Assessment of Professional Competence: GP Division - Assignment Example

Assessment of Professional Competence: GP Division 1. Introduction This interim report has been prepared in accordance with the requirement of the Rules and Guide to the Assessment of Professional Competence – General Practice Division. It summarizes my professional training and experiences gained from the date of registration to the Assessment of Professional Competence on 17th September 2007. I will be discussing the different aspects of work undertaken, the types of properties, the geographical areas, the techniques involved and the knowledge applied, the responsibilities undertaken and the acquired experiences. I graduated from the University of Hong Kong and obtained the Bachelor of Science in Surveying in 2007. Upon graduation, I joined Knight Frank Petty Limited on July 2007 as a Graduate Surveyor up till this date. During my first year of training, I was given the opportunity to work and rotate between two departments within the company: General Professional Services and Mortgage Valuation Department. The General Professional Services Division dealt with land matters. While working at there it allowed me to have a better understanding on land matters and on a wide range of ordinances. It offered me the opportunity to become involved in lease modification, premium assessment process, urban renewal projects, valuing a wide range of properties, and dealing with land resumption cases. The Mortgage Valuation Department dealt with the valuation for financing/loaning proposes. I gained different valuable working experiences working on different property markets. My duty was to contact the relevant parties: the mortgagor; the mortgagee; the registered owner; the buyer; and, the estate agent; to be able to organize the internal inspection on the properties to be mortgaged. I was also responsible to conduct the valuation of the site, the townhouse, and, the industrial building in addition to preparing different types of valuation reports. 2. Types of work undertaken During the training period, I gained experiences in two departments. These were the General Professional Services Division and the Mortgage Valuation Department. My jobs often involved the following areas: 1. Planning and development; 2. Compulsory Acquisition and Compensation; and, 3. Capital and Rental Valuation of Lands and Buildings. 2.1. Planning and Development I acquired the experience of planning and development through the redevelopment projects, feasibility studies, and, lease modification cases. During the marketing process of development/redevelopment, we expressed our opinions to the landlords and the purchasers on the redevelopment potential and constraints of the subject property including; the modification of government lease conditions, the estimation of land premium upon lease modifications, the procedures of applications to the Town Planning Board for approval of change of use as well as the possibilities of merger of sites, and joint venture development to maximize the potential use of the site. I was involved in many cases, such as, changing the use of the industrial site into offices/commercial composite buildings or under column 2 of the relevant Outline Zoning Plan. The Lease modifications or Section 16 applications to the Town Planning Board were necessary in such cases. Similar to the process of valuation, I had to examine the physical constraints and characteristics of the sites and its surrounding environment. Statutory and non-statutory development controls such as Government Lease, Outline Zoning Plans, Building (Planning) Regulations, Hong Kong Airport (Control of Obstructions) Plans, Hong Kong Planning Standard, and Guidelines with other relevant ordinances or regulations were carefully studied. In some occasions, I needed to consult various professionals, such as: architects, town planners, estate surveyors, and building surveyors regarding the feasibility of such development/redevelopment projects. In the case of Section 16, applications to the Town Planning Board for approval of change of land use under column 2 of the relevant Outline Zoning Plan, I had to advise clients on the possibility, the procedures, the time required for such applications, and the subsequent Section 17 review and Appeal process. In some cases, certain conditions in a government lease limited the development/redevelopment potential of the property. I had to advise clients on the implications of such restrictions and the possible actions to maximize the development potential through lease modifications. Generally, a government lease lists basic terms and other statutory restrictions for the development on the land. The premium required for such lease modification will then be offered by the government. Therefore, I had to advise the client regarding these basic terms and the amount of land premium to be paid on lease modifications by adopting the “Before and After" approach. Having considered the market situation, the site value analysis as well as the planning and financial perspective, the residential use is recommended as the most appropriate alternative use for the site. The site value analysis was mainly conducted by a residual valuation method. 2.2. Compulsory Acquisition and Compensation Since the Urban Renewal Authority (URA) has sped up the pace of urban renewal in Hong Kong, resumption projects are launched each year under the URA Ordinance (Cap 563). During the training period, I was involved in preparing the Home Purchase Allowance (HPA) subject to the occupancy of the flats for the owners in the gazette areas as designated by URA. The HPA for a resumed flat is the difference between the value of a notional replacement flat (the area of the resumed flat multiplied by the notional replacement flat unit rate) and the market value of the resumed flat. It is determined on a district basis and at a standard rate. HPA is the unit rate of a notional replacement flat of 7 years. The notional replacement flat is assumed to be in a comparable quality building, situated in a similar locality in terms of characteristics and accessibility. The notional replacement flat will be situated at the middle floor of a notional building with average orientation, i.e. not facing south or west, and without sea view. I was also assigned to prepare the compensation assessment and format the report for the resumption of the agricultural land in New Territories. Land may only be compulsorily resumed for public purpose by the Government. In assessing the compensation, the grounds and basis of compensation (i.e. heads of claims) should be ascertained. The following aspects should be considered according to the Land Resumption Ordinance (Cap.124): 1. The value of the land resumed and any buildings erected thereon at the date of resumption; 2. The amount of loss or damage suffered due to the severance of the land resumed or any building erected thereon from any other land of the claimant, or building erected thereon, contiguous or adjacent; and, 3. The amount of any costs or remuneration mentioned in sections 6(2A) and 8(4) of the Ordinance. The above considerations are commonly found in most cases where other considerations may also be found on a case by case basis. Generally speaking, I had to study the Land Resumption Ordinance (Cap 124) and the Land Resumption and Compensation in the Urban Area Guidelines for Owners, Occupiers and Surveyors. It is understood that the adjustments on some parameters are arbitrary such as location, accessibility, environment, and quality. Careful study of each comparable would then be very important. Analysis should then be carried out to study such effect on the value of each individual case. 2.3. Capital and Rental Valuation of Land and Buildings Under the supervision of qualified surveyors, I was assigned to prepare valuation reports for the assessment of capital and rental value for different properties including mainly strata-titled properties and en bloc buildings. The purposes of these valuation reports included the: sale and purchase, mortgage, and accounting reviews. Basis and Method of valuation must be determined before the valuation commenced. They were commonly told of the purpose of the valuation. For example, the valuation on Existing Use Value (EUV), Direct Comparison or Investment Method was to be applied while Residual Method was to be applied for the Redevelopment Value (RVD). The procedures in preparing the valuation reports that I have undertaken have been divided into the following stages: 1. Collect and compile the data and background information relating to the subject´s property and similarities, such as: floor plans and land search. Searches from Land Registry for the subject´s property should be made in order to ascertain if it contains any building orders being put onto the property pending release. Much attention should be paid during internal inspection if building orders are found in the Land Register. 2. Analyse the data and comparables. 3. Internal and/or external inspection of the subject property and the comparables; including survey of the surrounding environment and neighbouring developments. The purpose for carrying out an internal inspection is to ascertain whether the property contains any unauthorized building works or illegal structures or checking the status of the repair. It is important whether the property would be disposed of when the liability on such illegal structures would be put onto the purchaser. 4. Evaluate the property through appropriate valuation techniques and prepare valuation reports together with comments and recommendations. Concerning the building land valuation, attention was particularly paid to the assessment of the market value of a building lot with a single ownership with an existing building. Both EUV and RDV would be considered as market value to be determined by the highest value. To arrive to the land value, direct comparison of site/land transaction was adopted. However, when the site/land transaction is insufficient in the market, a residual method will then be used. 3. Types of property and Geographical Areas During my training period year, I have dealt with various types of properties. These are as follows: (i) Residential Properties They include estate-type development such as Taikoo Shing and Laguna Verde, single-block commercial/residential development, Home Ownership Scheme (HOS) development, aged tenement buildings, detached/semi-detached town houses in low density areas such as Stanley and Kowloon Tong. These properties are distributed all over the territory and range from completely new developments to over fifty years of existence. (ii) Commercial Properties They include street shops in addition to shop units in shopping arcades. Some of them are located in busy districts and carrying out active retail business while some of them are located in relatively quiet areas and used as storerooms or workshops. (iii) Office Properties They include mainly high-rise Grade A to Grade C office buildings inside or at the fringe of the Central Business Districts. (iv) Industrial Properties They include mainly en-bloc industrial buildings and industrial/office buildings. They are designated as workshops or storerooms as well as offices. (v) Others I also dealt with a car parking building, a hotel, and a vacant site. 4. Geographical Area Cover There are no definite geographical boundaries to my work. The geographical coverage of properties that I have dealt with is located in the urban areas of Hong Kong Island and Kowloon Peninsula as well as those developing and rural areas of the New Territories. 5. Technical Use The techniques that I have mostly used apply in valuation and redevelopment projects. This includes the comparison method, the investment method, and the residual valuation method. 5.1. Comparison method The Comparative method has long been regarded as the best method of valuation. It involves a comparison between the property to be valued and the sale or rental transactions of similar properties – comparables. It is a basic and reliable method to arrive at the open market value of residential, office, retail, and industrial properties. Adjustments are made for different locations, size, floor level, maintenance quality, age, view and orientation, and time. Upward adjustments are made if the comparable is inferior than the subject and vice versa. There were no rigid rules on the scope of adjustment factors. This was handled according to the imagination of the valuer having an effect on the value of the property investigated. In order to obtain a common basis for comparisons, the saleable area is usually adopted for its standard definition. During my experience in attending court hearings and valuation meetings with other surveyors, I found that some factors were frequently disputed, such as: time, building age/condition, quantum, floor level, and other pure subjective factors like view/aspect. Discrepancies in opinion were unavoidable. In order to make the valuation robust, it is better to have every factor backed up with objective statistics, and more importantly to maintain a consistency in the adjustments throughout the valuation process. 5.2. Investment method For tenanted properties, an investment method also known as the capitalization method or income method, was used to ascertain the market value of a property which is owned for investment purposes. By using this method, it capitalizes on a stream of future income into an equivalent of capital value. The choice of the capitalization rate was significant as it would determine the capital value of the property. Normally the market yields are published by the Rating and Valuation Department and are referred to. After the general market yield for a particular type of property that best matched with the subject property was identified, adjustments were made if necessary. For example, the better the quality of the tenant, the higher the security of rent receivable, hence a lower yield would be adopted as the landlord would suffer a lower risk for this kind of tenant. 5.3. Residual method This method was mostly applied in valuation land to be developed or redeveloped including vacant land or land on which old buildings are erected. The comparative method and residual method were most frequently adopted for such valuation. The comparative method required recent transactions of similar sites in the locality with adjustments being made. In the absence of satisfactory comparable, the residual method would commonly apply for assessing the land value. To be more specific, the market value of the hypothetical optimum development on the land can be ascertained as well. In the valuation, various deductions from the gross development value are made. These deductions include the cost of the hypothetical development, and allowance for profit and risk, an allowance for the period of deferment representing the time required to complete the development and where applicable, the cost of demolition and compensation to any tenants. The residue obtained is the site value by the gross floor area. Counter checks between the results generated by both the comparative method and the residual method are highly recommended if possible. After considering the above factors, several scenarios of proposed developments were considered within the limitation on the building heights, developable floor areas, unit floor areas, type, and use of the proposed development. Feasibility studies were carried out to compare different development scenarios in order to choose the optimal one. 6. LEVEL OF RESPONSIBILITY Generally, I handled cases independently although under the guidance of my senior in both the valuation analysis and the formal reports. My seniors always gave me advice and comments for the valuation methods to be applied, comparables used or parameters involved. Therefore, their experiences and input were invaluable to be able to make decisions on my own. My seniors also shared their experiences and gave their advice in resolving any outstanding issues. Some complicated, outsized and urgent projects such as URA Corporation Plan arose. At this time, I was able to work with my colleagues and seniors as a large amount of marketing information of different districts became apparent. I want to take the opportunity to thank all of my supervisors and colleagues for making this experience, one that shall carry weight and will help me in future ventures. I will take the maximum of responsibilities to ensure that the process runs well, that the individuals involved are satisfied according to their participation in the project, and the outcome of the project is cost effective for each particular case. Read More