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SQESalespersons Qualifying Examination✓EAQEEstate Agents Qualifying ExaminationA client wants a valuation of an operating hotel in Tsim Sha Tsui. Which method is most appropriate as the main approach?
Answer: The profits method. Why not the others: - Comparison with flats: Flats are not comparable to an operating hotel. - Replacement cost: It is for specialised properties that rarely change hands, not trading properties like hotels. - Residual method: It is for development sites or redevelopment, not an operating hotel valued as it stands. Rule: The profits approach values operating commercial properties, especially hotels, by estimating the portion of business profit that would go to rent, then capitalising that rent. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 6, para 10; as at Oct 2026
Using residential comparables for a trading property.
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