Basis of Valuation
Discuss About The Building Project Evaluation Management?
The property is located in Andrew Fairly Avenue, VIC. It is an existing roadway. The valuation of the property is being carried out because of an application from the local municipality of the Greater Shepparton, City council. The main valuation is to be done of the owner’s freehold interest, given the sale of the property when it is not occupied. The property is controlled by the legal counsil, hence there are no legal issues involved in the same. The valuation is done without considering the GST. The property is an existing roadway known as Andrew Fairly Avenue. It is situated in the north of the Shepparton city. The roadway is a path that passes between the junction of three more important roads and a railway line. Shepparton city is a very popular regional centre that is located in the hearts of the Goulbourn Valley. The area includes many commercial properties and many industries. There are a lot of canneries and milk processing companies in the area. The officially population of the area as per the local municipality will be around 70,000 people. The said property, of which valuation is to be done, lies in this rural centre and is surrounded by many other commercial properties and buildings. Presently the roadway falls under the category two of the industrial zone, but it is assumed that as development will occur, it will be declared as industrial zone 1, in prospects of matching the land beside that is marked as industrial zone 1. (Blackledge, 2016)
The property can be valued in various ways. The main points to be taken into consideration are the commercial value of the property. The most common method of valuation is a straight link with sale of similar land properties that have similar zoning and affected by more or less same factors. Since the subject, land is a part of the industrial area, but it is as of now utilised as a road. The main reason of considering the land valuation for purpose of sale is that eventually the roadway that now falls in the category of industrial zone 2 will fall in the same category as of the adjoining land property. This is the main assumption, why sale of similar land areas has been considered as the basis of valuation of the roadway even though it falls under the other industrial zone and category. (Parkinson, Hill, & Wheal, 2016) With the subject of the given land area, that to use the land for commercial purpose where people can come work and play, the company will need to do many easements and that is not possible. Hence, the only option that the company has is to use the area like a vacant land, as commercial construction is not possible in the area. Since the commercial prospects of the area is less, the only way to sale out the property will be to given a discount on the total sale, as per the industry standard. The average rate of sale of per sqm can be considered$125 per meter, considering the industrial rates and the given discount. (Isaac, Leary, & Daley, 2016) This valuation has been done taking into consideration the various aspects of the importance of the area as an important roadway that is connecting the major areas. The comparison of the said property with other similar properties in the area has been taken into consideration to value the property and that are few more encumbrances that is associated with the said property and its valuation. It is assumed that the property will be of great value to anyone who buys it, and the landowner has a great industrial advantage. The only thing to be taken care of is the gutters and other paths in the area that might need to be repaired. The total valuation is done taking into consideration a total area of 3,621 sq m. It is important to check the rates and other municipal factors before buying the property (Gupta & Tiwari, 2016).
In analysing the commercial prospects of the given property, the value of the similar sites have been taken into consideration and decision is based on the same. It is also indicated that it is just a basis and assumption. The value of sale might vary between the places giving to many other factors like the location and the encumbrances involved in the property. Effort is given to identify properties that are similar to the subject for valuation. However if similar property cannot be traced, then variations are to taken into consideration while analysing the commercial worth of the property (Henneberry, 2017).
The property in question is an existing roadway that forms the adjoining point many other important commercial areas. The valuation of the land is done, to ascertain the commercial viability of the place given the several factors. A valuation is done to determine the market value of the potential sale of the adjoining land to a potential customer. Even though proper survey has not had been done, the total area has been assumed as 3621 sqm. The valuation is done based on per sqm basis and discount amount is considered, given the place is not commercially viable, as there are lot of encumbrances involved in the property and its up gradation. (Vuuren, 2017) It is important that anyone who is using this report to take their important decisions whether they want to invest in the property or not, takes into consideration the commercial value of the property and also get themselves accustomed with the market value definition. This report is based on assumptions and more or less the surveys that are done may fluctuate given many factors is there that affect the market price of the property. It is clearly mentioned that in this appraisal no special treatment is done of nay of the purchaser or the seller. The valuation is done on neutral grounds taking all the factors into consideration that affects both the parties equally. There may be arguments that the owner of the adjoining land areas might have special interest in the property or that the municipality might have special interest for development of the roads and commercial centres. However, all those grounds are abolished, as the valuation is done on neutral grounds. The matters that are foregoing are the major factors that are affecting the commercial value of the property. (Bellman & Öhman, 2016)
Subject to all the conditions, discounts, all the encumbrances, and the surveys involved. It is ascertained that the valuation of the property is done to the best of my knowledge and as per the assessment that has been conducted; the value of the property in all the fair proportions will be equal to the value as assessed in the valuation report.
The main basis of valuation is the market value of the similar property and based on the same the value of the property has been determined. If no similar property can be, ascertained then changes and variations are allowed to ascertain the value of the said subject land area. The definition of market value is that estimated amount at which a probable buyer and the seller are ready to exchange the property among them, taking into consideration all the other factors that might affect the value of such property(Crosby & Henneberry, 2016).
The major assumptions that has been taken in the valuation process are –
1) A willing seller and buyer
2) That the property is for sale in the open market
3) That no special interest is involved of either of the parties and that valuation is done on neutral grounds
4) That other factors that might have affected the valuation are static during the period of valuation and does not change.
The rental value at which the owner is ready to lend out the property is also to be taken into consideration. The standard definition of the market rentals is to be taken into consideration before taking major decisions regarding letting out the property for commercial purposes.
Based on our valuation and examination of site, there are no signs of nay contamination that might affect the health of the environment. There are no proposals to include the property in any of the contamination register by any local party or community. There are no environmental problems in the area and hence it is clean from any kind of risk and hazards. No residual chemicals or harsh products are used in the district. The only kind of activity that might cause some problems is the treatment of wood and other termite control along the lines of transmission. If there are any chances of any hazardous product being present in the building, survey of the building must be done thoroughly. (Furfine, Lo, & Kamerling, 2017)
The valuers have stated clearly that there is no past present or future interest in the property . All the valuation is done on neutral grounds taking all the important factors affecting the property value into consideration.
If there are any encumbrances that have not been covered in the report and that might affect the commercial value of the property, must be informed to the valuation team immediately.
The valuation team is certified and have the qualification for carrying out the stated activities, and they have conducted the same to the best of their knowledge. The valuation has been done on the basis of the valuation principles and all the major provisions related to valuation of commercial property have been followed clearly. This valuation report will not take into consideration any kind of environmental hazards that the area may impose till it is specifically mentioned and proved. The report has been generated to the best of the knowledge of the valuation team. Any changes will not take place, till proper scrutiny has been done in that regard. The valuation is at the current date vlaution only, it will not be reflecting any changes that might occur after the current date and the same shall not be reflected in the valuation report, and the valuation team will not be responsible for nay changes that might occur after the current date of valuation. The same is reflected clearly in the valuation report (Salzman & Zwinkels, 2017).
Bellman, L., & Öhman, P. (2016). Authorised property appraisers’ perceptions of commercial property valuation. Journal of Property Investment & Finance , 34 (3), 225-248.
Blackledge, M. (2016). Introducing Property Valuation. NEW YORK: Routledge.
Crosby, N., & Henneberry, J. (2016). Financialisation, the valuation of investment property and the urban built environment in the UK. Urban Studies , 53 (7).
Furfine, C., Lo, S., & Kamerling, D. (2017). Golden Opportunity: Commercial Real Estate Valuation. Kellogg School of Management Cases .
Gupta, A., & Tiwari, P. (2016). Investment risk scoring model for commercial properties in India. Journal of Property Investment & Finance , 34 (2), 156-171.
Henneberry, J. (2017). Transience and Permanence in Urban Development. UK: WILEY PUBLISHER.
Isaac, D., Leary, J., & Daley, M. (2016). Property Development. UK: PALGRAVE.
Parkinson, A., Hill, S., & Wheal, R. (2016). An income-based analysis of the value premise for property energy performance. Energy , 106, 162-169.
Salzman, D., & Zwinkels, R. (2017). Behavioral Real Estate. Journal of Real Estate Literature , 25 (1), 77-106.
Vuuren, D. (2017). "Modified sales comparison method: valuing under (un)certainty". Journal of Property Investment & Finance , 35 (1), 101-110.
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