Income Approach (Income Capitalisation)

The income approach (often applied as an income capitalisation method) is typically used for income-producing properties. Under this method, market value is derived from the sustainably achievable income (e.g. rents), taking into account operating costs, vacancy risk, and a market-based capitalisation rate.

Typical use cases:
• Residential investment properties
• Let commercial and residential real estate
• Mixed-use properties

Key value drivers:
• Sustainable net income
• Market yield / capitalisation rate
• Remaining economic life and maintenance requirements
• Location and property quality