Valuation Methods for Assessing Government-Owned Heritage Buildings in Malaysia

Purpose: The current paper sought to identify and evaluate valuation and measurement approaches for government-owned heritage buildings in Malaysia to address existing methodological gaps under the Malaysian Public Sector Accounting Standards (MPSAS) while proposing a Malaysia-tailored framework that could help balance financial accountability with cultural stewardship.

Design/ Methodology/ Approach: Empirical evidence was gathered via three (3) focus group discussions (FGDs), which were conducted in Melaka (n=15), Pulau Pinang (n=19), and online (n=14), involving private registered valuers, valuers from the Valuation and Property Services Department (JPPH), local-authority officials, architects, conservators, and academics. Specifically, the present study performed FGDs to bridge the methodological gap in valuing non-market heritage buildings by eliciting multidisciplinary expert consensus to develop a standardised valuation framework for publicsector accrual accounting, with all transcribed discussions analysed thematically and triangulated with documentary evidence.

Findings: The current research concluded that government-owned heritage buildings in Malaysia should be valued using a cost approach, which focused on reproduction cost rather than being recorded at a nominal value of RM1, thereby ensuring full compliance with accrual accounting under MPSAS 17. Particularly, the above valuation approach utilised a combination of two (2) approaches, wherein land value was determined through the comparison method, whereas the building value was calculated based on the current construction costs adjusted by heritage factors (50 to 70%), such as rare materials and architectural significance and less accumulated depreciation. Moreover, this study identified a total of seven (7) critical valuation dimensions, including aesthetic value and national significance, and highlighted that, although the physical structure depreciated, the heritage significance would not. In essence, the present research advocated for a national heritage valuation guideline and multidisciplinary collaboration to guarantee that financial reporting would accurately reflect the service potential and cultural stewardship of the assets of the nation.