Why regional accommodation properties need specialist valuation

When you’re buying, selling, or making a decision regarding accommodation property, you want to be sure you’re looking at relevant, comparable properties. Sam Scott outlines the four key things buyers and sellers need to know.

October 19, 2021


When you’re buying, selling, or making a decision regarding commercial property, you want to be sure you’re looking at relevant, comparable properties.

Accommodation property is a specialist class and can’t easily be compared without a good understanding of the sales, specific market, and factors (turnover, occupancy, etc.) that influence the value.

These properties sit at the intersection of business management, tourism potential, and the local market, and specialists must have a good understanding of all three to provide advice specific to your property decisions.

What you need is an expert who understands not just the accommodation market, but also the local property market, and can blend that knowledge into advice that’s reflective of the property’s current state and future potential.

To make sure you’re getting appropriate advice regarding the value of your accommodation property, you need a specialist. Sam Scott discusses the specialty knowledge that’s required for accommodation properties and the four key things buyers and sellers need to know.

Accountant, agent, valuer, or specialist?

When dealing with a unique property, you want to choose advisors who have the relevant experience to help the process run smoothly.

If you’re selling an apartment in central Auckland, for example, you wouldn’t go with a valuer who’s only worked on lifestyle blocks down south. You’ve got to make sure the people you’re listening to have specific knowledge so they can look for the things you don’t know about and make sure that nothing gets missed.

For motel or accommodation businesses, this trusted insight usually comes from a mix of accountants, business managers, real estate agents and valuers. Where a specialist comes in is providing an essential link—combining knowledge of the local and national market with insight into the business operations of the property, with particular reference to niche accommodation properties such as motor camps, B&Bs and other small accommodation providers.

A specialist valuer will bring together an understanding of the multiple disciplines that contribute to the value of a property, so you can be confident you’re getting the full picture.

Four things buyers and sellers need to know

Before you buy or sell an accommodation business, this is what you need to know:

1. The information you get from a real estate agent or property broker can be overwhelming

There’s a lot of information to digest and understand when making a decision. An accountant can break it down to a certain extent, but there will be trends within the market, region, and niche that valuers can bring context to.

During the valuation process, a valuer will provide insight into the trading of the property in context to known national and local benchmarks. They can provide specific details as to where a business might be over-trading or under-trading, where it can be improved, and key concerns regarding both business and land buildings.

A specialist valuer will go through the information provided by your agent and/or accountant and break it down for you to make sure you’re seeing the full picture.

2. You need to consider the present as well as the future outlook for tourism

A specialist valuer can help you to understand not only the short-term outlook for this property—especially relevant during COVID-19 with reduced trading and tourism—but also consider long-term potential once the borders open up again.

Would the turnover go back to market level, or would it remain low? Is the financial stress due entirely to COVID-19, or is poor management partially responsible?

It’s tempting to think that the future will be rosy, so let’s invest now, but you have to consider the current market and the time it might take for the market to recover, and what if it doesn’t. Can you hold out until then? What if issues in the business or land and buildings need to be remedied before the true potential will be realised?

3. Take into account upgrades, improvements, and redevelopment potential

The valuation of a property considers how it stands now and takes into account the added value of any proposed or potential work.

But where a specialty valuer can help is to understand how much value those proposed renovations or redevelopments would actually add and the feasibility of the work to be completed.

It’s more than just value plus cost. We can provide advice to the client on the feasibility of the proposed improvements and whether the costs will be covered by the improved value or not. This allows property owners to make informed decisions regarding their assets.

4. Good quality advice is your best investment

The best thing you can do as a buyer or a seller is to gather good quality advice and ask questions.

Don’t just rely on what your agent says as gospel—make your own enquiries and acquire the support of advisors who know your specific market.

This can give you the confidence and security of knowing that there aren’t any hidden surprises, unexpected outcomes, or unjoined dots in relation to your property. A specialist advisor can help to uncover or point out areas of concern you hadn’t thought to look for, and put any financial data within the context of the market.

Where to find your accommodation property specialist

We can match you with a valuer who knows your region and your specialty market. Through our team of specialist valuers, we work with a number of locally owned and operated accommodation businesses.

Our valuers provide tailored advice to our clients’ needs. We’ll work with you to make sure you get the full picture for your property, and have all the knowledge you need to make the right choices.

Get in touch with a specialist valuer today

This article was originally published by TelferYoung