Shops and Business Premises
(i) Locations of the premise:- Shops in popular trading localities will given better security for the rent than shops situated in areas which are partly commercial and partly residential. The best test of the popularity of the district is the make a though inspection of the neighborhood and see how many vacant shops there are. There are exceptions of this rule
(ii) Type of premises: – Multi- storied building in a business locality will usually be occupied on the ground floor by shops and banks, and on the first and second floor by offices which will yields larger rents in proportion than for residential purposes. Modern building erected solely for office blocks would perhaps not be less secured, but generally shops with living quarters attached and occupied are better security than lock-up shops.
Commercial complex have almost appeared from the past 30 years or so to dominate the retailing trade thought individual shops and established. The metropolitan cities of India and most of the other cities or big towns are marked by a prolific growth of informal sector in retail business. The sheer force of unemployment and accompanied by continuous migration from rural to urban areas have accentuated the process of unauthorized occupation of public streets and places by enterprises in small trade and business. But this informal pattern of business attracts only a specific clientele group mostly drawn from the lower and middle income brackets. The elites have opted for a more sophisticated climate for marketing. This is the impulse behind the appearance of high valued commercial complex and huge department stores where leisure hours can comfortably be spent in a congenial marketing atmosphere.
The valuation considerations of the commercial complexes are entirely different from that of individual shops and establishments discussed after discussed earlier.
Office building let out on rent are considered as investment and in course of investment, a direct comparison is always made with the yields obtainable I other opportunities. Accordingly, office building are invariably valued according to the investment method which is the determination of the present value of the right to receive a future sum or a series of futures sums by discounting them at an appropriate compound rate.