Detailed explanation
DRC is the principal method for valuing specialised assets (industrial plants, hospitals, infrastructure) where market evidence is rare. The formula: DRC = Replacement Cost (new) − Physical Depreciation (wear, obsolescence) − Functional Obsolescence (technological) − Economic Obsolescence (over-capacity, market conditions). Used under RICS guidance for specialised property. Land component is typically valued separately by market comparison.
Moroccan example
A caroube concassage plant in Rehamna industrial zone (Safwa Grains) is valued at DRC: building replacement 18 M MAD minus 40% physical depreciation = 10.8 M MAD; land 10,745 sqm × 600 MAD = 6.4 M MAD; total ≈ 17.2 M MAD.
Related terms
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