Income Capitalisation

Methodology

The income capitalisation approach values a property by dividing its sustainable net operating income (NOI) by a market-derived capitalisation rate. The cap rate reflects the yield investors are accepting on comparable assets at the valuation date.

The Insitive module assembles the income statement from your tenancy schedule, applies a market-justified vacancy allowance and opex ratio, then derives an indicated value net of stamp duty, legals and agent fees. The gross and net initial yields implied by the result are reported so the cap-rate evidence can be cross-checked against settled investment sales in your sub-market.

When to use it

• CBD and metropolitan office assets.
• Retail strips, large-format retail and shopping centres.
• Industrial, logistics and warehousing.
• Stabilised build-to-rent and student accommodation.

Standards & references

• IVS 105 — Valuation Approaches and Methods (Income Approach), IVS 2025.
• IVS 104 — Bases of Value (Market Value).
• API Professional Practice 2021 — Australian Property Institute (adopts IVS).
• AASB 13 — Fair Value Measurement (Level 3 inputs and disclosures).

Plugin interface

Every method is a self-contained module that plugs into the Valuation App. It exposes a typed input/output schema so it can be invoked from a report writer, a workflow, or your own backend.