof access door or building equipment such as ducting, gantries, pipework, sprinklers.|
|Client 6||The party instructing the Valuer to prepare the Desktop Assessment. The Client may be the Supplier, Lender or a financial intermediary.|
|Coalition 7||The Trustee of IPMS, comprising not-for-profit organisations, each with a public interest mandate.|
|Common Facilities 7||Those parts of a Building providing shared facilities that typically do not change over time, including, for example circulation areas, stairs, escalators, lifts/elevators and motor rooms, toilets, cleaners’ cupboards, plant rooms, fire refuge areas, maintenance rooms and unallocated parking spaces.|
|Component Area 7||The total Floor Area attributed to one of the Components.|
|Cost Approach 1 10||A valuation approach based on the economic principle that a buyer will pay no more for an asset than the cost to obtain an asset of equal utility, whether by purchase or by construction.|
|Cost Approach 9 11||A valuation technique that reflects the amount that would be required to replace the service capacity of an asset (often referred to as current replacement cost).|
|Covered Area 7||The extent at ground level of the area of a Building covered by one or more roofs, the perimeter of which (sometimes referred to as the drip line) is the outermost structural extension, exclusive of ornamental overhangs.|
|Customer 6||A person who seeks to grant a first mortgage over the Subject Property to the Lender in support of a proposed Loan.|
|Declared Value and Sum Insured 4||Declared value and sum insured are terms used to describe the sum total of all property insured at each situation declared by the insured and calculated in accordance with the basis of settlement including foreseeable expenses such as fees associated with planning, architects, surveyors, consulting engineers, legal advisors, etc.|
|Desirable Information 6||This is data or information that may be of assistance to the Valuer in preparing the Desktop Assessment that is in addition to the requirement for Essential information.|
|Desktop Assessment 6||A report prepared:|
|Development Management 13|
The practice of delivering the right development, in the right location, at the right time. It includes the conceptualisation and optimisation of a development strategy, following through the various stages in the development project to achieve the completed project and meeting pre-defined cost, value and time budgets. It is providing the advice that would be the thinking of a developer.
Development management comprises the skills of project management in the applied context of property development; and a development manager is a person who demonstrates expertise involved in the development of property or roles in order to achieve the development of the property, and these may include site selection, development strategies, feasibility studies, planning applications, procurement, construction, management and disposal of the property in the development process.
|Development Manager 13|
Is responsible for the overall management of all aspects of a property development either directly or by delegation. The discipline ensures that all aspects are fully aligned into a single cohesive strategy, while balancing often competing objectives such as quality on one hand and cost control on the other.
A Development Manager may be acting in the role of a Consultant, or could be employed directly by a Developer or Property Owner to look after the development process on their behalf. Professional developers sometimes provide a development management service to property owners either on a fee basis or in a joint venture capacity. Furthermore, within development organisations the roles of the development manager may be spread across a team that collectively achieve the objectives outlined in Development Management. Further, a development manager may be involved in the end-to-end development process, although equally they may only be involved in certain stages of the development process. This is dependent on the project type, size, engagement and purpose of the development managers’ role.
|Economic Life 1||The total period of time over which an asset is expected to generate economic benefits for one or more users.|
|Economic Obsolescence 1||A loss of utility caused by factors external to the asset, especially factors related to changes in supply or demand for products produced by the asset that results in a loss of value.|
|Effective Rent 14||The actual liability for rent and outgoings after adjustments for any incentives to the face rent are taken into account. Effective Rent and Market Rental Value are synonymous.|
|Equivalent Rent 14||Equivalent refers to the rent being adjusted for the effects of any market rent reviews that will occur in the period of consideration.|
|Enterprise Value 1||The total value of the equity in a business plus the value of its debt or debt-related liabilities, minus any cash or cash equivalents available to meet those liabilities.|
|Essential Information 6||Essential Information specified in the Memorandum that the Valuer requires in order to complete and send a Desktop Assessment to the instructing party.|
|Expert Valuer 2||In Australia - a person who is a Certified Practising Valuer of not less than 5 years’ standing, of the Australian Property Institute and was active in the relevant market at the time of the original valuation. In New Zealand a Registered Valuer of not less than 5 years’ standing, of the Property Institute New Zealand and was active in the relevant market at the time of the original valuation.|
|External Obsolescence 1||A loss of utility caused by economic or locational factors external to the assets that results in a loss of value.|
|External Wall 7||The external enclosure of a Building, which comprises the area between the Internal Dominant Face and the outside of a Building.|
|Fair Market Rent 14||The rent that would be fair for the particular landlord and particular tenant to have agreed under the lease in question having regard to all the circumstances relevant to any negotiations between them of a new rent from the review date. The test is largely subjective. ‘Fair market rent’ is considered to be different from ‘current market rent’ to take into account what is reasonable between the actual parties to the lease.|
|Fair Value 9||The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.|
|Finished Surface 7||The wall surface directly above the horizontal wall-floor junction, ignoring skirting boards, cable trunking, heating and cooling units, and pipework.|
|Floor Area 7||The area of a normally horizontal, permanent, load-bearing structure, for each level of a Building.|
|Functional Obsolescence 1||A loss of utility resulting from inefficiencies in the subject asset compared to its replacement that results in a loss of value.|
|GLA 7||Gross Lettable Area as per PCA Method of Measurement|
|GLAR 7||Gross Lettable Area – Retail as per PCA Method of Measurement IDF (Internal Dominant Face) Wall Section|
Each internal finish of a section of an External Wall, ignoring the existence of any columns that is either recessed from or protrudes from its adjacent section.
|Incentives 14||Inducements provided by Landlords to attract tenants to lease space. Examples may include but are not limited to rent free periods, provision of fitout by the Landlord, cash incentives, payout of previous leases and other similar inducements.|
|Highest and Best Use 1||The use of an asset that maximises its potential and that is physically possible, legally permissible and financially feasible.|
|Gross Rent 14||The rental reserved or derived under lease or tenancy arrangement(s) where there is no further obligation on the tenant to pay any other property costs other than tenancy utilities and cleaning.|
|Income Approach 1||A valuation approach that provides an indication of value by converting future cash flows to a single current capital value.|
|Indemnity Value 4||The cost necessary to replace, repair and or rebuild the asset insured to a condition and extent substantially equal to but not better or more extensive than its condition and extent at the time that the damage occurred, taking into consideration the age, condition and remaining useful life of the asset.|
|Indicative Assessment 6||An indication of the value with any limiting conditions of the Subject Property, based on the information provided, following the procedures set out in this Memorandum.|
|Industrial Building 7||A Building predominantly used for industrial purposes, whether or not part of the Building is used for ancillary purposes.|
|Institute 5 and 13||All references to “Institute” means API/PINZ.|
|Insured 4||The insured is a person or entity whose interests are protected by the insurance policy.|
|Integrated Unit 12||An agricultural entity that has common ownership of all or part of the processes involving the production and marketing of its products and/or commodities.|
|Intensive Properties 12|
Where a significant proportion (e.g. >50%) of the income from operations is generated by activities undertaken in concentrated environments such as enclosed sheds etc.
The common concept across those industries classified as “Intensive”, “Specialised” or “Special Purpose” is where the land use cannot be easily converted to another enterprise or it is exposed to changing consumer tastes that could not be adjusted to quickly.
The following list, whilst not exclusive, provides examples of properties that may be deemed as specialised / intensive / special purpose:
|Internal Dominant Face (IDF) 7||The inside Finished Surface comprising more than 50% of the floor to ceiling height for each IDF Wall Section. If such does not occur, then the Finished Surface is deemed to be the IDF.|
|Investment Property 9|
Property (land or a building—or part of a building—or both) held (by the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or both, rather than for:
(a) use in the production or supply of goods or services or for administrative purposes; or(b) sale in the ordinary course of business.
|IPMS 7||International Property Measurement Standards.|
|IPMS 1 7||The sum of the areas of each floor level of a Building measured to the outer perimeter of external construction features, which may be reported on a Component-by-Component basis for each floor of a building. The definition for IPMS 1 is the same for all classes of building.|
|IPMS 2 7||The sum of the areas of each floor level of a Building measured to the Internal Dominant Face.|
|IPMS 3 7||The Floor Area available on an exclusive basis to an occupier.|
|IPMSC 7||The International Property Measurement Standards Coalition.|
|Lease (IVS) 14||An agreement whereby a lessor grants the right to use an asset for an agreed period of time to a lessee in return for payment or a series of payments.|
|Lender 6||The financial institution issuing instructions (or on whose behalf instructions are issued) to the Valuer. The Lender may have the same meaning as the Client.|
|Loading Bay 7||The area designed for vehicles next to or adjacent to a Loading Dock.|
|Loading Dock 7||An elevated platform at an opening of a Building designed for receiving or dispatching goods or equipment.|
|Market Approach 1||A valuation approach which provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available.|
|Market Rent 14||The estimated amount for which an interest in real property should be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.|
|Market Rental Value 14||The sum arrived at after making proper allowance for all collateral advantages and disadvantages ascertained upon proper examination of all the arrangements made between the lessor and lessee including the various rights and obligations under the terms of the lease which reflects the net consideration passing to the lessor from the lessee under the lease and associated collateral arrangements. (See Effective Rent)|
|Market Value 2 3||The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. |
* See also definition of Highest & Best Use
|Measurement Convention 7||A documented code for the Measurement for a Building.|
|Memorandum 6||This Desktop Assessment Memorandum produced by the API (including any API revisions, updates or additions from time to time).|
|Method of Measurement 7||The appropriate method to measure a Building, given combined consideration of the nature of the occupation or primary use to which the Building is designed and the use for which the measurement is to be utilised.|
|Mezzanine 7||An intermediate and partial storey, other than a Catwalk, between the floor levels or roof of a Building and usually fully or partially open on one or more sides.|
|NLA 7||Net Lettable Area as per PCA Method of Measurement.|
|Net Rent 14||The rent to the owner free of all outgoings (i.e. gross rent less all outgoings including Land Tax).|
|Obsolescence 1||A loss of utility of an asset caused by either physical deterioration, changes in technology, patterns of demand or environmental changes that results in a loss of value.|
|Office Building 7||A Building predominately used for office purposes, whether or not part of the Building is used for other purposes.|
|Outgoings 14||The expenses incurred in generating income. In real estate, these expenses include but are not necessarily limited to statutory outgoings (municipal rates, water and sewer rates, land tax) and operating expenses such as essential service routine repair and maintenance, common area expenses (cleaning and electricity), insurance and management fees.|
|Partial Interest 8||A partial interest may be described as a divided or undivided ownership right in property that represents less than the whole.|
|Passing Rent 14||The passing rent being paid by the lessee(s) as specified by the terms of the lease(s)/tenancy agreement(s).|
|Patio 7||A paved or floored terrace, adjacent to a Building, that may or may not be covered by an independent framework.|
|PCA 7||Property Council of Australia|
|Permanent Mezzanine 7||A Mezzanine which is an integral part of the structure of a Building.|
|Physical Obsolescence 1||A loss of utility due to the physical deterioration of the asset or its components resulting from its age and normal usage that results in a loss of value.|
|Profit Rent (Over rent) 14||The amount by which the passing rent is greater than the market rent.|
|Project Management 13|
Dedicated Project Manager – to deliver a specific stage of the development process.
For the purpose of ANZRPTIP 4 the definition of Development Management is distinct from dedicated Project Management which is more concerned with delivering an already defined project or construction related outcome. Project management is a professional discipline comprising stages relating to managing teams or groups of people in the initiation, planning, execution, control and completion of tasks, projects or work. In the property and construction industry the use of project management is perceived to be approached in the context of tasks, project or work undertaken in the property and construction sector, however broader concepts of project management are not limited to construction or development context. There is often no clear industry distinction between the two terms, development management and the use of project management in the property and construction industry, which tend to be inter-changed by clients and various other professions when referring to the development and project (construction) roles.
|Property 7||Any real estate asset in the built environment. (This definition is only intended to apply to the Methods of Measurement TIP).|
|Property Advice 5||Property Advice is the provision of specialist research, market knowledge and strategic advice to clients to solve their problems and maximise their opportunities. Property Advice is typically provided to corporations, government or individuals for a variety of purposes. For example it may include strategic property reviews, market research, advice on the purchase, sale or leasing of property, due diligence, new development or upgrading property, adding value by development approvals, feasibility studies, assessing portfolio mix, syndicate management, etc. The nature of the property advice and the title used to describe it depends very much upon the scope and individual circumstances of each brief.|
|Property Advisor 5||The term “Property Advisor” is used in a generic sense to cover a variety of property roles including: Property Economist or Consultant; Asset Manager; Syndicate Manager; Development Manager; Tenant Representative; etc.|
|Property Industry 7||Comprises Users, Service Providers and Third Parties with interests in real estate assets.|
|Property Insured 4|
Property insured is a term commonly used to describe the property that is covered under the insurance policy. Insurance policies typically provide insurance cover for all real and/or personal property of every kind and description, unless specifically excluded, belonging to the insured or for which the insured is responsible or has assumed responsibility to insure.
In some circumstances a property owner may self-insure some assets and these should be identified.
The property insured also extends to all property in which the insured may acquire an insurable interest during the period of insurance. An insurable interest may result from the completion of an agreement to purchase an asset even though settlement may occur at a future time.
|PropertyPRO™ 6||Valuations prepared in accordance with the API PropertyPRO™ Residential Valuation and Security Assessment Supporting Memorandum.|
|Property, Plant and Equipment 9|
Tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and(b) are expected to be used during more than one period.
|Qualified Property Valuer - API 15||In Australia, a Property Professional who is certified or accredited by the Australian Property Institute as having the appropriate academic qualification and practical experience and who has the applicable Professional Indemnity Insurance and is bound by the API Code of Professional Conduct.|
|Recoverable Amount 9||The higher of an asset’s Fair Value less costs of disposal and its Value In Use.|
|Reinstatement Cost 4|
Where property is lost or destroyed, in the case of a building, the rebuilding thereof, or in the case of property other than a building, the replacement thereof by similar property in either case in a condition equal to, but not better or more extensive than its condition when new.
Where property is damaged: the repair of the damage and restoration of the damaged portion of the property to a condition substantially the same as, but not better or more extensive than its condition when new.
|Replacement Cost 1 4||The current cost of a similar asset offering equivalent utility.|
|Reproduction Cost 1 4||The current cost of recreating a replica of the asset.|
|Rent Review 14||A periodic review of rental under a lease using a predetermined method.|
|Rent Shortfall 14||The amount by which passing rent is less than the market rent.|
|Residential Building 7||A Building predominately used for residential purposes, whether or not part of the Building is used for other purposes.|
|Residential Property Valuer (RPV) 6||A Valuer meeting the requirements for Residential Property Valuer as defined by the API.|
|Restricted Assessment 6||An assessment prepared in accordance with the API Restricted Assessment Supporting Memorandum.|
|Retail Building 7||A Building predominately used for retail purposes, whether or not part of the Building is used for other purposes.|
|Retrospective Valuation 2||A valuation taking effect from a date in the past.|
|(Rural) Lifestyle 12||In undertaking valuations of rural and agribusiness properties it is important to confirm that the property can indeed be classified as rural or agribusiness. One of the main areas of confusion is the delineation between rural and rural lifestyle.|
A Rural Lifestyle block is viewed differently in different markets. In forming a view on whether or not a property is a lifestyle block, a Valuer will have regard to the characteristics of the property and the market in which it sits. Characteristics to which the Valuer will have regard include the following:
This is a subjective assessment reflecting the weighting the Valuer places on each characteristic in each circumstance.
In Australia where a valuation is required for mortgage purposes, properties are to be treated as a Rural Lifestyle block where the property:
For properties, which do not meet this definition a full form valuation report is to be adopted, with the expectation that the valuation be completed or verified by a suitably experienced rural / agribusiness Valuer.
|Sales Evidence 6||Sales data that relates to properties that have characteristics comparable to the Subject Property and are utilised for comparison purposes.|
|Service Potential 1||The capacity of an asset to continue to provide goods and services in accordance with the entity’s objectives.|
|Service Provider 7||Any entity providing real estate advice to a User or Third Party including, but not limited to, Valuers, surveyors, facility, property and asset managers, agents and brokers, Space Measurement Professionals, cost consultants, interior designers and architects.|
|Settled Sales 6||A settled sale is a sale whereby title has transferred to the new owner and that transfer of title has been duly registered by the relevant State or Territory authority. It is sufficient for the Valuer to rely upon information provided via industry recognised third party sales databases such as Red Square, The List, RP Data etc to confirm the details of the transaction.|
|Sheltered Area 7||Any part of a Covered Area that is not fully enclosed.|
|Situation 4||Situation is a term commonly used in insurance policies to refer to the specific location of the insured assets. The insured may have many situations covered by the same insurance policy.|
|Space Measurement Professional 7||A Service Provider qualified by experience or training to measure Buildings in accordance with IPMS.|
|Special Assumption 3||An assumption that either assumes facts that differ from the actual facts existing at the valuation date or that would not be made by a typical market participant in a transaction on the valuation date.|
|Specialised Properties 12||Where the land cannot be applied to an alternative use without firstly incurring a significant effort in time and/or cost in removing infrastructure and/or vegetation.|
|Specialised Uses 7||Uses other than Office, Retail, Industrial and Residential.|
|SSC 7||The Standard Setting Committee appointed by the IPMSC to develop global standards for property measurement.|
|Standard Rural Assets 12||Includes dryland cropping, grazing, mixed farming and broad acre irrigation for annual cropping or fodder purposes.|
|Structure 7||A construction that provides shelter or serves as an ancillary function, but is not necessarily fully enclosed.|
|Subject Property 6||The property for which the Lender / Client instructs the Valuer to prepare a Desktop Assessment report.|
A party that acts as an intermediary between Lenders / Clients and Valuers in connection with the procurement by the Lender of Valuation / Desktop Assessment services.
The Supplier typically:
|Temporary Mezzanine 7||A Mezzanine which is not an integral part of the structure of a Building.|
Different terminology is adopted from country to country and region to region. This is particularly evident in the agricultural or rural sector.
Members utilising the relevant standards and guidance notes should attempt to adopt relevant and accepted terminology appropriate in the specific location in which they are involved.
New Zealand specific
|Third Party 7||Any entity other than a User or Service Provider with an interest in property measurement including, but not limited to, governments, banks, other property financing bodies, data analysts and researchers.|
|Third Party Platform 6||The computer system, portal, database, application service, program or any other technology which is authorised by the Lender / Client to be utilised by the Valuer:|
|Transactional Purposes 7||The use of measurement of a Building for the sale or lease or other dealing (includes valuation purposes) where the Building forms part of or the whole of a Property.|
|User 7||An owner-occupier, developer, investor, purchaser, vendor, landlord or tenant.|
|Valuation 15||An established, ethical and evidence based process for assessing the monetary value of an asset at a specified date, that is legally defensible and undertaken by a qualified, professional Valuer.|
|Valuation Review 2||Impartial judgment in considering the work of another Valuer.|
|Valuation Services 6||Preparing market valuations based on inspecting the subject property (including sales analysis and property inspections and other ancillary work) required for the preparation of Valuations.|
|Valuation Workflow System 6||Any computer system, portal database, application service, program or any other technology utilised;|
|Value in Use 9||The present value of the future cash flows expected to be derived from an asset or cash-generating unit.|
|Valuer 7||A Service Provider with an appropriate professional qualification in valuation or appraisal.|
|Veranda 7||An open or partly enclosed area on the outside of a Building at ground level (Level 0), and covered by a roof that is an integral part of the Building.|