MMP311 Trimester 2: Literature Review on Heritage Property Valuation

This literature review examines the valuation of heritage properties, particularly in Australia, exploring the unique challenges and methodologies involved. The study begins with an executive summary and table of contents, followed by an introduction that defines specialized and heritage buildings, emphasizing their architectural, artistic, and cultural significance. It then details the heritage sites of Australia, categorized by UNESCO, and lists properties maintained by the Australian Department of the Environment and Energy. The review highlights the advantages of heritage listings, including preservation, tourism, research, and community benefits. It discusses property valuation, legal constraints, and the responsibilities of valuers, outlining various valuation methods such as comparison, profits, residual, contractor, and investment approaches. The review also delves into valuation research, findings, and considerations for evaluating heritage properties, concluding with limitations and a summary of the key insights. The paper provides a comprehensive overview of heritage property valuation, including legal aspects, valuation methods, and market analysis.

Running Head: LITERATURE REVIEW
PROPERTY VALUATION OF HERITAGE PROPERTIES
Name of the Student
Name of the University
Author’s Note

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EXECUTIVE SUMMARY:
The thesis has been presented within the framework of the surveys and assessment data
of all the heritage properties, including the specialized and some of the heritage indigenous
properties and buildings. The aim of the study is to extract the valuation process and implement
these procedures to assess the market worth of the heritage buildings in Australia. The purpose of
this study shall serve the purpose if detailed learning and understanding of the legal principles
related to the heritage buildings and its application in due course of time depending upon the
facts and circumstances of each case. The study gives a detailed information about the heritage
sites and its valuation principles. The study also gives an insight on the comparison between
different valuation reviews and their findings. Thus, the purpose of the study is to review the
structure and methodology of valuation of heritage properties and provide detailed thesis on the
same.

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Table of Contents
EXECUTIVE SUMMARY:............................................................................................................1
INTRODUCTION:..........................................................................................................................4
HERITAGE SITES OF AUSTRALIA:...........................................................................................5
HERITAGE LISTING AND ITS ADVANTAGES:.......................................................................7
 Preserving and Conserving...................................................................................................8
 Tourist attraction...................................................................................................................8
 Heritage Research.................................................................................................................8
 Community Gratification and Dignity of Location..............................................................9
PROPERTY VALUATION:...........................................................................................................9
LIMITATION ON DEVELOPMENT:.........................................................................................10
VALUERS RESPONSIBILITY:...................................................................................................10
METHODS OF VALUATION:....................................................................................................11
 Comparison.........................................................................................................................11
 Profits:.................................................................................................................................11
 Residual..............................................................................................................................11
 Contractors..........................................................................................................................12
 Investment...........................................................................................................................12
VALUATION RESEARCH:.........................................................................................................12
THE OUTCOMES OF FINDINGS:..............................................................................................14

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CONSIDERATIONS WHILE EVALUATING HERITAGE PROPERTY:................................15
LIMITATIONS TO RESEARCH:................................................................................................15
CONCLUSION:............................................................................................................................16
REFERENCES:.............................................................................................................................17

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INTRODUCTION:
Specialized buildings is the broad spectrum under which all the buildings that have been
constructed for a specific reason or usage has been included, including the government buildings
and the heritage buildings that were once constructed for specific use of the ancestors.
Therefore, the estimation of property refers to the slit designed in the figures of sales, which have
comparable values. As opined by French (2004, pp. 534), specialized property has been
described as the property whose market value cannot be compared with other assets of same
character located within the similar locality.
Heritage buildings are type of specialized buildings whose nature is characterized by the
possession of merit based on architectural design, artistic, heritage or culture. A building is
designated within the list of a heritage building by the Planning Authority or Heritage
Conservative Community or any other Authority having such competence and jurisdiction to
declare and designate a property as a heritage property. Such designation is determined on the
basis of effective comparison among other buildings within the same location. The terminology
“heritage” means natural places which has been constructed by indigenous people evolved within
the framework of their historical and cultural sphere with all the moveable and immovable assets
in hand. In Gilbert (VO) vs. S Hickindbottom & Sons Ltd [1956], the hereditament of the
property has been explained by the court as the underlying principle. The principle states that if
there are multiple properties more than one, possessing similar character of business, service or
area, they shall be considered as a type of single category for heritance. This theory for
hereditament that the assets possessing similar nature and character shall be treated as a single
hereditament.

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HERITAGE SITES OF AUSTRALIA:
According to the UNESCO Declaration of Heritage Sites (Centre, 2019), Australian
properties can be divided into following categories:
The Cultural sites include:
 Australian Convict Sites (2010)
 Budj Bim Cultural Landscape (2019)
 Royal Exhibition Building and Carlton Gardens (2004)
 Sydney House Opera (2007)
 Natural:
The Natural sites include:
 Australian Fossil Mammal Sites (Riversleigh/ Naracoorte) (1994)
 Fraser Island (1992)
 Gondwana Rainforests of Australia (1996, 1994)
 The Great Barrier reef (1981)
 Greater Blue Mountains Area (2000)
 Heard and McDonald Islands (1997)
 Lord Howe Island Group (1982)
 Macquarie Island (1997)
 Ningaloo Coast (2000)
 Purnululu National Park (2003)
 Shark Bay, Western Australia (1991)
 Wet Tropics of Queensland (1988)

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Mixed:
The Mixed Sites include:
 Kakadu National Park (1981, 1987, 1992)
 Tasmanian Wilderness (1982, 1989)
 Uluru-Kata Tjuta National Park (1987, 1994)
 Willandra Lakes Region (1981)
On the contrary, the Australian Department of the Environment and Energy (Department of
the Environment and Energy, 2019) has listed following properties in its Heritage List which is
maintained by the department:
 Abbotsford Convent
 Adelaide Park lands and City Layout
 Australian Academy of Science Building
 Australian Cornish Mining Sites
 Australian Fossil Mining Sites
 Bondi Beach
 Brickendon Estate
 Cascades Female Factory
 Castlemaine Diggings National Heritage Park
 Centennial Park
 Cheetup Rock Shelter
 Coal Mines Historic Site
 Coranderrk

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 Dinosaur Stampede National Monument
 Darlington Probation Station
 Elizabeth Springs
 Fitzgerald River national Park
 Eureka Stockade Gardens
 Fraser Island
 Jordan River Levee
 Lesueur National Park, and so on
HERITAGE LISTING AND ITS ADVANTAGES:
Heritage Listings are the complete certification of the buildings possessing cultural and
historical value. Generally, the listings include a certain group of buildings. However, it can
comprise various other assets as well. Governments, Subsidiaries, or private institutions that are
entrusted with the authorization to design the listings as an official record are responsible for the
incorporation and maintenance of Heritage Lists. There are formal legislations and regulations
for designing lists various authorities have been appointed in various countries for the proper
evaluation of these lists.
The record of these listings ensure a transparent opinion for the characterization of
buildings along with its paleopathology, cultural or heritage value. These lists also promote
public awareness for the recognition of these buildings that have been neglected for a long
period. The lists also allows the auditors to assess the market estimation of a property effectively
taking onto account their specialized or the heritage value in the locality. Listings are the

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documents which contains all the relevant details of the property including its specifications like
its importance, management and its maintenance.
Following are the advantages of listings:
 Preserving and Conserving: the listing provides burden on the significance of earlier
happenings and the heritage properties play a vital role in preserving history as a
protected property and the government has issued guidelines to preserve, conserve and
maintain them. The protection and sustainability regulation is mostly the outcome of the
evaluation of preliminary data extracted from the record.
 Tourist attraction: tourists are hugely attracted to the heritage properties and industry
is the aspiring one that allows incoming of foreign currency as well as course of money
with no huge expenditure incurred by the country like construction of aesthetical places.
These tourist attraction places become worldwide landmarks and are well-known for their
character like holy places meant for worship, palaces, places of aesthetics and so on.
However, it can be understood that the industry of tourism is still thriving and has
contributed largely to the regional fiscal development and therefore, listings ensure
conservation of these buildings and make efforts for their maintenance to make them
attractive and accessible for tourists.
 Heritage Research: certification of historical properties allows the paleopathological
team and its effort to explore the properties, which are underexplored or unexplored. This
paves way for the various exploration activities like excavation and evaluation of the
properties to determine the activities and its effects along with the archeological
valuation. In addition, these efforts help in the determination of history and its
conservation.

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 Community Gratification and Dignity of Location: it is a subjective factor
depending upon the feelings of the people yet it is a significant factor meaning the
heritage places develop a feeling of gratification within the hearts of the people with
respect to the appreciation of the property located in their locality.
PROPERTY VALUATION:
There are many State Legislations, which have been incorporated to increase the scope of
conservation of heritage properties. Heritage Buildings protection Act 1990 introduced a
provision for the incorporation of an provisional register to list the title of heritage properties.
However, another statute known as Queensland Heritage Register 1992, which acknowledges
1300 assets as the part of heritage assets and expressed specific provision for the prior approvals
for actions affecting these properties like demolition, excavation, addition of paintings, painting
the building or any change that may affect the appearance of the building, soon replaced this
legislation. The statute has also laid down the provision for the extension of procedure for
injunction and interim listings for the directive of action on these assets.
On the other hand, State Register listings also bestows certain benefits like tax deductions
and reduced tax for the effort and expenditure made for the sustainable development of these
assets approved by authority.
Town planning schemes were introduced by Queensland to impose statutory constraints
on heritage places. Initially, these restrictions had formed the ground for statutory considerations
for the conservation of places, which are not designated. These restrictions were further
implemented on the procedure for making decisions. Such restrictions were identified and
implemented as the Town plan for the City of Brisbane and other planning agendas, in 1978.

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However, in 1989, the Town Plan underwent some major changes to adapt Heritage List or the
Table to maintain Heritage Properties, which constituted for 90 properties situated within the
locality of central location for business. If these places are demolished without prior permission
of the competent authority, strict penalties shall be imposed along with compensation. these
provisions were added along with other development rights.
LIMITATION ON DEVELOPMENT:
Heritage properties are subject to the statutory constraints on their alteration and
development that may interfere with the physical appearance of the work. However, such
constraints depend upon the nature of task, which may be allowed with the prior permission from
the authority. Concessions and incentives proposed by the listing agency neutralizes these
constraints. However, as every coin has two sides, even the constraints are subject to restrictions.
VALUERS RESPONSIBILITY:
It is the duty of the asset valuers to assess the valuation of property and provide skilled
suggestions on context of litigation. These valuers are identified by the courts as the subject
specialists and resourced people to interpret the price of the building and provide relevant
suggestions. They collect data from various sources to evaluate and compare them for market
valuation. Therefore, it can be understood that valuation is a process of collection of data and
evaluating it for the estimation of the trade value and the prospective selling price of the property
on a specified date in accordance with the market circumstances and economic stability. The
valuation also serves the purpose for assessment of the lease price or the rentals for the property
with reference to its taxation, accounting, settlement and others. Therefore, the procedure of

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estimation is a very complex process involving further processes for review, analyze and
assessment of data.
As opine by French (2004, pp538), it can be understood that valuation of property
involves utilization of data through secondary sources and compare them with data of other
properties depending upon the market estimation of the property. He has then stated that the
estimation of specialized properties is based on the assumption that the property would carry on
to be utilized the way it is continued to be in usage in the current situation.
METHODS OF VALUATION:
There are five main methods to valuate a property:
 Comparison: Assuming the stability of the market and comparable sales of similar
properties, the comparison method is most effective to bring out the value of a property.
This method is most useful for common properties like houses, shops, and so on.
 Profits: The profit method assesses the value of a property by evaluating the profit and
deducting the expenses except the rental amount giving the residue as the divisible
balance. This balance is then divided between the landlord and the tenant. It is mostly
common for the valuation of pubs, hotels, nursing homes and so on.
 Residual: The residual method is used to value a land or property with the potential for
redevelopment. The gross development is deducted from the cost of development along
with the cost of the developer and the residual amount is the actual money that the
developer can use for the development of the land or property. However, the method
becomes challenging due to inaccuracy of data.

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 Contractors: The contractors method is used when the property has a specialized
character owing to its nature, design or history, resulting in no market transaction of the
property. This method calculates the cost of implementation of modern techniques and
amenities to the property along with the restoration costs for the specialist nature of the
property. However, this method is considered as the last resort because the method is
unreliable due to the marked assumption is based on demand and supply, and not the
production.
 Investment: The investment method is used to value freehold or leasehold interest of a
property from its ability to generate and earn profits. In this method the transactions of
sale of property which can be compared is analysed to identify revenue. This revenue is
then applied to the prospective rental income which is deducted back to the current value
which is termed as the net present value. This indicates the net worth of the property in
the market.
The contractors method is used for the valuation of heritage and other specialized properties.
VALUATION RESEARCH:
As expressed by D’Arcy, J.A. (1991), the preservation of historic buildings and sites and
the cost implications, it was observed firstly that the average increase in the value of properties
within the areas included under the Melbourne metropolitan Area resulted in 69% while the
properties included in the heritage register presents an average advancement of 36.3% that is
relatively lesser ratio as contrasted to the areas that are metropolitan. However, in further
analysis of metropolitan residential buildings, the relative estimate was noted as 61.6% and the
similar estimation for Heritage Registered Properties amounted in 81%.

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In the second scenario, while evaluating non-metropolitan properties, it can be observed
that the average advancement in the estimation over the time period 1986-1989 resulted in 58.6%
while the similar evaluation was processed for Historic Buildings Register and it resulted in
38.9%. However, 42.3% was valued in residential properties constructed in non-metropolitan
areas while the evaluation for Historic Buildings register amounted to 42.9%. the valuation was
marginally differed on the advanced side.
While evaluating a property, it can be explained that the implication of registration of
heritage places has affirming effect over one category whereas the second category had no
changes and the third category had obstructive implication. However, in situations involving
specialized properties also the effect was found obstructive.
According to Investment property Databank (IPD) (2000), the investment performance of
listed office buildings, we can be inferred that the Royal Institutions and different listed office
buildings were able to produce good fiscal returns and in particular, more than one buildings.
The survey involves the founding portfolios of 240 places. One-third of surveyed institutions are
workplace sector while only 10% are from the group of the buildings which are listed and
further, their estimate has been contrasted with the unlisted analogue of such property. The
outcomes were evaluated and therefore, it can be assessed that the listed properties had higher
affirming effect than the unlisted office buildings as expressed above.
THE OUTCOMES OF FINDINGS:
 The nature of heritage restrictions: the nature of the history should not be subjective in
nature instead it should follow prescriptive methodology because in such instances,
occurrence of uncertainty may be great. This may result in the high cost to maintain the

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property and repair the gaps. Thus, the property may be value less due to the depreciation
of the market value.
 Limitations: A property always has scope for development and redevelopment subject to
certain situations. However, the regulatory responsible for the control of heritage
properties tend to control the prospect of a property to be developed or renovated. Such
limitation has implications over the valuation of the property and the outcome is to be
incurred by the posessor of the building at the moment of listing. In addition, these
limitations would continue to exist with the asset including the moment of its valuation
compared with the valuation of other various properties of same character located within
the nearby locality.
Therefore, it can be inferred that the study has involved three different types of properties
which are office buildings, properties in Metropolitan area, the residential properties in non-
Metropolitan Area and they are compared with the valuation of the Heritage buildings and hence,
the findings are based on an elaborative study of all the sites. the comparative study is also based
on the valuation of two different time periods to bring out the people’s awareness and
appreciation towards such heritage building which undermines the objectives of the property
valuation.
CONSIDERATIONS WHILE EVALUATING HERITAGE PROPERTY:
According to the Panel report issued in March 2000 on heritage controls, burden should
be entrusted to the fiscal and various different factors while considering the controls on heritage
properties. However, section 6(1)(a) of the Planning and Environment Act 1987 explicitly stated
the underlying aims for planning in Victoria and has provided regulations for organizing to attain

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these objectives. The objectives include providing fair and organized grounds for sustainable use
and up gradation of property, conservation and upliftment of property, which have historical,
cultural, aesthetical and many other significance attached to it, and lastly to effectively balance
the present and future attention of people living within the vicinity of such property.
Section 6(1)(a) of the Act has laid down the principles for planning and execution and
application of the aims mentioned above. It includes the plans constituted by the municipality
planning schemes. It mainly applies the planning agenda on different varieties of nature of land
areas and Heritage Overlay being one of them.
Direct relativity of recognized heritage sites and its area were supported by the fund up to
approximately 25.5million$ provided by Australian Government’s National Environmental
Science Programme. This would take care of the better understandings of the heritage buildings
and their situation in Australia for upcoming future.
LIMITATIONS TO RESEARCH:
There are various limitations to the valuation research which primarily arises from the
price of the property at the current date compared with the price of the property at the previous
date. It can be observed that the property prices have increased drastically due to increase in the
money value and hence, it is virtually impossible to isolate one factor from the other which
affects the valuation of a property. However, the second limitation to the valuation process is that
the study was based on comparative review of property trends. However, the samples were
analyzed on the basis of population of properties and not on the architectural or heritage value of
the property.

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CONCLUSION:
It can be thus, be concluded that the terminology “heritage” is explained as natural and heritage
places with Indigenous Cultural Spheres with possessing both movable and immovable assets.
These properties have been carefully maintained by the Indigenous people to the common man
through the long years of civilization and development. Evaluation of these properties into the
heritage list involves a continuous work of research and exploration. Their recognition and
taking necessary steps to protect and maintain them is both financially and in-kind challenging.
Australian Government has taken consecutive steps to protect and maintain them. One such step
is Community Heritage and Grants program to help these national heritage sites to be protected
and maintained with accurate police implementation and distribution of funding and resources.
The aim of such funds is to upgrade and advance the Australian Heritage Properties and aware
people about its interpretation and appreciation, which in turn would attract tourists including
local and foreigners.

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