Valuation Level 3 Flashcards
what considerations did you include when undertaking a sensitivity analysis on the gross development value of the Lancaster site?
I considered multiple factors such as and not limited to, fluctuating interest rates and also fluctuating costs in materials.
What did you include in your residual valuation?
I calculated the various costs of the development and the profit required.
What interest rates did you apply and how did you determine their rate?
What advice did you provide the client based on market analysis and risk?
I explained that even though there has been a reduced demand around the area, the location of the site should ensure demand. I also advised that the changing of interest rates its causing more costs in terms of financing and therefore people are willing to pay less for sites.
What advice did you provide to your client on their potential for conversion to residential use and what did you base that advice on.
I advised that to convert the property to residential use would be possible but that it would be uneconomical, I advised this based upon costing data.
How did you determine the void period to use in the office unit valuation?
I contacted local commercial agents to enquire about what a common void period is in the locality.
How did you adjust the market rent for the specification
I examined comparable properties in the area, if they were the same specification and locality then no adjustment was required. However what confirmed the market rent was properties of an inferior location but same specification having a market rent.
Purpose built Community centre West Yorkshire - What percentage did you apply for Fees? Why?
5%, the site was rather small and simple, minimal fees were suitable.
How would you value an overrented property?
Establish market rent. Multiply the market rent by YP into perpetuity, multiply the remainder by the YP for the remaining term of the lease as this is on the strength of the lease covenant.
What would you change if the overrented property had a poor covenant?
Apply a higher yield and a much higher yield to the ‘froth’.
What would you change if the overrented property had a long lease?
value as per normal overrented property, slightly less yield as its less risky, calculate net initial yield at the end for a stand back and look.
What would you change if the overrented property had a break clause?
value the froth until the break clause as opposed to the end of the lease.
