International Valuation Standards - Case Study Example

Valuation Report Property Address 26 Europa Bend, Sunshine West, Victoria, Australia Date of Valuation 24 March, 2014 Valuating Agency ABC Pty Ltd Table of Contents Table of Contents 2 Executive Summary 3 Land Details 4 Location 5 Scope of Work 6 Purpose of the Report 7 Intended Use of the Report 7 Effective Date and Report Date 7 Identification of the Property 7 History of the Property 8 Area and Market Analysis 8 Area Analysis 8 Market Analysis 9 Neighbourhood Analysis 10 Certification of Valuation 11 Assumptions and Limiting Conditions 11 Qualifications of the Valuer 12 References 12 Valuation of 26 Europa Bend, Sunshine West, Victoria, Australia Prepared for Matricon Executive Summary This executive summary must be read in conjunction and in context of the whole valuation report of which this forms a basic part. All contents, terms, conditions and comments given in the full valuation report are directly related to this Executive Summary. Property Address 26 Europa Bend, Sunshine West, Victoria, Australia Instructing Part ABC Pty Ltd (assumed name) Customer Mr XYZ (assumed name) Property Type Single Detached House Your Reference 11111 (assumed reference) Our Reference 22222 (assumed reference) Instructions The valuation is being done on instructions received on March 10, 2014 from SSPP (assumed name) to ABC Pty Ltd for Matricon Brief Description of Property An extended timber dwelling erected on a 334.35m2 allotment. The dwelling is fitted with high quality fittings and fixtures. The property is north-facing and offers excellent city skyline views from the top eastern balcony and living area of the same level. Related Specifications Land size: 530 m2 Townhouse size: 334.35 m2 Floor plan: Matricon Liberty 42 Zoning Character Residential Area Comments A residential dwelling of high quality in a popular Australian location Date of Inspection March 14, 2014 Date of Valuation March 24, 2014 Land price (includes stamp duty) $250,000 (2010) Townhouse price $420,000 (2012) Improvements $200,000 (2014) Market Valuation $870,000 (approx) Signature of Valuer Land Details The area used to be the site for a golf course earlier. It was bought by Australand following which it sought permission from the government to turn it into a residential area. The land was released to buyers piece by piece by Australand. The site under valuation here was bought by the owner who paid Matricon to construct a house on it. Title Particulars The land is registered in the name of one Yongshun XU of Unit 1, 15 Gordon Avenue, Oakleigh East Vic 3166 Encumbrances It is free from such encumbrances that might prevent its use for residential house construction or that might affect its value. Topography This is an allotment of regular shape, flat surface, slightly elevated from the road height. Services All essential services like gas, telephone, water, electricity and sewerage are connected to the site. Location Europa Bend refers to the road that is next to Sunshine Golf Course, which now forms blocks for residential buildings, and is located in Victoria, Australia. It is 0.57 kilometres end to end; touching Ralph reserve on one end and The Avenue on the other. Sunshine is a Victorian suburb, the distance of which from CBD is around 11-13 kilometres. City of Brimbank is its local government area and 8,838 was its total population as per 2011 census, making it one of Melbourne's low-density suburbs. Situated west of Melbourne, Sunshine forms an important retail destiny of the area since a number of light industrial units are operating from here. Of commercial attraction in Sunshine are Sunshine Marketplace, Sunshine Village Cinemas and Sunshine Plaza. In all it stays as a multicultural hub of date connected to other parts through Sunshine train station, which is categorised as a premium station. Some of well-known attractions are Fun City Family Entertainment Centre, which is next to Ballarat Road’s Harvey Norman, and also includes Formula E Go Karts. The site has a lake on its west side, and a park each on south and east side. Scope of Work The scope of work has been enormous and both onsite and offsite data was required to be collected in order to evaluate the property and compile this report. It involved following tasks, though not in sequential order, to project the valuation in a correct manner. A number of onsite visits were made to the property following the confirmation that the land title was clear and there were no strictures attached to it. The relevant documents were procured and inspected in this regard. The site was checked for all utilities available to it within and outside its precincts. The condition of the utilities was assessed. The property was thoroughly inspected internally and externally. The surroundings were inspected on the Europa Bend stretch and beyond for residential dwellings and an insight into comparability. Thorough online search by keying in several terms like Europa Bend, Sunshine, Sunshine property market, Sunshine rentals, Europa Bend rentals, cost of residential properties on Europa Bend and many more was made. A thorough onsite and online search was made on comparable property prices of the last three years, which included some personal but short conversations with some locals after seeking prior consent. Victorian government website was searched to check laws and regulations about land use in cases as these. Australian Bureau of Statistics (ABS) was searched for relevant data. Purpose of the Report The owner has paid Matricon to build a house on the allotment, so the valuation can be used both by Matricon and the owner should he wish to sell the property at a later date. Intended Use of the Report This report conforms to the International Valuation Standards, keeping in view the instructions from the University. Since no non-disclosure clause has been specified, it can be assumed that this report will be for the sole use of the University, the owner and Matricon. Effective Date and Report Date The effective date of valuation is March 14, 2014 and this report is dated March 24, 2014. Identification of the Property The property is located at 26 Europa Bend, Sunshine West, Victoria, Australia. At present it is a rectangular plot measuring 18m (front-north), 18m (back-south), 30m (side-east) and 30m (side-west). Source: PSMA Australia 2010 The certificate holding the legal description is as this: Volume 11187 Folio 926 Lot 181 on Plan of Subdivision 615540N Created by instrument PS615540N Stage 81, 23/02/2010 History of the Property The most recent history of the property is that the whole area used to be a golf course before Australand bought it. Later it got requisite permissions to turn it into a residential area and sold it piece by piece to different buyers. The current owner purchased it on 15/04/2010 for 250,000 inclusive of the stamp duty. Area and Market Analysis Area Analysis Europa Bend is in Sunshine West and a look at the area reveals a number of things. One thing that is very noticeable is that the side of the Bend on which this site is located is populated but the opposite side, which contains the Andersons Swamp is relatively open. It is on this side that a number of small industrial units are located. Notable few of which are Adventure One, Sheldon Reception and Convention Center, Stones Pastries, Abaris Printing, Macmillan Distribution Services Pty Ltd, Hart Metals, Snap Laverton North, Netafim Australia, page Steel, Outokumpu Pty Ltd, Blackwoods, Independent Distilleries Aust, Baldwin Filters and many more. Source: Google Earth Ralph Reserve and Ainsworth Reserve are in the immediate surroundings of Europa Bend. Sunshine Secondary College Ardeer Campus at a short distance and Shark's Tail Fish and Chippery at an equal distance. Market Analysis The market is bright on the Sunshine and after government allowed use of golf course land for residential construction, the real estate focus turned on this suburb which is on the western side of Melbourne. It is being dubbed as a "growth centre" now as it is expected that development in the area will make housing and job opportunities better. The market analysts believe that huge private and government sector investments in this area, which are considered to be a part of metropolitan planning strategy, are going to provide this battler suburb with new avenues and opportunities. In other words the former industrial heartland is going to be a delivery point of thousands of new knowledge and research jobs. This, in turn, is going to boost the real estate value of the place even more. And when making of new regional rail service that is supposed to touch Sunshine is complete, this suburb will be an innovation and national employment cluster (Dowling, 2013). The expected growth in Sunshine is also of great meaning because it is for the first time in last three decades that Melbourne has begun to grow towards its western side. Previously it has grown only towards south-east and east. The growth elsewhere has been marred by poor connections; for new ones Sunshine has been the most appropriate choice because of its strategic location and rich connections. Ever since the regional rail link project came up, developers have been monitoring developments very closely in Sunshine since they believe it is set for a boom. It has even been dubbed by some of them as next growth hub of Melbourne. The competition is on the rise as new high density projects are being launched and townhouses are much in demand. In fact demand on them is the highest. The demand is uniform through the whole area, and not only in Sunshine West. On a comparative note, Sunshine stands at an advantage than Box Hill because of its proximity to the city (Livingstone and Leader, 2013). Ryder (2014) has a very noteworthy opinion on the market here. He opines that even as Sunshine might not be looking as glamorous as Carlton or Toorak, it is still poised to be a regional hub of metropolitan Melbourne. Other real estate gurus like Jason Allen credit it with a greater affordability as compared to many other suburbs. He states that this affordability comes partly from Metro west upgrades and regional rail link. Developers' and investors' interest is an indication of strong competitiveness that Sunshine is going to witness in the years to come. This can also be linked to mid-year stock levels, which were lower; as a result of which the area is expected to go from strength to strength. Neighbourhood Analysis There are around 20 park reserves in Sunshine West and all fall within the side on which this allotment is located. Notable few of these include Paine Reserve, Gloucester Reserve, P J Lynch Reserve, Charles Bates Reserve, Langshaw reserve, Edwards Reserve, jack Madigan Reserve, Veternas reserve, Angliss Reserve and a few more (WhereIs.com, 2014). Ukranian Catholic Church is another landmark on the western side of Europa Bend. It is around the church that many educational institutions are located. As mentioned above, Sunshine West is a suburb, which is around 11-13 kilometres from Melbourne, and is governed by City of Brimbank. As according to 2011 census this area had a population of 16,743, which is almost double that of Europa Bend alone (ABS, 2012). It is both an industrial and a residential area, bound by Kororoit Creek on its eastern side, Forrest Street on its northern side, Western Ring Road on its western side and Boundary Road on its southern side. It has a curious history that go as back 1920s, a time when Sunshine heights Estate came into existence. The population here is ethnically diverse, with immigrants and refugees from Asia, Europe and the Pacific having made this are their home. Source: Google Earth Certification of Valuation The land price including stamp duty was 250,000 in 2010, townhouse price was 420,000 in 2012 and considering improvements worth 2000,000 will be made this year, it totals 870,000. This improvement figure is arbitrary and can vary subject to the prevailing rates of materials used during improvements. But if this property is compared with other properties on Europa Bend, it can be seen that the price valued is not unrealistic. For example, the estimated price of another allotment just a few yards away i.e. 47, Europa Bend is somewhere from $417,900 to $471,900 as per onthehouse.com.au, one of Victoria's popular land estimation companies (OnTheHouse.com.au, 2014). That plot is 514sqm and presents a for sale history starting 14 March 2013 when it was $480,000 - $520,000. Keeping these figures in view, the valuer certifies as below (AppraisalInstitute.org, nd) To best of our knowledge the statements and figures given in this report are correct. The reported analysis is based on unbiased opinions, conclusions and professional analysis. The valuing firm has no personal interests in the property. Highest levels of professional ethics and standards in application to valuing profession have been followed while preparing this report. Assumptions and Limiting Conditions The estimates of values arrived in this report and also market analysis and other information gives herein must be considered valid for only the date of valuation. All information related to the property provided by the parties concerned, including ones from the government bodies, have been accepted on the face value and without any in-depth verification, so are considered as correct until any objections are raised for which the valuer must not be deemed as responsible. Figurative, statistical, industry and public information have been procured from agencies and sources that the valuer believes are trustworthy with a credible market image. However, the valuer does not take any responsibility on perfection and accuracy of the data/ information that it has obtained. This report is for use only by the concerned parties as long as it is meant for informational purposes only as no guarantees are being provided by the report towards achievability of results. The values reached herein are assumed to be based on current market trends, area analysis and other allied factors prevalent at the moment. Since those are subject to unseen fluctuations in future the values should not be construed as holding true permanently. The report must not be used for any purposes not specified and exchanged between the parties involved. Furthermore the values provided must not be intended as an advice towards investment. It is to be understood by all parties that no part of this report or content herein should be disseminated to anyone falling outside of the agreement or to general public through media, advertising, news media, mail, sales media, public relations, direct transmittal or any other form of communication without prior written approval and consent. All parties involved with this report understand that the report cannot be taken as a basis for a legal action unless all parties have reached any such prior agreement. No change is allowed to be made by anyone other than the valuer if and when required. And the valuer would not be responsible for any unauthorised change made to the report unscrupulously (Aicpa.org, nd). Qualifications of the Valuer Valuer has a proven track record of more than a decade in the field of real estate valuation and holds approved qualifications some of which are listed below: Advanced Diploma of Property Services (Valuation), TAFE Course 17690 Bachelor of Business and Commerce (Property) degree from University of Western Sydney, which includes completion of these units: Valuation of Special Premises (200604, Compulsory Acquisition and Litigation (200606), and Rural Valuation (200605). A Masters in Property and Development (Valuation) from University of New South Wales, and Registration under the Valuers Registration Act 1975, before the repeal of that Act pursuant to Section 8(3)(d) (NSW Government, nd). References AppraisalInstitute.org. (nd). Statement of assumptions and limiting conditions. Available http://www.appraisalinstitute.org/assets/1/7/AI-900.04_Certification_-_Assumptions_and_Limiting_Conditions.pdf. Accessed March 19, 2014. Aicpa.org. (nd). Illustrative List of Assumptions and Limiting Conditions for a Business Valuation. Avaiilable http://www.aicpa.org/InterestAreas/ForensicAndValuation/Resources/Standards/downloadabledocuments/illustrative_list_assumptions.pdf. Accessed March 19, 2014. Australian Bureau of Statistics (2012). "Sunshine West (State Suburb)". 2011 Census QuickStats. Accessed March 19, 2014. Dowling, J. (2013). The future looks bright for 'growth centre' Sunshine. Available http://www.theage.com.au/victoria/the-future-looks-bright-for-growth-centre-sunshine-20130808-2rkr4.html. Accessed March 19, 2014. Livingstone, A and Leader, B. (2013). Sunshine earmarked by developers as a new growth hub in Melbourne's west. Available http://www.heraldsun.com.au/leader/west/sunshine-earmarked-by-developers-as-a-new-growth-hub-in-melbourne8217s-west/story-fngnvmj7-1226730759596. Accessed March 19, 2014. NSW Government. (nd). Fair Trading. Available http://ablis.geometryit.com/resource/NSW/State/AD4336.pdf. Accessed March 19, 2014. OnTheHouse.com.au. (2014). Property Profile Report. Available http://www.onthehouse.com.au/reports/property_profile/11191251/47_Europa_Bend_SUNSHINE_WEST_VIC_3020/. Accessed March 19, 2014. PSMA Australia. (2010). 26 Europa Bend, Sunshine West VIC 3020 Address Information. Available http://www.allhomes.com.au/ah/vic/property-research/26-europa-bend-sunshine-west-vic-3020/201389121511. Accessed March 19, 2014. Ryder, T. (2014). In The best places to invest in property in 2014. Available http://thenewdaily.com.au/money/2014/01/07/taking-property-plunge/. Accessed March 19, 2014. WhereIs.com. (2014). WhereIs. Available http://www.whereis.com/vic/sunshine-west/category-parks-reserves#session=MzI=. Accessed March 19, 2014. Read More