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Real estate valuation is the process of estimating the market value of a property. The three primary approaches to valuation are the Sales Comparison Approach, the Income Capitalisation Approach, and the Cost Approach.

The Sales Comparison Approach estimates value by comparing the subject property to similar properties that have recently sold. Adjustments are made for differences in location, size, condition, and features. This is the most widely used method for residential properties in India.

The Income Capitalisation Approach is used primarily for income-producing properties such as commercial buildings and rental apartments. It calculates value based on the net operating income (NOI) divided by the capitalisation rate (cap rate). A lower cap rate indicates lower risk and higher value.

The Cost Approach estimates value by calculating the cost to replace the property minus depreciation, plus land value. This is useful for unique properties or new construction where comparable sales data is limited.

Under RERA (Real Estate Regulation and Development Act, 2016), all real estate projects must be registered with the state RERA authority. Builders must deposit 70% of collected funds in an escrow account, provide accurate project timelines, and disclose all relevant project information to buyers. Non-compliance can result in penalties up to 10% of project cost.

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