Bases of value under the RICS Red Book
a complete guide to property valuation in Morocco

In a property valuation engagement, the first question asked by a valuer trained to the RICS framework is not “how much is the property worth?”. It is “which value are you looking for?”. Because two competent, independent valuers rigorously valuing the same property at the same date may legitimately reach two different figures — not because one is wrong, but because they have adopted two different bases of value. The Market Value of a villa in Anfa is not its Fair Value IFRS 13. The Mortgage Lending Value of development land is not its Market Value. The open-market value declared in an inheritance may not be the contribution value accepted by the tax authority. This article exhaustively lists the bases recognised by the RICS Red Book Global Standards 2025, IVS 2025 and the Moroccan legal context, explains which one suits which case, and flags the most frequent pitfalls.

1. Why the choice of basis of value changes everything

Under the RICS Red Book Global Standards 2025 (effective since 31 January 2025), VPS 2 (Bases of value, assumptions and special assumptions) and IVS 104 (Bases of Value) require the valuer to define the adopted basis precisely and explicitly before any calculation. This is not an editorial formality: the basis conditions everythingthat follows. (Note: in the previous 2022 edition of the Red Book, these provisions were codified under VPS 4 — the 2025 reorganisation renumbered the VPS to make Bases of Value VPS 2, right after the terms of engagement.)

• The comparables selected differ depending on whether one is seeking an open-market transaction or an accounting Fair Value.
• The core assumptions (typical buyer, marketing period, constraints) vary entirely between Market Value and Investment Value.
• The weighted method (comparable, capitalisation, residual, cost) must be compatible with the basis.
• The final result and its range can vary by 10 to 40%, depending on the basis, without the valuer having made any error.
• The legal and tax usability of the report depends on the choice of basis relative to the purpose of the engagement (inheritance, contribution, lending, IFRS, etc.).

This is why a serious valuation report states the adopted basis of value on the first page, with its normative source (IVS 104 §X or the relevant article of the Code), and the associated special assumptions. Everything that follows rests on it.

2. The six main bases of IVS 104 / RICS VPS 2

IVS 104, adopted in full by the RICS Red Book, recognises six main bases of value. Each answers a distinct economic question: how much, in which market, under which assumption, from which buyer's perspective.

2.1 Market Value (Valeur de Marché) — IVS 104 §30

This is the most widely used and universally recognised basis. The official IVS 104 definition: “The estimated amount for which an asset would exchange between a willing buyer and a willing seller, in an arm's-length transaction, after proper marketing, where the parties had each acted knowledgeably, prudently and without compulsion.”

It implies six cumulative conditions: willing buyer, willing seller, transaction without compulsion, proper marketing, knowledgeable and prudent behaviour, and the assumption of “highest and best use”(the best possible use that is legally permissible, physically possible and financially feasible). Market Value is the technical equivalent of what French and Moroccan law commonly call “valeur vénale” (open-market value).

Typical uses: private transaction, inheritance, contribution to a company (with adjustments), bank security, amicable sales, life-insurance estate files.

2.2 Market Rent (Valeur Locative de Marché) — IVS 104 §40

The rental equivalent of Market Value: the estimated rent for which the property would be let between a willing landlord and a willing tenant, under open and informed conditions. It is generally expressed in MAD/m²/year or MAD/m²/month depending on the segment, and takes account of the usual local market terms (lease duration, indexation, deposit, allocation of charges).

Typical uses: commercial lease renewal, setting the initial rent, contradictory valuation in a landlord/tenant dispute, valuation by capitalisation (Market Rent being the input of the calculation).

2.3 Equitable Value (Valeur Équitable) — IVS 104 §50

Formerly called Fair Value (a term abandoned by the IVS in 2020 to avoid confusion with IFRS 13). Equitable Value is the estimated price for the transfer of an asset between two identified parties, reflecting the respective interests of each. Unlike Market Value, which assumes an open market, Equitable Value applies to transactions where the identity of the parties matters.

Typical uses:dividing a family-owned undivided property, exit from a shareholders' agreement, buy-out of shares between co-heirs, division of matrimonial estate, intra-group restructuring.

2.4 Investment Value / Worth (Valeur d'Investissement) — IVS 104 §60

This is the value of the asset for a specific identified investor, given their objectives, their own discount rate, their tax constraints and any synergies with their other assets. It may be higher or lower than Market Value. Investment Value is intrinsically subjective and is never Market Value, even where the two are sometimes close.

Typical uses:portfolio arbitrage for an OPCI or family office, “buy or rent” analysis for an occupier, calibrating an offer in a private deal, management control of a property company.

2.5 Synergistic Value / Marriage Value — IVS 104 §70

This is the additional value created by combining two or more assets or property interests, where the combined value exceeds the sum of their individual separate values. This synergy can only be captured by the specific parties able to realise it.

Typical examples in Morocco:

• Merging two adjoining villa plots, whose combination allows an R+5 development compliant with the planning scheme (PA), where each isolated plot would remain sub-optimal.
• Buying a narrow strip giving access to a large landlocked plot (right of way unlocked).
• A neighbour acquiring an undivided share to complete an operation.
• Recombining dismembered real rights (usufruct + bare ownership) in a single buyer.

2.6 Liquidation Value (Valeur de Liquidation) — IVS 104 §80

This is the estimated value of the asset in the context of a forced and accelerated sale, where the seller is under compulsion and marketing is limited. It usually breaks down into two sub-bases: orderly liquidation (an ordinary sale but within a constrained timeframe) and forced liquidation (auction, seizure). It is always lower than Market Value, sometimes significantly (a 10 to 40% discount depending on the nature of the constraint).

Typical uses: insolvency proceedings, bank security stress tests, contradictory valuation in property seizure, prudential control for an OPCI.

3. Bases imposed by external standards

Beyond the native IVS bases, other frameworks impose their own value definitions. A valuation report intended for these uses must explicitly reference the external basis (and not simply rely on Market Value).

3.1 Fair Value under IFRS 13

IFRS 13 Fair Value Measurement defines Fair Value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” It is measured according to a three-level hierarchy: level 1 (quoted prices in active markets), level 2 (observable inputs), level 3 (unobservable inputs, modelling).

For real estate, IFRS 13 Fair Value is conceptually close to IVS 104 Market Value but differs notably on highest and best use, which may be restrictively defined, and on the adjustments required for transaction costs (which are sometimes excluded). It applies to listed property companies, to OPCIs (Law 70-14), and more generally to any IFRS consolidation requiring fair value.

3.2 Mortgage Lending Value (MLV)

Defined within the European prudential framework (the CRD/CRR Directive transposing Basel III) and by the EBA standards, Mortgage Lending Value represents the long-term value of the asset, excluding speculative elements and filtering out cyclical fluctuations. It is structurally more conservative than Market Value.

In Morocco, conventional banks generally work on the basis of open-market value (Market Value) for their security, then apply an internal prudential haircut (typically LTV 70% to 80% depending on the segment). But certain specific operations — international bond refinancing, syndications with European banks — may require a valuation on an explicit MLV basis.

3.3 Insurable Value (Valeur d'Assurance)

Defined as the cost of rebuilding the structure as new (excluding the land value), increased where applicable by ancillary costs (demolition, clearance, design-team fees, rehousing costs). This is a basis technically foreign to Market Value: a building can have an Insurable Value much lower or much higher than its Market Value, depending on construction costs at the time and the nature of the underlying land.

4. Bases specific to the Moroccan context

Moroccan law and practice impose or adopt certain specific bases that must be articulated with the international bases.

4.1 Valeur vénale (open-market value)

A term used by Moroccan tax law (CGI), civil law (the Dahir forming the Code of Obligations and Contracts, the Real Rights Code Law 39-08) and notarial practice. Valeur vénale aligns conceptually with the Market Value of IVS 104, subject to the adjustments imposed by the specific context (statutory abatements, special assumptions). For a valuation intended for a tax or inheritance purpose in Morocco, the RICS-certified valuer adopts Market Value, explicitly qualifying it as “valeur vénale within the meaning of Moroccan tax law”.

4.2 Contribution Value (Valeur d'Apport)

When a property is contributed to the capital of a company (incorporation or capital increase), the contribution value is set by the shareholders under the control of a contributions auditor where applicable. It is generally modelled on Market Value, but may incorporate strategic considerations (contribution at historical value, contribution at restated open-market value, tax integration). The RICS-certified valuer produces the reference Market Value, on which the decision of the shareholders and the contributions auditor rests.

4.3 Inheritance value and declaration to the ANCFCC / DGI

In inheritance matters, the value used for the declaration to the DGI and registration with the ANCFCC corresponds to the open-market value of the property at the date the succession opens (death of the deceased). An independent valuation compliant with RICS Red Book standards secures the declaration, provides a defensible basis in case of a tax reassessment, and allows the division between co-heirs to be objectified.

4.4 Expropriation Value

In matters of expropriation for public utility, the applicable regime is defined by Law 7-81. The compensatory value adopted follows specific principles (reference date, any abatement, ancillary indemnities) that depart from pure Market Value. A contradictory valuation before the administrative commission or before the competent court requires a specific basis, distinct from the open-market value of a free transaction.

5. How to choose the right basis of value — decision tree

The choice of basis follows directly from the purpose of the engagement, the recipient of the report and the legal or accounting context. Here is the reasoning in practice:

A complex engagement may require several bases simultaneously. For example, a company-contribution file ahead of a listing on the Casablanca Stock Exchange may require both the contribution value (for the contributions auditor), the Market Value (for the economic valuation), and the Fair Value IFRS 13 (for the post-listing consolidation). The RICS-certified valuer articulates these bases in a single report, explicitly distinguishing each basis and its rationale.

6. The five most common mistakes

1. Confusing Market Value and Fair Value IFRS 13

The most frequent mistake, particularly in OPCI or listed-property-company files. IFRS 13 Fair Value is not identical to Market Value, even if the two are often close. Confusing the two in a consolidation report can lead to rejection by the auditor or by the AMMC.

2. Wanting a “liquid Market Value” in a forced-sale context

A client in financial difficulty sometimes asks for “the real value of my property”, implying what they could obtain by selling quickly. That is not Market Value (which assumes proper marketing); it is Liquidation Value — a distinct basis that produces a lower figure, sometimes significantly.

3. Asking for an “Investment Value” while thinking of Market Value

Investment Value is subjective— it depends on the identified investor. Asking for “the investment value” of your property from a valuer without specifying the target investor leads to an approximate answer that does not carry the weight of a Market Value.

4. Confusing open-market value and company-contribution value

Contribution value is generally modelled on Market Value, but it may depart from it for tax or strategic reasons. The valuer produces the reference Market Value; the contributions auditor and the shareholders set the final contribution value.

5. Comparing land whose planning use has changed against comparables under the old use

For land that has undergone a change of planning use to R+4 or R+5 after the approval of a Development Plan, the Market Value is not measured by comparison with other villas. It is measured by the residual method, on the basis of the developer programme that the planning scheme permits.

7. Linking bases of value to valuation methods

Once the basis is adopted, the valuer selects the most suitable method (comparable, capitalisation/DCF, cost, residual). Not all methods are compatible with all bases:

• Market Value can be measured by the comparable, capitalisation, cost, or residual method depending on the asset.
• Market Rent is measured almost exclusively by the comparable rental method.
• Investment Value is almost always measured by DCF (Discounted Cash Flow), with a discount rate specific to the investor.
• Liquidation Value generally derives from Market Value reduced by a justified discount.
• Synergistic Value requires a combined-scenario approach (before/after synergy).
• Fair Value IFRS 13 imposes the input hierarchy (level 1, 2, 3) that modulates the choice of method.

8. What a compliant RICS Red Book report always contains

A property valuation report compliant with the RICS Red Book Global Standards 2025 systematically states, in this order:

1. The identification of the instructing party and the recipient of the report.
2. The precise purpose of the engagement and its context (transaction, inheritance, IFRS, security, etc.).
3. The Basis of Value adopted, with the normative reference (IVS 104 §X or the applicable external framework).
4. The core assumptions and special assumptions where applicable.
5. The valuation date and the report date.
6. The methods used and their weighting.
7. The comparables selected and their treatment.
8. The sensitivity analysis.
9. The final result with its confidence interval or range.
10. The general conditions and limitations of liability (RICS PSPS).

ReaConsult is an independent property valuation practice in Morocco. Our RICS-certified experts produce reports compliant with RICS Red Book standards. Before you act, have the property valued by our independent RICS appraisal service and browse more analyses on the ReaConsult blog.