Valuation

Question 1

What part of the International Valuation Standards deals with valuing development property

Answer 1

IVS 410 - Development Property

Question 2

How does IVS 410 define development property?

Answer 2

An interest where;

• redevelopment is required to achieve the highest and best use
• where improvements are either being contemplated or are in progress at the valuation date

Question 3

In accordance with IVS 410 give some examples of development property

Answer 3

• The construction of buildings,
• Previously undeveloped land, which is being provided with infrastructure
• The redevelopment of previously developed land,

Question 4

How does Valuation of Development Property (Oct 2019 - 1st Edition) recommend valuing development property?

Answer 4

Useflow flow chart of the recommended best practice for valuing development property:

1. Instruction (ToE)
2. Investigation (Inspection & market analysis)
3. Data handling, interpretation and application (comps, RLV, sensitivity analysis, verification)
4. Reporting (market value, actual report)

Question 5

What 4 main options does Valuation of Development Property (Oct 2019) say are likely to impact valuation approach and outcome

Answer 5

• Develop
• Develop in phases
• Sell or dispose
• Defer or wait

Question 6

What value does Valuation of Development Property (Oct 2019) suggest valuers use?

Answer 6

Market Value

Refined as:
- ‘the value of the development property assuming optimum development, taking into account current and prospective economic and market circumstances and planning conditions’

This may require special assumptions to be made where the valuation does not assume optimum development

Question 7

How does does Valuation of Development Property (Oct 2019) suggest risk should be accounted for?

Answer 7

Promotes the use of sensitivity analysis to model risk

Question 8

What has been updated between the 2017 and 2020 International Valuation Standards?

Answer 8

Title
- year of publication is no longer included in the title of the standards.

New chapter:
- ‘IVS 220 Non-Financial Liabilities’ as part of the intangible asset standards.

Glossary:
- Updated to include new terms and to provide additional clarifications.

Question 9

How has Valuation of Development Property 2019 been updated from Valuation of Development Land 2008?

Answer 9

2008 was an Information paper

2019 is a Guidance Note

Question 10

How do you report fees on a valuation instruction?

Answer 10

No hourly rates
No undercutting
No colluding

Consider

• Value of asset (relates to PII cover)
• Larger asset = more time to gather info

Question 11

What are the reasons for Valuation?

Answer 11

VPGAs

Financial Reporting
Secured Lending
Real Property Interest

Question 12

How would you assess if an asset was inappropriate for Loan Security?

Answer 12

• Poor marketability
• Condition
• Wasting asset
• Sustainability issues

Question 13

Are you allowed to ask for loan terms when valuing for loan security valuations?

Answer 13

Yes

Question 14

What would you do if your client asked you to change the value

Answer 14

• Ask them to provide evidence to support their view of higher value
• Assess evidence in line with report
• Don’t be influenced by Client as I am an independent valuer