Glossary

Allocation of premises : Determination of a specific function for which the property will be used.

Asset manager : A specialist in charge of improving the value of a portfolio. Asset managers manage a fund for one or several investors with whom they may act as joint investors.

Blocks of premises : Two approaches are used to appraise the market value of blocks of premises, in particular blocks of flats.

  • Either the sale of the whole block
  • Or the sale unit by unit (flat by flat, split sales)

Block sale : Sale of an entire multiple occupancy building to the same person or body corporate, bought with the intention of making a profit when the building is sold, often by selling the building in units.

Building lease : Long term lease in which the leesee, holder of a real right, agrees to build and maintain constructions on the leased site. Upon lease termination unless stipulated otherwise the constructions become the lessor's property.

Building open to the public : The term describes public or private buildings that receive customers or users other than employees. These establishments are subject to specific regulations on safety, security and accessibility.

Business lease : A contract wherein the owner of a business concern (the lessor) grants a rental contract for the management of the business to a manager who exploits the business in his own name, for himself and at his own risks. In exchange the tenant manager pays the owner a rent or dues.

Capitalisation rate : This is the ratio between potential income from a property and the property's purchase price.

Capital value : The capital value is the value that could be attributed to real estate in the framework of contribution of property or transfer of the asset. The capital value will vary depending on the type of transaction and the use of the property agreed between the parties.

Current or alternative use : Several approaches can be used to appraise the market value depending on whether the building is assumed used for its current usage or another usage. A change of use can lead to very different values depending on the market and the cost of transforming the building.

Commercial lease : Lease for premises in which the lessee operates a business concern owned by the lessee.

Catchment area : The real or theoretical area or population from which a retailing establishment attracts customers. The outer outline of the zone is influenced by distance and transport times. When these zones are illustrated on a map, there may be isometric or isochronous curves. The definition of the zone plays an important role in the estimation of the potential turnover of the establishment or for its scope of advertising.

Cladding or siding : Thin protective covering, that can dilate freely, on the structural or exterior walls of a building.

Communal areas: The parts of a building or site used by all the occupiers or of use to all the occupiers.

Contracting authority: A person or body corporate, owner of a site, for whom a development project is carried out.

Co-ownership : A form of ownership in which an entire building or group of buildings is owned by several people. The property is split into several units, each unit having a private area and a share in the common areas.

Down payment : Sum of money paid accompanying a bilateral letter of intent to buy a property. The amount is deducted from the amount due if the sale goes through.

Deed : A written document drawn up by a lawyer or public official which is authentic until civil proceedings to challenge its authenticity are undertaken.

Estate agent : A professional person that acts for owners, buyers, tenants or landlords during the sale or leasing of apartments, retail business concerns, or building sites. Estate agents are not owners of the property being sold or leased; they are intermediaries providing services to help find reliable and tenants or buyers with financial and legal guarantees.

Eviction indemnity : An indemnity owed by a lessor who does not wish to renew a commercial lease. The amount of this indemnity must equal the prejudice suffered by the lease not being renewed.

Franchise : A system of selling products, services or technologies based on a close and on-going cooperation between the franchiser and franchisee, two companies that are legally and financially distinct and independent. In exchange for certain fees, the franchisee has the right to exploit a brand or concept in exchange for regular services from the franchiser.

Guarantor : A person who commits to guaranteeing the performance of a contract for one of the parties to the other party's benefit. A guarantor who accepts to perform if the principal debtor defaults is known as a personal guarantor. If, instead of committing to perform, a guarantor offers a mortgage on a building it owns as security, it is known as a real guarantor.

Ground occupancy ratio : This ratio can reduce the amount of ground area occupied by buildings without taking their height into consideration. The ground occupancy ratio is defined as the ratio of the site area occupied by the vertical erection on the ground of the volumes of buildings, to the surface of the site. When the property is partially covered by roads, the area of the site considered is the site that is left without the part taken by the road.

Gross replacement cost : Cost that can be used to define the replacement value of a building. It includes the price of the land and the construction cost of buildings and other fixtures, non-recoverable taxes, fees and taxes.

Headline rent : The headline rent corresponds to the value on the lease agreed between the parties.

Head contractor : A person or body corporate contracted to construct a building or carry out works on behalf of an owner or to direct the construction.

Immediate supply : The amount of space that is currently vacant and available to let or for sale.

Inventory of fixtures : A deed drawn up jointly by the landlord and tenant detailing the nature and quality of the property being let as well as the number and condition of objects forming the property.

Industrial space : The main function of industrial space is to accommodate manufacturing activities, small assembly lines, small-scale distribution and/or storage.

Instructions : Contract in which a person (the principal) gives another person (the agent) the power to act on his behalf for one or several legal purposes (sale, leasing or purchase of property). Agents and other property managers require instructions to sell, let or manage a third party's property.

Investment funds : These are investment vehicles, often collective (owned by many), that manage financial or real estate assets with a defined investment goal (type of financial assets, management policy, objectives, fees, share value, rhythm of calculation of value and so on). Closed funds have a limited number of shares (or units), do not issue new shares or buy shares that have already been issued. Open-ended funds issue new shares and buy shares that have already been issued.

Insurance value : Value for which the property is insured with an insurance company. This value is used as a basis to calculated the payment of annual premiums and as a basis for negotiation if a claim is made.

Land tax : Land taxes cover several taxes levied by local or regional authorities: the waste removal tax in some towns, special facilities taxes... Land tax is levied on constructions and land.

Land survey register : The set of documents that enable plots of land and buildings to be situated geographically, show the divisions, identify the owners and supply the cadastral rental value.

Lease : A contract in which a natural person or body corporate grants, for a defined period, the usage of a property to another person in exchange for a sum of money, pursuant to terms and conditions stipulated in the contract or by the law.

Lease back : A medium term credit contract whereby a credit company purchases the commercial real estate or other capital equipment of a client company on condition that they are leased back to the user client for an agreed rent over a set term. At the end of the term the client has the option of giving the assets back to the credit company, or asking for the contract to be renewed, or buying the asset for a price that at least partially takes into consideration the payments paid in rents.

Lease-sale : Contract in which the owner of a property rents the property to a person who, at the end of a set period, has the option or the obligation to buy the property (credit-lease, lease-back, rent ownership).

Luxury building : A qualitative description of a new, renovated or redeveloped building with modern architecture. Equipment is technically advanced and interior design of good quality.

Market Value : The market value is the price at which the sale of a property or property interest would be completed in an arm-length transaction at the date of the valuation, assuming:

  • a willing seller and buyer;
  • a reasonable period (having regard to the nature of the property and the state of the market) for the proper negotiation;
  • that the state of the market, level of values and other circumstances were stable during this period;
  • that the property was offered in an open market, unconditionally and with adequate marketing
  • that neither party had a special interest in the property, etc

Mortgage : A legal title burdening a property that acts as a guarantee to pay a debt contracted on the property. The mortgage enables the lender to use legal means to force the sale of the property belonging to the debtor if the latter cannot reimburse the amounts owed.

Net replacement cost : Gross replacement cost depreciated to take into account dilapidation and obsolescence.

Net initial yield : Gives as a percentage the ratio between the net income (excluding taxes and charges) from a property and the acquisition cost (price of the building plus fees and transfer duties).

Office stock : The total of office space built in a given zone

Penalty clause : A clause in which a set rate of damages and interests owed by the debtor are fixed contractually in the event the debtor does not perform.

Pension funds : Pension funds invest the capital given to them by individual savers in securities and real estate in order to pay the pension of future retirees. These types of funds usually seek low-risk investments. When real estate is the chosen investment, pension funds usually opt for secure assets - those in good condition, well located, already let and so on.

Private contract or agreement : A document drawn up by a private individual that bears the signature of all parties. The most common purpose of such documents is to act as proof of the existence of a legal situation.

Professional lease : A lease contract for premises exclusively used for professional purposes (other than commercial, specialised trades, industrial or agricultural); the lessee can exercise a (liberal) profession in the premises (doctor, lawyer, dentist etc.).

Property company : A real estate company is a company whose business is owning real estate which is let and/or used to maximise the profitability and yield. The core of the business is managing a real estate portfolio. The real estate may be residential, commercial (offices, retail, warehouses, industrial) or operational (hotels, retirement homes, university residences etc.)

Private areas : The parts of a building reserved for the use of a specific owner or tenant.

Portfolio : The real estate assets owned by an investor with a view to receiving direct revenue or capital gains.

Possible development (future pipeline) : A credible potential project for which some administrative procedures are still to be fulfilled or are pending approval.

Property developer : A developer is an economic intermediary that erects buildings with a view to selling them again to first time buyers, occupiers or investors. The developer organises the construction of buildings. In parallel, real estate operators can play a wider role. They can act at each stage of the construction process and the sale of the building. They design, develop, own, sell, invest, operate and manage real estate assets.

Real estate development contract : A contract deemed to be of common interest in which a person known as the "real estate developer" contracts with the owner of a site to construct a building for an agreed price using work by contract agreements. The developer can also carry out, or have carried out, for an agreed price some or all legal, administrative and financial issues pertaining to the construction project.

Reinstatement value : This is defined as the cost of reconstructing buildings and equipment (considered fixtures), including fees and technical costs. It differs from the market value in that it is generally identical or equivalent to estimates. It only applies to buildings and related equipment (general services or equipment for comfort).

Residential lease : A rental contract for premises to be used as a principal residence or for mixed residential-professional use.

Retail : Direct sale on a site to consumers of goods and/or services.

Renovated building : A building that has already been occupied and has been renovated to a degree that does not require planning permission.

Reservation fee : A sum of money for the promissor (seller) in a unilateral sales promise held as compensation for the immobilisation of the promised asset during the option period. This reservation fee is given to the promissor by the buyer if the latter renounces his option to buy.

Sales in units : This technique is mainly used for residential property. It involves selling multiple occupancy buildings by dividing them into individual, separately owned units. The units may be vacant or occupied at the time of sale.

Sale on plan : The sale on plan is a sale concluded before the development is completed. The buyer immediately becomes owner of the land and takes ownership of the building as and when construction advances.

Special interest price : The special interest price is the price achieved for the sale of a property on the market in circumstances which have skewed the existing balance of supply and demand. This price results from one party having a special interest in buying or selling the property that is removed from the real estate market in general. The special interest price is therefore different from the average market value even if the parties taking part in the transaction consider that they have not concluded an unfavourable transaction.

Semi-speculative development : A development project for which all procedures prior to construction have been carried out for example the site purchased, preparatory studies made, project defined, and planning approval fully granted as are any other administrative authorisations. Only the actual construction remains and this considerably reduces the time needed before the occupier can move into the new premises as works are ready to start.

Sales agreement : Convention in which one party (the promissor) consents to the other party (the beneficiary) for a set period the option to purchase a property (a building) at a set price.

Security deposit : Sum of money given to guarantee performance of a contract. For rental contracts, the deposit is given to the lessor by the lessee when the latter takes possession of the premises. In principle the deposit is returned to the lessee at the end of the lease on condition that the lessee has paid all rents and charges owed and has properly maintained the premises.

Suspended ceiling : A ceiling fitted underneath another ceiling to reduce the floor-to-ceiling height or hide piping and/or electrical cables.

Speculative development : A building development, usually to let, that is constructed without any occupier(s) committing to take space in it.

Standard building : New or renovated building with traditional architecture. Technical equipment is of a basic standard and interior design simple.

Town centre (high street) : One of three retailing domains (with shopping centres and peripheral retail zones). The town centre is usually composed of shops on the ground floor of buildings. Co-ownership charges the costs of maintaining and repairing the communal areas and services in a building. These charges are split into those that can be recovered from the tenants by the landlord and those that are borne by the landlord.

Turnkey scheme : A transaction concluded when the building is still a project or under construction, but whose structure will be modified to suit the needs of the occupier.

User-owned property : A development undertaken for the company that will occupy the building that may or may not own the land.

Usufruct : A real right resulting from the division of property rights, the holder of the usufruct (usufructary) has the right to use and receive the fruits from the property but not the right to dispose of the property which belongs to the bare owner.

Vacancy rate : The ratio of the immediate supply of space to total stock of space for a type of asset in a given area.

Valuer surveyor or appraiser : A professional whose function is to estimate and appraise the market sales or rental value of real estate, including housing, on going retail concerns, shops or industrial space.

Warehouse : A building that is principally used to accommodate a distribution activity, storage and/or dispatch of goods activity. The main characteristics of a warehouse are a floor-to-ceiling height, homogeneous space and volumes, regular shapes and heights, multiple loading bays, perhaps some office space and a maneuvering area.

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