Valuing a medical analysis laboratory in Morocco: walls and technical plant

1. The context of the assignment

Take a typical assignment. A group of biologists owns the walls of a laboratory located on the ground floor of a building, near a polyclinic and several specialists' offices. They are considering a reorganisation: separating the company that owns the walls from the one that operates, with a view to bank financing and the arrival of a new partner. The banker asks for a value of the walls; the incoming partner wants to understand exactly what they are buying — the bricks, the activity, or both.

The purpose drives all the work: here, financing and a contribution to a company. The basis of value retained is market value, at a precise valuation date, with any special assumptions clearly flagged. This is exactly the scoping we describe in our general methodology of the real estate appraisal process in Morocco: without a clean scope, the figure means nothing.

2. The heart of the matter: walls vs technical plant

The first methodological decision is to not confuse two superimposed assets in the same unit:

• The walls — the land, the structure, the durable fit-out (basic partitioning, sanitary facilities, accessibility). This « bricks » part is comparable and depreciates slowly.
• The technical plant — benches, fume hoods, fluid networks, specific ventilation, cold rooms, sampling rooms, dedicated workstations, and the biology analysers themselves (often leased or on a reagent-rental basis, therefore sometimes outside the scope of the property value). This part depreciates quickly and follows an equipment logic, not a property-market one.

Why is this separation decisive? Because the uses diverge. A bank finances walls, not analysers; a partial sale may concern the walls only (sale then lease-back to the operator) or the business; a property/operating split needs itemised figures to be clean fiscally and legally. This is the same rigour we apply to the walls/business distinction of a hospitality unit or a specialised health asset.

3. DRC for the technical plant (VPGA 5)

The specialised fit-out of a laboratory does not compare on the market: there is no « comparable » for a compliant sampling room or a fluid network. They are approached through depreciated replacement cost (DRC, RICS VPGA 5), the reference method for specialised assets detailed in our DRC and VPGA 5 guide.

The principle: cost the replacement cost new of the shell and the fit-out, then apply depreciation (physical deterioration, functional obsolescence, economic obsolescence). As a purely illustrative example, and with no market reference value: if the replacement cost new of the specialised fit-out represented 100 (an arbitrary base), a combined deterioration and obsolescence of 40% would bring its residual DRC value to 60. What matters is not the figure — invented for the example — but the logic: a recent, well-maintained technical plant retains value; an old, undersized or non-compliant plant loses it quickly, regardless of the quality of the walls.

4. The medical location: flow before surface

For a laboratory, location does not boil down to the price per sqm of the street. What creates value is the medical ecosystem: proximity to a clinic, a polyclinic, specialists' offices, an imaging centre — all sources of prescriptions and patient flows. Add to this accessibility, parking and visibility.

The practical consequence: the same technical plant is worth differently depending on whether it sits at the heart of a health hub or in a neighbourhood without an ecosystem. This is the operating-asset logic we apply across the health chain, from the laboratory to the private clinic: value follows the flow the establishment can capture, not the surface alone. It is also why, when the activity justifies it and the client provides the data, an income approach comes to complement the cost.

5. Health compliance, a watch-point

• Authorisations — operating a laboratory is subject to authorisation and to compliance with the health regulations in force. The expert verifies the existence of the authorisations and flags any fragility, without substituting for the authorities: confirm the conditions with the competent bodies and your advisers.
• Technical plant standards — circulation, ventilation, waste management, dedicated rooms. A non-compliance implies works whose cost weighs on value and must be costed.
• Land title and planning — verify the title, the unit's intended use, the condominium bylaws and the absence of problematic easements before any value conclusion.
• Documentation of condition — the actual condition of the fit-out and fluids conditions the DRC depreciation; it is observed at the visit, supported by photos and measurements.

6. The conversion test: office, pharmacy, retail?

« If the activity stops, a nicely located unit will remain. » It is rarely that simple. The laboratory unit is configured for a specialised use. Its conversion to a medical office, a pharmacy or a retail space assumes works and, above all, compatibility with zoning and the condominium bylaws.

This is the highest and best use analysis we run on atypical assets, from land in alternative use to specialised buildings. A simple rule: alternative-use value is retained only if that use is legally and physically possible. In our typical case, conversion to an office is plausible (the medical neighbourhood lends itself to it), which sets a reassuring floor under the value of the walls; but it assumes removing the laboratory fit-out and re-adapting the unit — a cost to factor in, not an automatic uplift.

7. Cross-checking cost and income: the value synthesis

A specialised asset is never handled with a single method. On this file, the expert cross-checks:

• The cost approach (DRC) — to bound the value of the walls and the specialised fit-out, and provide a consistency floor.
• The income approach — where the operating data provided by the client allow, to reflect the flow the location and technical plant generate; this is the logic of trading properties (RICS VPGA 4), as for other health assets.
• The conversion test — to verify that the value retained does not exceed what an alternative use would justify, and conversely that it does not fall below the floor of a realistic conversion.

The same architecture appears in our industrial asset valuation methodology: the approaches are confronted, the differences explained, and a reasoned range retained rather than a single figure. All this work falls under our real estate appraisal service in Morocco, conducted by RICS-certified experts.

8. The deliverable

The assignment concludes with a report compliant with the RICS Red Book that sets out: the scoping (purpose, basis and valuation date, assumptions), the collection (title, authorisations, plans, condition of the technical plant, operating data), the approaches used and their cross-checking, the walls / technical plant itemisation essential to financing and the contribution, the conversion test, and a value range with its sensitivities and reservations. Lead time: 5 to 8 days, or 48-72 h express, from 3,500 MAD excl. tax, firm quote within 24 h.

A useful clarification on scope: such an appraisal is a private (free) appraisal. It informs a decision and feeds an amicable negotiation — setting a price, building a financing file, structuring a property/operating split — and supports your position with third parties. It does not substitute for the expert a judge would appoint in the event of a dispute: in litigation, it is the court that appoints the expert.

9. FAQ

Note: This article presents a methodological case study compliant with RICS standards (Red Book, DRC VPGA 5 and trading property VPGA 4). The figures cited are illustrative examples and in no way constitute market data. Authorisations, health compliance and transfer terms fall under the regulations in force — confirm your situation with the competent authorities and your advisers. A private appraisal informs the decision and amicable negotiation; in the event of a dispute, the expert is appointed by the judge. For an assignment, see our real estate appraisal service or the blog.