VALUATION OF…
Mixed Use
Developments blending two or more uses, valued on apportioned income and value across each component.
Content status: Methodology and evidence log — Sources, Caselaw and Market Information are added incrementally.
Methodology
Mixed-use properties combine two or more distinct income streams — typically retail, office or residential — under one roof or on one erf. The Discounted Cash Flow Method, applying an apportioned cash flow across each use component, is generally the preferred primary method, since a single blended capitalisation rate can obscure differing risk profiles between components.
The Big Five framework is applied separately to each use component before the results are aggregated: the Income Generating Units for each component (retail podium, office floors, residential units) are identified individually, contract rental is compared to market rental appropriate to that specific use, and vacancy allowances and operating expenditure are modelled per component, since retail and residential vacancy and expense patterns differ materially.
A sum-of-parts cross-check — valuing each component separately using the method most appropriate to that use (Income Capitalisation for retail/office, Direct Comparison for residential) and aggregating the results — should be used to test the blended DCF valuation.
Caselaw
Case law, regulatory rulings and expert-determination disputes relevant to valuing this asset class. Each entry cites its source and summarises the practice implication for valuers — this is not investment, financial, or legal advice.
The Evidence Log is for VDH Members
The Evidence Log for Mixed Use — sourced sales, disposals and rentals with Valuer’s Lens commentary — is included in VDH Membership: from R125/month for SACPVP candidates and students, R399/month standard. All prices include VAT.
The methodology and case law on this page remain free to read.