There is no market in square metres of darkened auditorium. Either the trade supports the value, or the conversion scenario does — and if neither does, the land does.
1. Two worlds: the city-centre cinema and the mall multiplex
Morocco's stock of cinemas tells two stories. On one side, the historic city-centre houses — Casablanca, Rabat, Tangier and Marrakech each counted many of them — a good number of which closed over the decades, leaving a heritage and land question behind: what does one do with a single-use volume in the heart of a city? On the other, the modern multiplexes, generally built into shopping centres or attached to leisure schemes, which work as footfall anchors for the whole development.
Valuation instructions span the full range: the sale or succession of an independent cinema; the valuation of a multiplex within the appraisal of a shopping centre — an exercise we set out in our guide to the valuation of regional malls — the funding of a refurbishment; or the arbitrage between continuing to trade and redeveloping the site.
2. A trading property in the strict VPGA 4 sense
The cinema is one of the canonical examples given under VPGA 4of the Red Book: an asset whose value depends on the activity carried on within it, and whose fabric has almost no standalone worth. Comparison on a price per square metre is more inoperative here than for any other asset class — there simply is no market in “square metres of auditorium”.
The valuation therefore rests on the trading revenues, drawn from the data the client supplies:
- Admissions — annual attendance across several years, separating the effect of an exceptional release slate from the underlying trend.
- Spend per admission — box office, but also concessions and drinks, whose margin contributes materially to a multiplex's result.
- Diversification — events, private hire, live broadcasts, on-screen advertising: ancillary income that smooths dependence on the programme.
- Structural costs — distribution fees, staff, energy, maintenance of projection and sound equipment, and rent where the operator is a tenant.
The valuer normalises these flows and reasons as a reasonably efficient operator would: what a competent operator would extract from the site, not the particular performance — good or bad — of the incumbent. The same discipline governs the valuation of hotels under VPGA 4 and of a petrol station, where the property and the business are likewise inseparable.
3. The multiplex in a mall: a tenant unlike any other
Where the cinema occupies a unit within a shopping centre, the analysis splits in two:
- From the operator's side — the business is assessed through the lease: unexpired term, rent (often with a turnover-linked element), brand and exclusivity clauses, investment obligations. A rent disconnected from actual receipts weakens the business.
- From the landlord's side — the cinema unit is an ambivalent asset. It is an anchor feeding footfall across the whole scheme, and at the same time a highly specific volume that would be hard to re-let should the operator leave. The rental value has to carry both realities, and the potential vacancy of such a volume is treated quite differently from that of an ordinary shop.
- Interdependence — the cinema's performance depends on the mall (access, parking, catchment) and the mall's on the cinema. The report should make that interdependence explicit rather than value the unit as though it stood alone.
Where the rent departs from the market, the reasoning follows the same lines as for any over-rented or under-rented property under a term and reversion analysis: the sustainable rent, not the headline rent, is what the valuation can carry.
4. Depreciated replacement cost: the cost check on a very specific building
The property component of a cinema — raked seating decks, acoustic insulation, projection rooms, air handling, fire safety engineered for large capacities — has no comparable market. Depreciated replacement cost (DRC, VPGA 5) takes over, along the lines set out in our guide to the DRC and DCF methodology for specialist assets:
- Cost new — rebuilding the shell and the auditorium-specific fit-out.
- Accelerated depreciation — technological obsolescence moves quickly: projection formats, immersive sound and seat comfort have become competitive standards, which imposes short refurbishment cycles.
- Reading the gap — the difference between the value in operation and the DRC measures the goodwill attaching to the location, the catchment and the competitive position. A negative gap is a warning signal about the viability of the site.
One exceptional year is not a trend
Cinema attendance moves with the release calendar. A year carried by two or three exceptional titles says nothing durable about the site. The valuer normalises admissions across several trading years and states the basis on which the normalised figure was struck — rather than capitalising the best year on the record.
5. The conversion test: often the real question
For city-centre cinemas that have closed or are struggling, the instruction is in truth frequently a highest and best use exercise: what can this volume become? The conversions observed in practice — performance venues, cultural or event spaces, retail after heavy remodelling — share one feature: they demand substantial investment and planning consent. Three scenarios should be worked through systematically:
- Continued trading — value on the income approach, where relevant after refurbishment, which is costed and deducted.
- Conversion of the volume — an alternative use that is legally and physically possible, net of the restructuring works.
- Land value — demolition and redevelopment according to the zoning. For many city-centre cinemas it is the land that sets the floor.
The report presents the scenarios, the conditions each would have to meet, and adopts the one that maximises value within the planning rules that actually apply — never on an undocumented hope of conversion.
6. The inputs to the instruction
- Land and planning — land title, zoning, any heritage protection attaching to the building, easements.
- Trading — admissions and receipts across several years, programming, accounts, distribution contracts.
- Contracts — the lease (particularly in a mall) and its variations, operating authorisations, technical service contracts.
- Technical — condition of the auditoria and of the projection equipment, fire safety and accessibility compliance, capital expenditure to be programmed.
- Market — competing supply within the catchment, and the dynamics of the location itself (city centre, mall, leisure park).
7. Common traps
- Valuing on built area — the square metre of auditorium has no market; only the trading flow or the conversion scenario supports a value.
- Extrapolating an exceptional programming year — attendance has to be normalised across several trading years.
- Ignoring refurbishment cycles — comfort and technology standards impose recurring investment, which belongs in the cash flow.
- Overstating conversion — without interrogating the zoning and the restructuring costs, a “conversion value” is an assertion, not a valuation.
- Valuing the mall unit in isolation — the interdependence between the multiplex and the wider scheme must be spelled out.
8. What the report is for
Sale or succession of an independent cinema, valuation of a multiplex within a retail portfolio, funding of a refurbishment, arbitrage between trading on and converting, discussion between landlord and operator: the report establishes a reasoned, scenario-based value that is documented and verifiable line by line. It states which trading years were normalised and how, which rent it considers sustainable, and what each conversion scenario would require. Our reports are prepared by RICS-certified expertsand comply with Red Book standards; a private valuation informs a decision and an arm's-length negotiation, and sets out its assumptions instead of hiding them.
A cinema is a specialist instruction, quoted case by case according to the configuration, the purpose and the documentation available. For reference, our valuations start at 3,500 MAD excl. tax for standard assets, with a firm quote within 24 hours and delivery in 5 to 8 days, 48-72 hours on the express service. ReaConsult has been operating since 2019, with more than 5,000 valuations completed, offices in 6 cities and a rating of 4.9/5 across 47 reviews.
Selling, refurbishing or converting a cinema? Have the trade, the building and the land value appraised separately, with a DRC cross-check and costed conversion scenarios.
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Note:this article sets out a valuation methodology compliant with RICS standards (Red Book, VPGA 4 trading property and VPGA 5 depreciated replacement cost). Planning rules, any heritage protection and operating authorisations are governed by the regulations in force — confirm your own position with the competent authorities and your advisers. A private valuation informs a decision and an arm's-length negotiation. To instruct us, see our contact page or the property blog.