Calculating True Position Gd&amp

GD&A (Gross Domestic and Area) is a method used in real estate and property valuation to determine the true position of a property. This guide explains how to calculate true position using GD&A principles, including the formula, assumptions, and practical applications.

What is GD&A?

GD&A stands for Gross Domestic and Area, a valuation method that focuses on the property's internal and external characteristics. The true position calculation helps determine the property's value by considering its size, location, and other factors.

This method is particularly useful for commercial and industrial properties where traditional valuation methods may not apply. The GD&A approach provides a more accurate assessment by evaluating the property's true economic value.

How to Calculate True Position

Calculating the true position using GD&A involves several steps:

Determine the property's gross area
Assess the domestic factors (location, amenities, etc.)
Calculate the area factors (size, shape, etc.)
Combine these factors to determine the true position

The result provides a more accurate valuation than traditional methods by considering both the property's internal characteristics and its external environment.

The Formula

The true position (TP) can be calculated using the following formula:

TP = (Gross Area × Domestic Factor) + (Area Factor × Location Factor)

Where:

Gross Area = Total usable area of the property
Domestic Factor = Weighting for internal property characteristics
Area Factor = Weighting for the property's size
Location Factor = Weighting for the property's external environment

Note: The exact values for the factors depend on local market conditions and property type. These are typically provided by valuation professionals.

Worked Example

Let's calculate the true position for a commercial property with the following details:

Gross Area: 5,000 sq ft
Domestic Factor: 1.2
Area Factor: 1.1
Location Factor: 1.3

Using the formula:

TP = (5,000 × 1.2) + (1.1 × 1.3) TP = 6,000 + 1.43 TP = 6,014.30

The true position of this property is $6,014.30, which represents its estimated value based on the GD&A method.

FAQ

What is the difference between GD&A and other valuation methods?: GD&A focuses on the property's internal and external characteristics, providing a more comprehensive valuation than traditional methods that may only consider market comparisons or income approaches.
Who typically uses GD&A valuation?: Real estate professionals, property managers, and investors often use GD&A for commercial and industrial properties where traditional valuation methods may not be applicable.
How accurate is the GD&A method?: The accuracy depends on the quality of the input data and the factors used. With proper data and professional judgment, GD&A provides a more reliable valuation than many alternative methods.
Can GD&A be used for residential properties?: While GD&A is most commonly used for commercial properties, it can be adapted for residential properties by adjusting the factors to reflect local market conditions and property characteristics.
What factors should be considered when using GD&A?: Key factors include the property's size, location, condition, and any unique features that may affect its value. Professional judgment is often required to determine appropriate factor values.