Basics
Property Valuation Methods in India, Explained
The three ways Indian property is valued: comparable sales, land plus depreciated cost, and rental capitalisation, and when each one is appropriate.
By ValuerDekho editorial team · Reviewed by Reviewing registered valuer (to be named) · Updated 6 September 2026
Sales comparison
The valuer finds recent transactions of similar properties (registered deeds, verified listings) and adjusts for location, size, floor, age, condition, view and amenities. It is the primary method for flats and plots because those markets have many transactions. A 2 BHK on the 12th floor sold at ₹1.8 crore three months ago supports a similar 3rd-floor unit at ₹1.65 crore after a floor and view adjustment.
Land and building
Land is valued by comparison with plot sales; the building is valued at today’s construction cost less depreciation for age and obsolescence. Used for independent houses, farmhouses and industrial premises. A 250 sq yd plot in a South Delhi colony at ₹3.5 lakh per sq yd plus a 20-year-old 4,000 sq ft structure at ₹2,500 per sq ft less 35% depreciation gives the value.
Income capitalisation
Net rental income divided by a market yield. Used for let-out offices, shops and warehouses. A shop earning ₹6 lakh a year net at a 5% yield is worth ₹1.2 crore, cross-checked against sales.
Depreciated replacement cost
Replacement cost of the structure less depreciation, plus land. Used where sales evidence is scarce: schools, hospitals, special-use buildings, and for insurance reinstatement (excluding land).
Adjustments valuers make
Tenure (leasehold, pagdi, thika), title defects, tenancy, encroachment, floor-space index potential, redevelopment status, approval status (B-khata, undiverted land), and distress.
Reading the method section
Look for the method named, the reason for choosing it, the comparables with dates and sources, the adjustments in percentages, the reconciliation and a single concluded figure with the state guideline value shown for comparison.
Frequently asked questions
Which method gives the highest value?
None by design. A registered valuer picks the method the market uses for that property type and reconciles indications; the purpose is accuracy, not a target figure.
Why does my report mention two methods?
Good reports cross-check a primary method with a secondary one and explain the reconciliation.
Related guides
- Fair Market Value as on 1 April 2001 (FMV 2001)
- Form 170 Valuation Report: What It Must Contain
- Home Loan Property Valuation: What Banks Look For
Last reviewed 6 September 2026 by Reviewing registered valuer (to be named). Regulatory references are to the Income-tax Act 2025 and Income-tax Rules 2026 (in force from 1 April 2026) with the former 1961-Act section numbers in brackets. This is general information, not tax or legal advice.