The Depreciated Replacement Cost (DRC) method is commonly adopted where there is limited or no direct market evidence, particularly for specialised properties.
This approach involves:
- Estimating the current cost of replacing the asset
- Deducting depreciation to reflect:
- Physical deterioration
- Functional obsolescence
- Economic obsolescence
DRC is typically used for:
- Industrial facilities
- Specialised buildings
- Public sector assets
- Properties not frequently traded in the open market
While DRC does not directly reflect market transactions, it provides a reliable indication of value where other approaches are not applicable.
At Valuex Ltd, the DRC method is often used as a primary approach or as a cross-check to support valuation conclusions.