Definitions

API Definitions

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 9Australian 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.
Balcony 7An 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.
Building 7An independent Structure forming part of a Property.    
Business Combination9A 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 1A commercial, industrial, service, or investment entity (or a combination thereof) pursuing an economic activity.
Carrying Amount9The amount at which an asset is recognised after deducting any accumulated depreciation and accumulated impairment losses.
Catwalk 7An internal or external walkway above the surrounding area that is used to provide higher level access.
Certified Practising Valuer (CPV) 6A Valuer meeting the requirements for Certified Practising Valuer as defined by the API.
Clearance Height 7The 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 6The party instructing the Valuer to prepare the Desktop Assessment. The Client may be the Supplier, Lender or a financial intermediary.
Coalition 7The Trustee of IPMS, comprising not-for-profit organisations, each with a public interest mandate.
Common Facilities 7Those 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 7The total Floor Area attributed to one of the Components.
Cost Approach 1 10A 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 7The 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 6A 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 4Declared 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 6This 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 6A report prepared:
  1. by Valuers relying on specified documents and information; and
  2. that involves no physical inspection of the Subject Property; and
  3. that produces an Indicative Assessment of value of the Subject Property.
Economic Life 1The total period of time over which an asset is expected to generate economic benefits for one or more users.
Economic Obsolescence 1A 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.
Enterprise Value 1The 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 2In 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 1A loss of utility caused by economic or locational factors external to the assets that results in a loss of value.
External Wall 7The external enclosure of a Building, which comprises the area between the Internal Dominant Face and the outside of a Building.
Fair Value 9The 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 7The wall surface directly above the horizontal wall-floor junction, ignoring skirting boards, cable trunking, heating and cooling units, and pipework.
Floor Area 7The area of a normally horizontal, permanent, load-bearing structure, for each level of a Building.
Functional Obsolescence 1A loss of utility resulting from inefficiencies in the subject asset compared to its replacement that results in a loss of value.
GLA 7Gross Lettable Area as per PCA Method of Measurement
GLAR 7Gross 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.
Highest and Best Use 1The use of an asset that maximises its potential and that is physically possible, legally permissible and financially feasible.
Income Approach 1A valuation approach that provides an indication of value by converting future cash flows to a single current capital value.
Indemnity Value 4The 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 6An 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 7A Building predominantly used for industrial purposes, whether or not part of the Building is used for ancillary purposes.
Institute 5All references to “Institute” means API/PINZ.
Insured 4The insured is a person or entity whose interests are protected by the insurance policy.
Internal Dominant Face (IDF) 7The 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 7International Property Measurement Standards.
IPMS 1 7The 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 7The sum of the areas of each floor level of a Building measured to the Internal Dominant Face.
IPMS 3 7The Floor Area available on an exclusive basis to an occupier.
IPMSC 7The International Property Measurement Standards Coalition.   
Lender 6The 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 7The area designed for vehicles next to or adjacent to a Loading Dock.
Loading Dock 7An elevated platform at an opening of a Building designed for receiving or dispatching goods or equipment.
Market Approach 1A 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 RentThe 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 Value 2 3The 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 7A documented code for the Measurement for a Building.
Memorandum 6This Desktop Assessment Memorandum produced by the API (including any API revisions, updates or additions from time to time).
Method of Measurement 7The 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 7An 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 7Net Lettable Area as per PCA Method of Measurement. 
Obsolescence 1A 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.

Partial Interest 8A partial interest may be described as a divided or undivided ownership right in property that represents less than the whole.
Patio 7A paved or floored terrace, adjacent to a Building, that may or may not be covered by an independent framework.
PCA 7Property Council of Australia
Permanent Mezzanine 7A Mezzanine which is an integral part of the structure of a Building.
Physical Obsolescence 1A 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.
Property 7Any real estate asset in the built environment. (This definition is only intended to apply to the Methods of Measurement TIP).
Property Advice 5Property 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 5The 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 7Comprises 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™ 6Valuations 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.
Property 7Any real estate asset in the built environment. (This definition is only intended to apply to the Methods of Measurement TIP).
Recoverable Amount 9The 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 4The current cost of recreating a replica of the asset.
Residential Building 7A Building predominately used for residential purposes, whether or not part of the Building is used for other purposes.
Residential Property Valuer (RPV) 6A Valuer meeting the requirements for Residential Property Valuer as defined by the API.
Restricted Assessment 6An assessment prepared in accordance with the API Restricted Assessment Supporting Memorandum.
Retail Building 7A Building predominately used for retail purposes, whether or not part of the Building is used for other purposes.
Retrospective Valuation 2A valuation taking effect from a date in the past.
Sales Evidence 6Sales data that relates to properties that have characteristics comparable to the Subject Property and are utilised for comparison purposes.
Service Potential 1The capacity of an asset to continue to provide goods and services in accordance with the entity’s objectives.
Service Provider 7Any 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 6A 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  7Any part of a Covered Area that is not fully enclosed.
Situation 4Situation 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 7A Service Provider qualified by experience or training to measure Buildings in accordance with IPMS.
Special Assumption 3An 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 Uses 7Uses other than Office, Retail, Industrial and Residential.
SSC 7The Standard Setting Committee appointed by the IPMSC to develop global standards for property measurement.
Structure 7A construction that provides shelter or serves as an ancillary function, but is not necessarily fully enclosed.
Subject Property 6The property for which the Lender / Client instructs the Valuer to prepare a Desktop Assessment report.
Supplier 6

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:

  • issues instructions to Valuers to prepare Valuations and/or Desktop Assessments for Lenders / Clients.
  • owns the Third Party Platform.
Temporary Mezzanine 7A Mezzanine which is not an integral part of the structure of a Building.
Third Party 7Any 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:
  • to undertake  Desktop Assessments; 
Note: this does not refer to the Valuer/Valuation Firms database, computer system, portal, application service, program or any other technology, or any other Third Party Systems
 
Transactional Purposes 7The 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 7An owner-occupier, developer, investor, purchaser, vendor, landlord or tenant.
Valuation 6A Valuation carried out in accordance with the General Concepts, Principles and Definitions of the Valuation and Property Standards Manual, excluding Desktop Assessments and Restricted Assessments.
Valuation Review 2Impartial judgment in considering the work of another Valuer.
Valuation Services 6Preparing 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 6Any computer system, portal database, application service, program or any other technology utilised;
  • To instruct, track, deliver, submit and coordinate the workflow of desktop assessments.
Value in Use 9The present value of the future cash flows expected to be derived from an asset or cash-generating unit.
Valuer 7A Service Provider with an appropriate professional qualification in valuation or appraisal.
Veranda 7An 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.
  
1.The defined words and terms have particular relevance to ANZVTIP 2 – Market Value of Property, Plant and Equipment in a Business. The definitions vary from those used by the Australian Accounting Standards Board and Members therefore need to be cognisant of any differences when preparing valuations for financial reporting purposes. A valuation completed in accordance with this TIP may, in many instances, be equivalent to fair value as defined and measured in AASB 13 Fair Value Measurement for financial reporting purposes; however, Members should take care before making such a representation.
2.The defined words and terms have particular relevance to ANZVTIP 1 - Retrospective Valuations.
3.The defined words and terms have particular relevance to ANZVTIP3 - Addressing the Concept of ‘Forced Sale’.
4.The defined words and terms have particular relevance to ANZVTIP 4 - Valuations for Insurance Purposes.
5.The defined words and terms have particular relevance to ANZRPTIP 2 - Property Advisors.
6.The defined words and terms have particular relevance to Residential Desktop Assessment – Memorandum for First Mortgage Purposes.
7.The defined words and terms have particular relevance to ANZRPTIP 3 – Methods of Measurement.
8.

The defined words and terms have particular relevance to ANZVTIP 6 – The Valuation of Partial Interests in Property Held Within Co-Ownership Structures.

9.The defined words and terms have particular relevance to AVGNTIP 1 – Valuations of Real Property, Plant & Equipment for Use in Australian Financial Reports.
10.Source: International Valuation Standards Council Glossary.
11.

Source: Australian Accounting Standards Board Standard AASB 13 Fair Value Measurement, Appendix A Defined Terms