Valuation Methods in Real Estate Investment

Imagine you are an analyst at a real estate investment firm that is considering the acquisition of a commercial office building. The firm is evaluating the potential investment using various valuation methods. Discuss the three primary valuation methods used in real estate investment: the Income Approach, the Sales Comparison Approach, and the Cost Approach. Analyze the advantages and disadvantages of each method and provide examples of situations where each method would be most appropriate. Additionally, consider how market conditions might influence the valuation outcomes of each method.