Subdivision Case Study 2019- Field Trip Instructions

Instruction

You have been asked to arrive at the market value of the block of land located on the fringe of the Acland Park Subdivision.You are to assume the subject block is currently in an undeveloped ‘paddock’ state comprising one vacant block estimated to be worth $600,000 as a rural residential lifestyle block.The area of the subject site is 4.6 ha in total comprised in one Title.

You have inspected the Subdivision Plan contained in the Resource Consent which allows for a mix of medium and low density residential sections as per the Living “Z” zoning of the site.  You are to value the site based on the plans supplied and as designed to comply with the original Outline Development Plan.  A resource consent has been obtained for site.  It was granted on the 4 August 2019 and cost $103,000 for Council fees and accompanying consultants reports etc.  Resource Consent conditions include a 3 month bulk earthworks shutdown period from 1 June to 31 August each year and a contribution towards the upgrade of the Springston Rolleston Road which has been set at $55,000 plus GST.In addition Development Contributions have been assessed based on each additional H.E.U basis as follows:

-Reserve Contribution $15,000 inc GST

-Water Contribution $ 4,000 inc GST

-Sewer Contribution $10,000 inc GST

-Road Contrabution $2,5000 inc GST

To be deducted from the above is a credit for some reserve land to be given along the road frontage which has been assessed at $200,000.

You are to value the block using the Hypothetical Subdivision Budget, Sales Comparison and DCF methods.Use the expenses provided along with any other assumptions you consider appropriate.  You may assume that there will be 580 metres of new roading. 

You are not required to provide a valuation report but are required to provide your valuation workings/field notes and market research in a coherent and bound hard copy document as well as emailing an electronic copy to the lecturer.

1. Market Analysis and valuations of the individual lots.

2. Sales Comparison Using Block Sales Analysis.

3. Hypothetical Subdivision Budget

4. DCF Analysis of oneblock sale and the subject using monthly cash flows.

5. Reconciliation of Analysis and Methods with clear conclusions as to final value and your reasoning behind your conclusion.

NOTE In valuing this property you are to rely solely on the information supplied by the lecturer supplemented by information gathered on the site visit and publicly available information. Do not approach any real estate agents or other property professionals.  The information supplied is strictly confidential.  All information is realistic if not factually correct.  It has been prepared for student use only and should not be used for any other purpose.  

Note that this assignment will require students to undertake market and sales analysis in the Lincoln and Rolleston Area using private vehicles.  When doing this the utmost care should be taken to exercise care and follow defensive driving strategies.