Valuation Report Sample

Hi Folks,

Came across this sample valuation in PDF format which is attached. I've copy-pasted the highlights to give you an idea. Occasionally we do get enquiries asking what valuation reports contain so this should help. If anybody else has purchased independent valuations and would like to add them to this thread as samples I'm sure it would benefit the newbies on the forum.

Regards, Mike

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Re Valuation of Business Unit
Unit D, 12 Neptune Place, North Harbour

TYPE OF PROPERTY
A contemporary, road front business unit falling with the medium size bracket and situated within the North Harbour Industrial estate.

LOCATION & LOCALITY
The property is placed within the North Harbour Industrial Park, a relatively new although established industrial subdivision which enjoys a central position in relation to the surrounding and expanding North Shore urban areas. Saturn Place is within one of the more recent subdivisions, being that block of land to the northern side of Upper Harbour Drive, positioned between its intersections with William Pickering Drive and the motorway.

DESCRIPTION OF IMPROVEMENTS
Completed in 2001 the complex comprises a total of six office/ warehouse units. Overall design and appearance is modern and aesthetically appealing, featuring full height glass curtain walling and alucobond panelling to an architectural entrance canopy to the road front office, areas, the warehouse space incorporating clear span full 6 metre stud height and full height roller doors.

LEASE DETAILS
We have been provided with a copy of the lease document which incorporates the following provisions:

Lease Format Auckland District Law Society Third Edition 1993 (2)
Tenant F Smith Ltd
Premises Unit D, 12 Neptune Place, North Harbour
Term Six years
Further Terms Two of 3 years each
Commencement Date 17 November 2001
Annual Rent $34,141 pa as determined by Sheldon & Partners Ltd

MARKET CONSIDERATIONS
The first few months of 2001 saw a noticeable increase in the level of leasing and sales activity, largely attributable to an improvement in the economic climate and business confidence. In the second and third quarters of 2001 there was a general easing in the market, occasioned largely by cyclic factors. The events of September 11 also put a damper on the market place.

Since November 2001 there has been a strong demand for investment property, largely as a result of the low level of return for funds on fixed deposit and increased desirability of property over alternative forms of investment given the mixed global economic forecast. The good level of demand has had a positive effect upon property values.

COMPARABLE SALES
Unit D, 12 Neptune Place The subject property was purchased ex plans in February 2001 for $325,000. The price is very reasonable being one of the first sales within the block and incorporating some "owner occupier" discount as there was no lease in place.

C/ 2 Neptune Place sold ex plans to an "owner occupier" in May 2001 at $249,000 which on analysis would reflect a notional rent of $92 psm for the warehouse and $105 psm over the office accommodation capitalised at 10.0%.

D/ 12 Saturn Place Sold in Mid 2000 for $228,000 reflecting a yield of 9.65%.

Unit D/ 68 Paul Matthews Road The property sold to an investor in September 2001 at $260,000 which represents a notional rental of $170 per sq metre over the offices and $108 per sq metre over the warehouse, capitalised at 10.0%.

VALUATION

1 Replacement Approach
This method of valuation is based upon a summation of the property's land value and the cost of developing the improvements in order to arrive at a total replacement cost. The replacement cost of the improvements includes other site development and indirect development expenses such as holding charges and professional fees in order to arrive at a total replacement cost. For existing properties an allowance for physical depreciation is then made in order to arrive at a net cost/ value of the improvements.

This approach to value is considered to be a check method as it does not take directly into account the property's income earning potential which is the main market criteria for investment properties such as the subject. It is common for industrial and commercial property to sell at a price either above or below that indicated by the following approach, the variation dependent upon the supply and demand factors, the property's age, location and nature of tenancies.

Land Value, adopt $75,000
Value of improvements, adopt $250,000
CAPITAL VALUE REPLACEMENT APPROACH $325,000

2 Economic Approach
The following method of valuation is based upon a capitalisation based on the current market rental in order to arrive at its value from an investors viewpoint.

Capitalisation
With regard to the available evidence bearing in mind the subject property's particular physical and locational characteristics plus lease terms, we capitalise the current contract rental as follows:
Total contract rental $34,141 pa capitalised @ 9.25% = 369,091

CONCLUSION
As this is primarily an investment property, the majority of reliance must be placed upon the economic approach to value as its makes due allowance for market conditions, whereas the replacement approach is considered a check as it does not take directly into account other additional development expenses such as profit and risk, developers margin, leasing fees and holding charges subsequent to completion, nor the property's income earning potential which is the main market criteria for investment properties such as the subject. Accordingly we adopt the property's market value as at 1 January 2002 as follows:

CURRENT MARKET VALUE $370,000

[Source: http://www.viranda.com/documents.cfm ]
 

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