Understanding the open-market valuation of a property in Madagascar

Open-market valuation is the process by which a Building & Real-Estate Expert, listed with the Compagnie des Arbitres Rapporteurs et Experts Agréés près les Cours et Tribunaux de Madagascar (CAREA), determines the market value of a property on a given date, using recognised methods and within the Malagasy legal framework. In Madagascar, this valuation is essential for property transactions, bank mortgage guarantees, inheritances and court proceedings. Mr RABENIMANANA Normand, founder of Cabinet ExpertImmo, has been on the CAREA list since 1990 and has practised real-estate valuation in Antananarivo for more than thirty-five years.

What is the open-market value of a property?

The open-market value is the estimated price at which a property could be sold under normal market conditions, between a willing seller and a willing buyer, on the valuation date. This definition is consistent with the principles applied by the Compagnie des Arbitres Rapporteurs et Experts Agréés près les Cours et Tribunaux de Madagascar (CAREA) and with the practices in force before the Malagasy courts.

The open-market value must not be confused with the price advertised by a seller or the amount of a past transaction. It results from a rigorous analysis by an accredited expert, taking into account multiple objective factors.

Why have an open-market valuation carried out in Madagascar?

An open-market valuation drawn up by an accredited expert is required in many situations in Madagascar:

• Bank mortgage guarantee: credit institutions require an open-market valuation report signed by an accredited expert for any property-loan file.
• Property transaction: sale or acquisition of a residential, commercial, industrial or land asset.
• Inheritance and partition: determining the value of real-estate assets as part of an inheritance or a family partition.
• Court proceedings: litigation, expropriation, compensation, divorce.
• Taxation: asset declaration, calculation of transfer duties.
• Accounting: valuation of real-estate assets on a company's balance sheet.

What methods does the expert use to determine the open-market value?

The accredited Building & Real-Estate Expert at Cabinet ExpertImmo uses three main methods, combined according to the nature of the property being valued:

1. The direct comparison method

This method consists of comparing the property being valued with similar properties recently sold in the same geographical area. The expert adjusts the value according to differences in floor area, condition, location and amenities. In Antananarivo, this method is particularly suited to residential properties in districts such as Analamahitsy, Ivandry or Ambohijatovo.

2. The income-capitalisation method

Used mainly for rental properties (investment buildings, commercial premises, offices), this method determines the value of the property based on the rental income it generates or could generate. The expert applies a capitalisation rate reflecting the conditions of the Malagasy real-estate market.

3. The replacement-cost method

This method assesses the cost of rebuilding the property as new, less depreciation. Mr RABENIMANANA Normand combines his CAREA membership with significant experience in general construction, which informs the application of the replacement-cost method on the Malagasy market.

What is the difference between open-market valuation and a property estimate?

An open-market valuation carried out by an expert on the CAREA list produces a signed and sealed report carrying evidential weight before the Malagasy courts and admissible to credit institutions under the ordinary rules of law. A property estimate, often produced by an estate agent or a private individual, is merely an opinion of value without the same evidential weight. For any official procedure in Madagascar — bank financing, court proceedings, inheritance — a report drawn up by an expert on the CAREA list is, in practice, required.

What factors influence the open-market value in Antananarivo?

The open-market value of a property in Antananarivo, the capital of Madagascar, depends on several factors analysed by the expert:

• Location: district, accessibility, immediate surroundings, proximity to services.
• Type of title: land title, land certificate, State-owned land.
• Area and layout: size of the land and the building, number of rooms, layout.
• Overall condition: build quality, maintenance, renovations carried out.
• Planning compliance: building permit, compliance with planning rules.
• Market trends: supply and demand in the area concerned.

How does an open-market valuation work at Cabinet ExpertImmo?

The open-market valuation process at Cabinet ExpertImmo follows a rigorous protocol in 5 steps:

1. Initial contact — the client submits their request and provides initial information about the property.
2. Fee agreement — a free quotation is issued, followed by a signed written agreement before any work begins.
3. Site visit and document collection — detailed inspection of the property, technical measurements, examination of the land title and supporting documents.
4. Analysis and drafting — application of the valuation methods, comparative analysis, drafting of the reasoned report.
5. Delivery of the report — a signed and sealed report carrying the evidential weight granted to reports by experts on the CAREA list. Average turnaround of 5 to 15 business days for a standard property in Antananarivo.

Conclusion

Open-market valuation is an essential step for any property transaction in Madagascar. Carried out by an expert on the CAREA list, it produces a report carrying evidential weight before the courts and admissible to credit institutions under the ordinary rules of law. Cabinet ExpertImmo, led by Mr RABENIMANANA Normand — on the CAREA list since 1990 — has practised real-estate valuation in Antananarivo for more than thirty-five years.