Which property valuation method is best for estimating special purpose properties?

The Cost Depreciation Approach is particularly effective for estimating the value of special purpose properties because it focuses on calculating the cost of constructing a similar property and then adjusting that cost for depreciation. Special purpose properties often serve unique functions that may not be commonly found or comparable to other properties in the area, making it difficult to apply the Sales Comparison Approach effectively, which relies on comparative sales data.

Using this approach, valuers consider what it would cost to replace the building and its unique features, taking into account any physical, functional, or economic obsolescence. This method provides a more accurate reflection of the property’s value when traditional comparative methods fall short, especially for properties like schools, hospitals, or religious buildings that do not typically have a large number of recent market transactions for direct comparison.

Thus, for special purpose properties, the Cost Depreciation Approach provides a tailored and reliable method to assess value based on the specific characteristics and utility of the property in question.