 It assumes that a hypothetical tenant would be willing to pay in rent the decapitalised equivalent cost of providing this hypothetical alternative.In Hong Kong, the practice in the application of the Contractor's Basis is to use the financial market rate or the property market yield to decapitalise the effective capital value to arrive at the annual value as defined in Section 7(2) of the Rating Ordinance.The choice of valuation method will not always be clear and it is often the case that a second method will be used to test the results of the initial valuation where appropriate data is available for this purpose.