Bases of Value under the RICS Red Book: comprehensive guide to property valuation in Morocco

Market Value, Equitable Value, Fair Value IFRS 13, valeur vénale, contribution value, Mortgage Lending Value: understanding which basis applies to your situation is the first decision of a valuation — and the most strategic.

In a property valuation assignment, the first question a RICS-trained valuer asks is not « how much is the property worth? ». It is « which value are you looking for? ». Because two competent and 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 retained two different Bases of Value. The Market Value of a villa in Anfa is not its IFRS 13 Fair Value. The Mortgage Lending Value of a developer's plot is not its Market Value. The valeur vénale declared in succession may not be the contribution value accepted by the tax administration. This article enumerates exhaustively the bases recognised by the RICS Red Book Global Standards 2025, IVS 2025 and the Moroccan legal context, explains which 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 (in force since 31 January 2025), VPS 4 (Bases of value, assumptions and special assumptions) and the IVS 104 (Bases of Value) standard require the valuer to precisely and explicitly define the basis retained before any calculation. This is not editorial formality: the basis governs everything that follows.

• The comparables retained differ depending on whether one seeks an open transaction or an accounting Fair Value.
• The fundamental assumptions (typical buyer, marketing duration, constraints) vary totally between Market Value and Investment Value.
• The weighted method (comparative, capitalisation, residual, cost) must be compatible with the basis.
• The final result and its range can vary from 10 to 40 % depending on the basis, without the valuer having made any error.
• The legal and tax admissibility of the report depends on the choice of basis vis-à-vis the purpose of the assignment (inheritance, contribution, lending, IFRS, etc.).

That is why a serious valuation report states from the first page the basis of value retained, its normative source (IVS 104 §X or article y of the Code), and the associated special assumptions. Everything that follows is built on it.

2. The six principal bases of IVS 104 / RICS VPS 4

IVS 104, fully reproduced by the RICS Red Book, recognises six principal bases of value. Each answers a distinct economic question: how much in such market, such assumption, such buyer perspective.

2.1 Market Value — IVS 104 §30

The most widely used and universally recognised basis. 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, no compulsion, proper marketing, knowledgeable and prudent behaviour, and assumption of « highest and best use » (best possible use legally, physically, financially). Market Value is the technical equivalent of what French and Moroccan law commonly call « valeur vénale ».

Typical uses: private transaction, inheritance, in-kind contribution (with adjustments), bank security, amicable sales, patrimonial life-insurance files.

2.2 Market Rent — IVS 104 §40

Rental equivalent of Market Value: the estimated rent at which the property would be leased between a willing lessor and willing lessee, under open and informed conditions. It is generally expressed in MAD/sqm/year or MAD/sqm/month depending on the segment, taking into account the usual conditions of the local market (lease duration, indexation, deposit, charge allocation).

Typical uses: commercial lease renewal, initial rent setting, contradictory expertise in case of lessor/lessee dispute, capitalisation valuation (Market Rent is the input).

2.3 Equitable Value — IVS 104 §50

Previously called Fair Value (term abandoned by 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: partition in family undivided ownership, exit from shareholder agreement, share buy-back between co-heirs, matrimonial patrimony separation, intra-group restructuring.

2.4 Investment Value / Worth — IVS 104 §60

This is the value of the asset for a specific identified investor, having regard to their objectives, their own discount rate, their tax constraints and their potential synergies with other assets. It can be higher or lower than Market Value. Investment Value is inherently subjective and is never Market Value, even if they sometimes approach each other.

Typical uses:portfolio arbitrage for a REIT or family office, « buy or lease » analysis for an occupier, offer calibration in a private deal, foncière management control.

2.5 Synergistic Value / Marriage Value — IVS 104 §70

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

Typical examples in Morocco:

• Combining two adjacent villa plots, whose merger allows a R+5 development compliant with the Master Plan, where each isolated plot would remain sub-optimal.
• Acquisition of a narrow strip giving access to a large landlocked parcel (passage easement lifted).
• Acquisition by a neighbour of an undivided share to close an operation.
• Recombination of dismembered real rights (usufruct + bare ownership) with a single buyer.

2.6 Liquidation Value — IVS 104 §80

The estimated value of the asset in the context of a forced and accelerated sale, where the seller is constrained and marketing is limited. It generally falls into two sub-bases: orderly liquidation (ordinary sale but in constrained timeframe) and forced liquidation (auction, foreclosure). It is always lower than Market Value, sometimes significantly (10 to 40 % discount depending on the nature of the constraint).

Typical uses: insolvency proceedings, stress-tested bank security, contradictory expertise in property seizure, prudential control for a REIT.

3. Bases imposed by external standards

Beyond the native IVS bases, other referentials impose their own value definitions. A valuation report intended for these purposes must explicitly target the external basis (not just settle for 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 on active markets), level 2 (observable inputs), level 3 (unobservable inputs, modelling).

For real estate, IFRS 13 Fair Value conceptually approaches IVS 104 Market Value but differs notably on the 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, OPCI (Moroccan REIT, law 70-14), and more generally any IFRS consolidation imposing fair value measurement.

3.2 Mortgage Lending Value (MLV)

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

In Morocco, conventional banks generally work on the basis of valeur vénale (Market Value) for their securities, applying an internal prudential discount thereafter (typically LTV 70 % to 80 % depending on segment). But some specific operations — international bond refinancing, syndications with European banks — may require a valuation on explicit MLV basis.

3.3 Insurable Value

Defined as the cost of building reconstruction (excluding land value), increased where applicable by ancillary costs (demolition, clearance, design and supervision fees, relocation costs). This is a basis technically foreign to Market Value: a building may have an Insurable Value much lower or 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 retain certain specific bases that should be articulated with the international ones.

4.1 Valeur vénale

Term used by Moroccan tax law (CGI), civil law (Dahir forming the Code of Obligations and Contracts, Real Property Code law 39-08) and notarial practice. Valeur vénale conceptually aligns with the Market Value of IVS 104, subject to adjustments imposed by the specific context (legal abatements, special assumptions). For a valuation intended for tax or succession use in Morocco, the RICS valuer retains Market Value while explicitly qualifying it as « valeur vénale within the meaning of Moroccan tax law ».

4.2 Contribution Value (Valeur d'Apport)

When contributing a property to the share capital of a company (incorporation or capital increase), the contribution value is set by the partners under the control of an in-kind contribution auditor where applicable. It is generally aligned on Market Value, but may integrate strategic considerations (contribution at historical value, at actualised valeur vénale, tax integration). The RICS valuer produces the Market Value as a reference, on which the partners and the contribution auditor base their decision.

4.3 Succession Value and ANCFCC / DGI declaration

In succession matters, the value retained for declaration to the DGI and registration with the ANCFCC corresponds to the valeur vénale of the property at the date of opening of succession (death of the deceased). An independent appraisal compliant with RICS Red Book secures the declaration, constitutes a defensible base in case of tax reassessment, and allows the partition between co-heirs to be objectified.

4.4 Compulsory Purchase Value (Expropriation)

For compulsory purchase for public utility purposes, the applicable regime is defined by Moroccan law 7-81. The indemnity value retained follows specific principles (reference date, possible abatement, accessory indemnities) that deviate from pure Market Value. A contradictory expertise before the administrative commission or the competent court requires a specific basis, distinct from the valeur vénale of a free transaction.

5. How to choose the right basis — decision tree

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

A complex assignment may require several bases simultaneously. For example, a contribution file prior to a BVC listing may require the contribution value (for the contribution auditor), Market Value (for economic valuation), and Fair Value IFRS 13 (for post-listing consolidation). The RICS 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 with Fair Value IFRS 13

The most frequent error, particularly in OPCI or listed property files. IFRS 13 Fair Value is not identical to Market Value, even if they often approach. Confusing them in a consolidation report may 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 true 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. Requesting 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 without specifying the target investor leads to an approximate response that does not have the scope of Market Value.

4. Confusing valeur vénale and in-kind contribution value

Contribution value is generally aligned on Market Value, but may deviate for tax or strategic reasons. The valuer produces Market Value as reference; the contribution auditor and partners settle the final contribution value.

5. Comparing a plot subject to a change of urbanistic designation with comparables under the former designation

On a plot subject to a change of urbanistic designation to R+4 or R+5 after Master Plan homologation, Market Value is not assessed by comparison with other villas. It is assessed by residual method, on the basis of the developer programme the Master Plan allows.

7. Articulation Bases of Value ↔ Methods

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

• Market Value can be assessed by comparative, capitalisation, cost or residual method depending on the asset.
• Market Rent is assessed almost exclusively by comparative rental method.
• Investment Value is almost always assessed by DCF (Discounted Cash Flow), with a discount rate proper 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) which modulates method choice.

8. What a RICS Red Book compliant report always contains

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

1. Identification of client and report recipient.
2. Precise purpose of assignment and its context (transaction, inheritance, IFRS, security, etc.).
3. The Basis of Value retained, with normative reference (IVS 104 §X or applicable external framework).
4. Fundamental and special assumptions where applicable.
5. Valuation date and report date.
6. Methods mobilised and their weighting.
7. Comparables retained and their treatment.
8. Sensitivity analysis.
9. Final result with its confidence interval or range.
10. General conditions and liability limits (RICS PSPS).

ReaConsult is an independent property appraisal firm in Morocco. Our RICS-certified experts produce reports compliant with RICS Red Book Global Standards 2025, IVS 2025 and IFRS 13 for individuals, MRE, developers, REITs and institutions.