The as-is valuation of a property under refurbishment: the riad case

A figure given without naming its basis is not merely incomplete on an unfinished building. It is misleading, because the two bases available answer opposite questions.

1. As is: name the basis before you calculate

In valuation everything starts with the basis of value adopted, because it is the basis that gives the number its meaning. On a property mid-contract, two bases coexist and must never be conflated:

• As-if-complete value. The market value of the property once the works are finished in accordance with the scheme. It is a hypothetical value: at the valuation date that finished building does not yet exist. It can therefore only be given under a clearly stated special assumption.
• As-is value (in the present state, or as existing). The market value of the property as it stands today, unfinished works included. This is the basis that matters to a buyer, to a seller and to anyone weighing whether to carry on, in very nearly every real situation.

The distinction is not an academic refinement. It follows from the Red Book bases of value. A report that gives a figure without saying whether it is as is or as if complete cannot be used — worse, it misleads the person relying on it.

2. Why money spent does not equal value created

The commonest error made by an owner mid-contract is to add up the invoices: I paid this for the riad, I have put that into the works, therefore it is worth the sum of the two. That is wrong for three reasons.

• Cost is not value. A dirham spent does not mechanically create a dirham of market value. Some over-specified work is never recognised by the market, and some poorly executed work destroys value outright.
• An unfinished building is discounted. A purchaser taking a property on mid-way inherits the remaining uncertainty, the funding and the time. He therefore pays less than the finished value reduced by the cost of finishing alone.
• Risk has a price. Taking over a building contract means accepting uncertainty — hidden defects, cost overrun, delay. The market pays for that risk through a margin, and that margin is deducted from today's value.

The as-is method replaces the naive addition with an investor's reasoning. It also explains why two owners who have spent identical sums on identical riads can hold assets of very different value today.

3. The residual logic: from as if complete to as is

The as-is value of a property under refurbishment is derived by the residual method — the same logic used to value development land, set out in our note on the developer's residual method. The structure of the calculation is this:

Every term has to be justified. The finished value is established by comparison or by income; the remaining costs come from a measured estimate and a contingency; the funding cost and the margin reflect market conditions and the risk profile of the particular scheme. The balance — the residue — is what a rational purchaser would agree to pay today.

Two properties of that arithmetic are worth stating plainly, because they are what the invoice method misses. First, the deduction is always larger than the cost of the outstanding works alone: fees, contingency, funding, time and margin all sit between the finished value and today's value. Second, the size of that additional deduction is not a constant. It grows with the uncertainty of the particular contract, which is why the same stage of completion produces different discounts on a recent building and on old fabric.

4. The riad: first, which as-if-complete value?

Before anything is deducted, the value of the riad once restored has to be fixed. And here a riad raises a decisive preliminary question: restored for what use? Two scenarios produce two very different finished values, as we set out in our note on a riad as a residence against a riad as a trading property:

• A prestige residence. Value established by comparison with other restored riads sold as exceptional houses. The market is narrow and qualitative, and the method comes close to the one used for a prestige villa with no direct comparables.
• A guest house in operation. Where the scheme aims at a classified, trading establishment, the as-if-complete value belongs to a trading property under VPGA 4 and rests on projected income — see our valuation of a riad-hotel in the medina of Marrakesh.

The valuer adopts the scenario matching the most probable and best documented use — consents, scheme, market — and may present both in parallel. It is that finished value, and that alone, which serves as the starting point for the as-is calculation. Choosing it casually undoes everything that follows, however careful the deductions.

5. The costs and risks specific to a riad in a medina

What is distinctive about a riad is the weight of the items to be deducted. A restoration in a medina concentrates uncertainties that a new-build flat simply does not carry:

• Access and logistics. Narrow lanes, no plant access, materials carried in by hand or by cart — a real premium in both cost and time.
• Specialist crafts. Zellige, tadelakt, carved plaster, painted cedar, ironwork. The skills are scarce, prices and lead times vary, and quality is uneven.
• Hidden defects in old fabric. Structure — beams, floors — damp and rising moisture, services that are worn out or absent, foundations. They commonly reveal themselves only once the works are opened up, which is the reasoning behind our note on hidden defects discovered after purchase.
• Heritage and planning constraints. The medina is a protected fabric; interventions are regulated, which bears on consent timescales and on technical choices.

The direct methodological consequence is that the contingency and the risk marginare higher than for a standard property. That is what widens the gap between the value of the finished riad and its as-is value — and it is exactly what the cost already spent ignores. Buyers approaching this asset class for the first time will find the same ground covered from the purchaser's side in our notes on buying a riad in Marrakesh and on renovation costs on older Moroccan property.

6. The special assumptions the report must state

An as-is report complying with Red Book standards must make its assumptions explicit and traceable, failing which the figure will not hold in a negotiation. At a minimum:

• The basis of value adopted — as is, as if complete — and, where both are given, how they relate to one another.
• The use scenario underlying the finished value: prestige residence or classified trading establishment.
• The source of the remaining costs: a dated estimate, a measured schedule, or the valuer's own assessment — together with the contingency applied and the reason for its level.
• The assumptions on programme, funding and margin, each justified by reference to market conditions rather than asserted.
• The legal position: land title or moulkia, consents for the works, planning compliance within the medina.

For the full course of an instruction — inspection, verification, report — see how a property valuation is conducted in Morocco.

7. When to commission an as-is valuation

• Buying or selling an unfinished property at a defensible price, without paying for the illusion of the cost incurred and without giving away the potential.
• Deciding between selling as it stands and finishing the works. Setting the as-is and as-if-complete figures side by side settles the question, because the difference between them is the reward available for carrying the remaining risk.
• Co-ownership or succession over a property mid-contract: establishing a neutral value for a division, where the parties would otherwise argue from invoices.
• Recording the position at a given date, where a scheme has stalled and the parties need a common statement of what exists and what it is worth.

Our reports are prepared by RICS-certified experts and comply with Red Book standards: both bases named, the residual calculation set out in full, and every assumption behind the deductions stated, so that the conclusion is documented and verifiable line by line rather than taken on trust. ReaConsult has been advising owners and investors since 2019, with more than 5,000 valuations completed, offices in 6 cities and a rating of 4.9/5 across 47 reviews. Usual delivery is 5 to 8 days, 48-72 hours on the express service, from 3,500 MAD excl. tax, with a firm quote within 24 hours; the fee framework is set out in our note on what a valuation costs.

8. Three questions that recur

Does as is mean in poor condition? No. As is means in the present state, whatever that state may be — new, old, mid-contract, dilapidated. On a property under refurbishment it means with the works at the exact stage they have reached, neither finished nor assumed to be.

Can a riad under works be valued by simple comparison? Rarely with any reliability. Comparable properties mid-contract, at the same stage of completion and in the same legal position, are close to unfindable. The residual logic is the method suited to the problem, with comparison serving to establish the finished value at the top of the calculation.

Is the contingency a standard rate? No. It depends on the property. A riad in a medina, with its hidden defects and its specialist crafts, justifies a higher contingency than a recent building. The valuer calibrates it against the condition observed, the extent of the works and the level of documented uncertainty, and explains that calibration in the report rather than applying a figure from elsewhere.

Note:this article sets out the as-is and as-if-complete bases and the residual logic that links them, for information and to Red Book standards. No amount, contingency rate, funding cost, risk margin or programme length is quoted: any such figure exists only within a particular instruction, and is rendered here qualitatively for that reason. Every valuation rests on comparables, measured estimates and assumptions proper to the property, formalised in the report. The legal position of the works and of the title falls under the regulations in force and must be confirmed case by case with your own advisers. A private valuation informs a decision and an arm's-length negotiation. To instruct us, see our contact page or the property blog.