CASE STUDY Flashcards
Why was a Red Book valuation specifically required here?
Red Book valuations are required in scenarios where accuracy, regulatory compliance, and legal certainty are paramount.
They provide a level of rigor and assurance. In this case the client wanted to use the valuation as evidence to acquire the site.
How did you establish your client’s objectives and priorities for your instruction at the outset?
Prior engagement through phone calls and email to understand the objectives. These were set out in our fee proposal and terms of engagement.
Tell me about the RICS guidance you referred to in this instruction?
RICS Valuations - Global Standards 2022
Valuation of Development Property 2019
Did you want to take a in person site visit and what would be the particular value of this?
An in person site visit always has a particular value. I would gain direct observation, however considering the context of the site and purpose of the valuation, it becomes less important.
When would an existing use value be the appropriate approach?
This would be more applicable if there was an existing tenant in the unit.
Also if there was no planning consent.
Tell me about your research on the letting history and the conclusions drawn from this.
The building had been vacant for 7 year, I had found evidence of the site previously being marketed for an industrial use but it was never let. From this I concluded that there is no demand for an industrial use in this location.
Would there be any restrictions on the consent which might impact value?
Planning condition to require the passivhaus build, having an effect to both cost and values. The planning limited the number of units to 5.
Did you consider planning policy relating to loss of industrial floor space or employment space?
The site was within an area in which residential was an allocated and acceptable use.
Explain the valuation approach felt was justified in this case
It felt appropriate given the nature of the asset. The industrial building was vacant with no demand.
The purpose and intended use of my client was to implement the planning permission for residential development.
Whether any abnormals and how did you account for these?
How did you account for contamination costs?
it had been identified through the client and contractor that some site remediation would be required. An amount for remediation was allowed for within the cost plan. Our T&E stated that we had not examined the detail of this.
What impact did the Passivhaus requirement have if any on your advice? Did you account for this in your comparable analysis?
The Passivhaus requirement had an impact on the value of the properties. I had to make an adjustment to value from my comparable evidence to allow for a premium. I considered published research to establish a premium of around 5-6%
Why do you described the development as ‘community led’?
The company is member led and focuses on local projects in Greater Manchester. The company is not for profit and looks to undertake pilot projects.
What was your process for reporting to the client and were they happy with the outcome?
My report is reviewed and signed off internally by a director who is a registered valuer. We then issue the report to the client in draft form for comments.
Did you report include a development appraisal or RLV? Explain the difference between the two.
The report included a RLV as the valuation was to understand the land value.
Development appraisals are set up to establish the profit of a scheme.
What would you do differently next time?
I would insist on a site visit, and check my comparable by consulting with local agents for any transactions I may have missed.
