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Comparison of Valuation Methodologies for Two Different Properties

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Added on  2023/06/18

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This report compares the valuation methodologies used for two different properties and provides a critique of the contents of each report. It also includes a comparable analysis and recommendations for future valuations.

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COMMERCIAL
VALUATION

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. PURPOSE AND DEFINITION...................................................................................................3
1.1 Report of RETAIL BANKING CHAMBER at Mona Vale Road.........................................3
1.2 Report of BEING LOT 1 IN STRATA PLAN 564212 at Point Piper..................................4
2. CRITIQUE OF THE CONTENTS OF EACH REPORT............................................................5
2.1 Valuation methodology..........................................................................................................5
2.2 Similarity................................................................................................................................6
3. COMPARABLE ANALYSIS.....................................................................................................6
3.1 Report of Mona Vale:............................................................................................................6
3.2 Report of Point pipe...............................................................................................................7
4. CONCLUSION...........................................................................................................................7
5. RECOMMENDATIONS.............................................................................................................8
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INTRODUCTION
Valuation of property enable the determination of exact value of the land that would help to
make the decision. It is an important aspect with which the land is being valued with the
consideration towards various factors including market, nearby location and property. This report
will discuss about the comparison of valuation of two different properties along with some
different valuation methodologies. Likewise, a critique analysis of the valuation methods and
other aspects adopted in the report will also be discussed in the report.
MAIN BODY
1. PURPOSE AND DEFINITION
1.1 Report of RETAIL BANKING CHAMBER at Mona Vale Road
The main purpose of valuation of the property is related with the aspect of valuation of property.
With regard to the valuation of property at Mona Vale the main focus is being lied over the size,
position and condition of the property is given. In the same way with the valuation of property at
Mona Vale Road, the rental values as well as market value is being ascertained.
Its purpose may6 also include is to determine the exact and accurate value of the property while
making a comparison with other property located in the same area. With this comparison and a
focus over the aspect of size along with quality of location, parking facility, presentation of
premises and various others the real value of the Rental banking chamber is undergoing to be
ascertained.
Current market rental:
As per the definition of International Valuations Standards Committee it is the best possible rent
that is expected at the date of valuation with an assumption that there is a willingly interaction
between a lessee and lessor in an arm length transaction. This is being done after proper
marketing and the parties acted without any compulsion and there must be wilfulness and
adequate knowledge.
Unit of value approach:
It is the net rental $/sqm p.a.
Premises:
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It can be represented as the whole of land or the building.
Measurement area:
According to the definition of Gross Lettable Area – Retail the area of the premises is measured
from the internal finished surface of the dominant portion of external building walls. However,
under this definition toilets, cupboards, stairs, tearooms and other listed facilities are excluded.
However contrary to this as per the definition of BOMA (1997) staff facilities including toilets
and tea room must be must be included under ground floor measurement.
1.2 Report of BEING LOT 1 IN STRATA PLAN 564212 at Point Piper
The main purpose behind the conduction of valuation of this property is related with the
ascertainment of the current fair market value of the premises with respect to the statuary
purpose. This means through the valuation of the this report the fair market value of the premises
would be determined. It is to be noted that the valuation with respect to this property and
premises is not related and subject to mortgage security purpose. While making an analysis of
the market value of the property a focus over the aspect of size, condition and position of the
property is being given. This means that as per this valuation report the subject matter is lied near
these aspects that the value of the property is being differ with the occurrence of changes in these
aspects.
Market value:
As per International Valuations Standards Committee (IVSC) market value refers to the best
price under which interest in the property is valued and might be sold at the time of valuation. As
per this definition there is an assumption that there must be an interaction between the willing
buyer and willing seller in the arm length transaction. It is to be noted that it must be taken place
after proper marketing under which the parties act knowledgeably, prudently and without the
presence of any compulsion.
Accepted standards of value:
It refers to the expect value that would be expected with regard to the property. It is an
important aspect with regard to the valuation of the property. This means that it is being
determined after making an analysis of the market and other available and nearby property.
Through this standard the valuation of the property along with its comparison i.e. actual to the

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standard would be performed so that the most suitable and appropriate value of the property
would be determined.
2. CRITIQUE OF THE CONTENTS OF EACH REPORT
Along with the valuation of property with the implication of various methodology and
aspects, it would be critically states that in the report of Point piper although a focus over the
aspect of position, market and value is being given along with various other but while compared
it with the report of Mona vale various other aspects are missing. This mainly includes Site
contamination report, zoning, epitome of the lease and other aspect. In the same manner if the
capitalization method would be implemented in the report of Point piper then it would be easy to
make decision regarding the determination of value of the property. Thus, on a critical note it
would be right to state that if the techniques of capitalization and various other methods and
aspects that are covered under the Mona Vale would be given consideration in the report of Point
piper then it would lead to have better decision making and analysis of the most accurate value
of the property.
2.1 Valuation methodology
The valuation method that is used under the report of Mona Vale is adjusted direct comparison
analysis under which the similar and comparable rental property of the area is determined. While
implementing this method a focus over the aspect of size and quality of location, quality with
regard to improvement, parking area, size, and presentation of the premises are being considered.
This means that all the aspect that are essential that could determine the exact value of the
property are being focussed and considered while valuating the property of the land. In short it
would be right to state that while making a valuation in regard to this property the aspect of size,
condition as well as position of the property is being considered.
However, contrary to this while vaulting the property that is associated at Point Piper
Capitalisation method that is utilising the value approach is being adopted. Unit of value is $/sqm
p.a. In making valuation of this property the main focus is lied over size, condition as well as
position of the property.
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2.2 Similarity
This means that the aspect that are being focussed under the valuation method in both the report
are somewhat similar because under the valuation of both the property the central focus point is
the size, position and location is considered. With the consideration over these aspects the most
appropriate value of the property is being outlined. This is counted as one of the major similarity
because both the valuation report are considered and focussed over this aspect.
3. COMPARABLE ANALYSIS
3.1 Report of Mona Vale:
While valuating the property, the method of comparable rental analysis is adopted. Under
this analysis a comparison of Commonwealth Bank, St George Bank, Westpac Bank, Crows Nest
are being compared and accordingly the most appropriate value of the property is being
determined and analysed. While making this comparison it is being analysed that the value of St
George Bank is high in comparison of Crows Nest because of the presence of nearby furniture
shop, food and café district on the adjacent to Mona Vale Road. However, it is also analysed that
the parking for the St George Bank is not easy. In the same way while valuing the Crows Nest it
is analysed that the building is well-connected to traffic and other facilities but there is no
parking facility. Likewise, town water, telephone, electricity and sewerage are different facilities
that are provided to the property.
Moreover, In order to value the Mona Vale, the location at which it is present has been taken
into consideration such as it is located on the eastern side of Mona vale road and there are
number of shops that are located near it. The total land on which Mona Vale is build is also
considered while valuing such as it has been recorded an approximate area of some 404 square
metres. So the current value of land in that particular area has been considered while valuing
actual Mona vale. The method that are used for valuations in context of Mona vale is standard
published by BOMA in 1997. The mona vale is given on lease so it GLAR standard has been
used to measure the same which include measurement from internal furnished surface of external
building walls. In addition to this, the areas that has been considered while measuring is around
244 square metres so $/sqm denotes- net rental dollar per square metre rate.
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Therefore, this method of valuation has considered as it includes all the element to actually
estimate the overall cost such as size, position and condition of the property. So, all standard, the
date at which the property has been purchased helped in valuation of Mona vela. Finally, after
the overall valuations, it was decided that the value of property is around $102,558* per annum
by calendar monthly. In addition to that, instalments of $8,546.50 has been paid in advance.
3.2 Report of Point pipe
On the other hand, Point piper is prestige eastern suburn of Sydney located around some 3.5
kilometre east of Sydney that is close to all facilities and services. There are two retail business
operating in the premium having same entry gate so for the valuation only one lease is
considered as single shop. Such as, in context of Point pipe, the main or prime method that is
used for valuation is capitalisation method i.e. utilising a unit of value approach- $/sqm p.a.
Rental. At the same time, it can be stated that in recent scenario, CPI is not favourable method of
review commercial rent that need to be charged as there is low inflation in context of fixed annual
review term of 5-6%.
The market areas in which the Point pipe is build have been observed in increase of 5% per
annum and it is expected to rise in future scenario. Likewise, since two years, it has been noticed
that the retail rents in the areas have more growth as compared to capital value growth of the
most properties. Along with that the point pipe is situated at good location with a good flow of
traffic, better parking and other facilities so that people can easily reside. Apart from this all site
contamination status has also been considered so it has been observed that there has no such
contamination issues such as build storage of chemical, ground tank neither in current or past. So
it has been observed that as per the guideline given by council and health, all the wastage has
effectively collected and removed that helps in understanding that the property has well managed
and valuations can be easily done.
4. CONCLUSION
From the above report it can be concluded that valuation of the property enables the exact
and adequate value of the property. In the same way it is also understood that with the valuation
of property the consideration towards size, position and location is being given. Likewise, it is

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also understood that with the implication of most appropriate technique in term of valuation
methodology, the property is being valued.
5. RECOMMENDATIONS
Although capitalization and adjusted direct comparison method are being adopted with
regard to property valuation, but in order to determine the most appropriate value of the
property income capitalization method is being recommended. this is because with the
implication of this method the income that can be generated from the rental property
would being determined and best value would be ascertained.
Likewise, it is also recommended that the projected income would be made compared
with the income that could be generated from other rental property. This would lead to
have better analysis of the property along with its valuation.
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