Addae-Dapaah, K; (1996) The effectiveness of the direct sales comparison approach to office appraisal in Singapore. Australian Land Economics Review , 2 (2) pp. 35-43.

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Abstract

The skyline of Singapore’s Central Business District (CBD) reflects the prestige and multitude of office buildings in the city state. Investment in CBD office buildings can amount to billions of Singapore dollars. Any investor in office buildings has indubitably relied or relies primarily on the valuations of these buildings to determine investment returns. The most popular and universally used method for valuing these investment buildings is the Direct Sales Comparison approach. The position adopted in this paper is that even though the wealth of practical experience favours the use of the Direct Sales Comparison approach, it encounters methodological constraints. The lack of some critical information in the available data tends to make the method less effective than it is claimed to be for office valuation; failure to account for the conditions of sale and the terms of financing can introduce distortion of market values. This can lead to the distortion of the asset pricing of local office space. There will be growing concern to regularise the direct sales comparison approach in this regard, and to re-consider the use of the income approach as well as the discounted cash flow approaches, in part or in full.

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