Advanced Property Valuation: Specialized Property Literature Review

This report presents a comprehensive literature review on specialized property valuation, with a specific focus on heritage buildings in Australia. The study begins with an executive summary, which highlights the thesis's core objective of analyzing valuation processes, especially concerning heritage buildings. It then introduces the concept of specialized properties, differentiating them from standard properties and emphasizing the challenges in their valuation due to limited market data. The report explores the Australian heritage landscape, categorizing UNESCO heritage sites and listing sites from the Australian Department of the Environment and Energy. It discusses the benefits of heritage listings, including preservation, tourism, heritage research, and community pride. The report delves into property valuation, statutory restrictions, and the role of valuers. It examines valuation review studies, contrasting the value increases of heritage-listed properties with those of non-heritage properties, and explores the investment performance of listed office buildings. The findings are categorized into themes, including the character of heritage control and the constraints of development, offering a detailed overview of valuation approaches for specialized property.

Running Head: SPECIALIZED PROPERTY
LITEATURE REVIEW OF SPECIALIZED PROPERTY
Name of the Student
Name of the University
Author’s Note

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Executive Summary:
The thesis is the extraction of surveys and valuation related data of all the specialized
buildings. However, the study deals in detail with the heritage buildings and its valuation. The
aim of the thesis is to bring out the processes of valuation and apply these processes to value the
heritage buildings in Australia. The purpose of this study will serve the in-depth understanding
of the valuation processes and its application.

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INTRODUCTION:
Australia has a rich natural and cultural heritage that justifies our sense of place and national
identity and makes a positive contribution to nation’s wellbeing.
Specialized buildings are those buildings, which have been built for a particular purpose
or use, which involves particularly many government buildings. The valuation of such buildings
is processed by a gap created in the comparable sales. According to French (2004, pp534),
specialized property is explained as the type of property where the market information is not
sufficient to assess it by way of comparing it with other properties with similar nature within the
same vicinity.
Heritage buildings on the other hand, mean a building, which possesses values of
architecture, aesthetic, history or culture. The term “heritage” implies natural and historical
places with Indigenous cultural domains with movable and immovable properties in possession.
The Planning Authority or Heritage Conservative Community or any other Authority having
competence for such declaration and jurisdiction depending upon the location of that building
designates such building as a heritage building. In Gilbert (VO) vs. S Hickindbottom & Sons Ltd
[1956], the founding principle was laid down as when there are two or more properties within the
same trade, occupation or curtilage, they are treated as a form of a single hereditament for the
purpose of rating and valuation. In other words, it can be explained that the properties of the
similar nature or character, engaged in similar trade or occupation shall be dealt alike as a form
of single hereditament.

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HERITAGE SITES OF AUSTRALIA:
The UNESCO Declaration of Heritage Sites ((Centre, 2019)) in Australia can be
categorized as:
Cultural:
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)

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 Shark Bay, Western Australia (1991)
 Wet Tropics of Queensland (1988)
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)
As per the Australian Department of the Environment and Energy (Department of the
Environment and Energy, 2019), the Heritage List states following sites:
 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

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 Coranderrk
 Dinosaur Stampede National Monument
 Darlington Probation Station
 Elizabeth Springs
 Fitzgerald River national Park
 Eureka Stockade Gardens
 Fraser Island
 Jordan River Levee
 Lesueur National Park
 Glass House Mountains National landscape
 Great Barrier Reef
 Great Ocean Road
 Greater Blue Mountains
 High Court of Australia (former), and so on
HERITAGE LISTING AND ITS BENEFITS:
Heritage Listings are the documentation of the properties, which possesses value of
history or culture. Generally and predominantly, these listings are buildings or batch of buildings
but it can include other properties as well. These lists are incorporated and maintained by the
national governments, agencies, or by organizations that are privately entrusted the licensing to
create listings of properties. Various countries have formal laws and legal principles for such
listings and the authorities are formed for its scrutiny.

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These documents or the listings provide a clear view for the archeological, cultural or
historical purposes and it helps in raising awareness among the people for the appreciation of
these places which have been ignored for long times. They also enable planners and auditors in
assessing the market value of such buildings depending upon the heritage or specialized value of
such properties. Listings include specifications about the property like its significance, regulation
and its management.
There are four benefits of listings, which are:
 Preservation and Conservation: it means that the listings of the heritage property
provides emphasis on the importance of history and the historical buildings play a pivotal
role of preserving the rich history of as an asset and provides guidelines on the attempts
to preserve and conserve them. The preservation and conservation management, in many
cases, is developed by using initial data from the listings.
 Tourism: Heritage is a huge attraction for tourists and tourism is the budding industry
that allows free flow of money and income into a country with no major expenses. Also,
these tourist attractions become famous landmarks like places of worship, or palaces or
places of décor. However, the tourism industry is still growing and contributes majorly to
the local economy and hence, listings help in preservation of these heritage properties and
make them available for tourist attractions.
 Heritage Research: documentation of historical assets ensures the archeological
department and its research scholars that history is underexplored. This gives them a
platform for excavation, evaluation, determining the building projects and its impact, and
archeological valuation. Assets, which are not well known and yet documented in the

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listings, they can be made available for exploration and hence determining the history and
heritage of communities and cities.
 Community Pride and Sense of Place: it is subjective yet an important benefit of
listings of heritage places. It means that the places, which are documented as heritage
places, imbibe a sense of pride among the people living in close vicinity of the place and
deeply roots the sense of place in them.
PROPERTY VALUATION:
There have been statutory restrictions on heritage places and they were introduced in
Queensland by the way of town planning schemes. At the beginning, these controls were
imposed as statutory considerations in order to preserve undesignated places, which were further
applied in the decision-making procedure. In 1978, these controls were recognized and enforced
as Town Plan for City of Brisbane and other planning schemes. However, in 1989, the Town
plan was amended to revise and update Table of Heritage Places, which consisted of
approximately 90 places, located within the vicinity of central district for business. In case of
demotion of these places, strict penalties were imposed and measures for compensation were
incorporated like development rights, which can be transferred.
Various State Legislations were enacted to broaden the scope of heritage conservation.
Heritage Buildings protection Act 1990 is one such legislation, which introduced an interim
register, which would record the names of places that are protected under the Act. This
legislation was soon replaced by another enactment in 1992 called Queensland Heritage Act.
This legislation recognized 1300 properties as the heritage properties in Queensland Heritage
Register and laid down procedures for requirement of prior approval for tasks like demotion,

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alteration or addition like paintings to such properties that would change the physical appearance
of such buildings. However, it is also stated that processes of injunctions and provisional listings
can be extended for the regulation of work on these heritage properties. The other legislations are
effort for the protection of heritage sites including the indigenous people and their land, property
and sites are the Aboriginal and Torres Strait Islander heritage Protection Act 1984, Native Title
Act 1993, and so on.
State Register listings also confers some benefits like reduced rates, land tax and tax
deductions for the expenditure on conservation of these properties, approved by the authority.
CONSTRAINTS ON DEVELOPMENT:
If a property is incorporated in the Heritage Register, it is evident that it brings certain
constraints with it over the character of work that may be permitted with respect to the property.
These constraints may get neutralized by way of concessions and other incentives as offered by
the listing agency. However, these concessions are not absolute. Nevertheless, as a general
perception goes that once a property is incorporated as the heritage property, the value of the
property would reduce.
WHAT VALUERS DO:
The property valuers assess the value of a property, provide expert advice on matters
pertaining to litigation and are recognized by courts has the subject matter experts of the property
market interpretation. They also gather property information and eventually analyze them to
evaluate the value of properties that can be compared to each other. Hence, valuation is the
evaluation and assessment of the market price of a property and the price in which that property

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can be sold on a particular date, given the market conditions and the property value remains
constant. The purpose of valuation also extends in setting lease value of such property, asset
accounting and its management, taxation assessment, settlement of property, and so on. Thus, the
process of valuation is a complex process which involves continuous reviewing of data and
analysis of developments and alterations made in the property market.
According to French (2004, pp538) it has been explained that the valuers may utilize the
secondary information from the properties that may be compared and analyze the data with
respect to the circumstances of the market at the current estimation of price of the subject
property. However, this procedure is mostly used for the property valuation of the non-
specialized properties. However, he has further states that the valuation of specialized buildings
is assumed on the fact that the building would continue to be used in the same way as it is being
used now.
VALUATION REVIEW STUDIES:
According to D’Arcy, J.A. (1991) The preservation of historic buildings and sites and the cost
implications, it was found that firstly, the average value increase for all properties within the
Melbourne metropolitan area was 69%whereas the properties incorporated under the heritage
Register showed an average increase of only 36.3% which is relatively low compared to the
metropolitan area. However, in case of metropolitan residential buildings, the average value was
recorded as 61.6% and the same for Historic Buildings Registered properties was 81%.
Secondly, in case of non-metropolitan properties, the average increase in value over the
period 1986-1989 was 58.6% whereas the same was recorded as only 38.9% in case of properties
incorporated under the Historic Buildings Register. However, in the case of residential dwellings

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in the non-metropolitan properties, the value was accorded as 42.3% whereas the same for the
Historic Buildings Register’s properties were 42.9% which is almost identical but marginally on
the higher side.
While evaluation the property valuation assessment, it can be understood that the effect
of Historic registration had positive impact on one category while second was neutral and third
had a negative impact. However, in cases of special properties the impact was found to be
negative.
According to Investment Property Databank (IPD) (2000), the investment performance of
listed office buildings, it can be concluded that the Royal institutions and other listed office
buildings were capable of producing remarkably good financial return, particularly more than the
modern office buildings. This survey is based on 240 portfolios of institutions. A third of these
portfolios are office sector whereas only 10% are the listed buildings and their value has been
compared with their unlisted counterparts. The findings were analyzed and it can be understood
that the listed properties had more positive impact than the unlisted office buildings.
THE THEMES OF FINDINGS:
 The character of the heritage control: The heritage should be not be descriptive in nature
rather it should be prescriptive as in such cases greater uncertainty may occur. This may
involve high maintenance cost and the costs for repair. Hence, the final outcome shall be
the depression of market.
 Constraints: A property can always be developed and redeveloped depending upon the
situations. However, the authorities controlling the heritage properties always control the
potential of a building to be developed or redeveloped. Such constraint has an impact

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over the building and its value assessment until the listing of such property and such
negative is borne by the owner of the property at the time of listing. Further, these
constraints would remain with the property even at the time of its value assessment
comparison with other properties of similar nature location within the same vicinity.
CONSIDERATIONS WHILE ASSESSING HERITAGE PROPERTY:
According to the March 2000 Panel Report on heritage controls, weight should be given
to economic and other factors while considering heritage controls. However, Section 6(1)(a) of
the Planning & Environment Act 1987 had laid down objectives for planning in Victoria and has
incorporated framework for planning to achieve these objectives. These objectives include
firstly, to provide fair, and systematic grounds for the economic and sustainable utilization and
development of property. Secondly, conservation and enhancement of buildings, areas and places
which have aesthetic, cultural, scientific, architectural, or historical values attached to the
property. Thirdly, effectively balancing the present and the future interests of all the people
living in the area.
The principle planning instrument for execution and application of the objectives laid
down under section 6(1)(a) of the Act includes the schemes incorporated by the municipal
planning schemes. The scheme majorly implements the planning framework on different types of
land zones and controls and Heritage Overlay being one of them.
The Australian Government’s National Environmental Science Programme provided fun
of up to 25.5million$ per year for the year 2015-2021 to support the direct relevancy of
identified heritage sites and its surroundings. This in turn would provide better understanding of
the situation of the heritage properties in Australia for future.

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CONCLUSION:
Australia has a rich natural and cultural heritage that justify our sense of place and
national identity and makes a positive contribution to nation’s wellbeing. Thus, it can be
concluded that the term “heritage” implies natural and historical places with Indigenous cultural
domains with movable and immovable properties in possession. The indigenous owners to the
modern man delicately maintain these sites for long years. The assessment of these places and
their incorporation in the Heritage Registration List is a continuous effort. The opportunities for
their identification and support for their protection and management of these protected sites are
both financially or in-kind challenging. Identification of a site may be challenging there are
various opportunities to involve broader community in its identification by way of various
sources of data. The Australian Government in the form of Community Heritage and Grants
program to help National Heritage with the policy implementation and group awareness
programs within the Australian Community has provided numerous funding. This funding aim to
improve the understanding and appreciation of many Australian heritage properties to attract
Australian as well the international tourists.

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REFERENCES:
Armitage, L. and Irons, J., 2005, June. Managing cultural heritage: heritage listing and property
value. In European Real Estate Society Conference.
Centre, U. (2019). Australia - UNESCO World Heritage Centre. [online] Whc.unesco.org.
Available at: https://whc.unesco.org/en/statesparties/au [Accessed 5 Aug. 2019].
D’Arcy, J.A. (1991). The preservation of historic buildings and sites and the cost implications.
Melbourne, VIC: Valuer General’s Office.
Department of the Environment and Energy. (2019). Department of the Environment and
Energy. [online] Available at: https://www.environment.gov.au/heritage/places/national-
heritage-list [Accessed 5 Aug. 2019].
Environment.gov.au. (2019). [online] Available at:
http://www.environment.gov.au/system/files/resources/cb226e0d-ba51-4946-af5a-
24b628958e79/files/australian-heritage-strategy-2015.pdf [Accessed 5 Aug. 2019].
French N 2004 Journal of Property Investment and Finance 22(6):533-541
Gilbert (VO) vs. S Hickinsbottom and Sons Ltd [1956]
Investment Property Databank. (2000). The investment performance of listed office buildings.
London: RICS.
Property and land titles. (2019). The valuation profession. [online] Available at:
https://www.propertyandlandtitles.vic.gov.au/valuation/the-valuation-profession [Accessed 5
Aug. 2019].

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Whittlesea.vic.gov.au. (2019). [online] Available at:
https://www.whittlesea.vic.gov.au/media/1758/city-of-whittlesea-heritage-study-impact-of-the-
heritage-overlay-on-housing-prices.pdf [Accessed 5 Aug. 2019].