During this exercise, Highland Valuers Company has been instructed by Mr. & Mrs. James and Pamela Wright, through McGrath Real Estate Company to conduct a property appraisal exercise. The appraisal was conducted using the direct market value comparison method which considers property sales of the nearby property while the uniform standards of Professional Appraisal Practice were strictly followed in the writing of the report. The valuation exercise was also conducted according to the definitions of the International Valuations Standard Committee which have been adopted by the Australian Property Institute (Kunis, 2015, p. 12). These definitions include;
Other aspects that played a key role in settling on the figure proposed include the location of the property, and its zoning, the accessibility of the property form different transport system methods. Landmarks around the area and factors that increase the value of the property were also considered in this valuation exercise. The passing yield which is the %price from the current passing net income, such that no chance is allowed for the rent to grow in the future also contributes to the value of the property. Another factor is the equivalent yield which is the annual yield obtained from the current net income and any expected future changes to the net income over time such that no chance is allowed for the rent to grow in the future . This thus implies that the yield is the rate of return of a net income stream over given time in order to that reflects current rents and costs and current levels of rental values (Morey, Shaw, and Rowe, 2011, p. 197). Finally, the market yield is also considered which refers to the percentage price from the assessed market net income such that no chance is allowed for the rent to grow in the future thus contributing to the value of the property.
The goal of the appraisal was to give the company and the couple an opinion about the market value of their property. The owners wanted to know this values so they could be able to account for the value of the property, and incase a mortgagee was interested in the property, the couple would be able to come up with a reasonable mortgage security deal (Andrews and Moore, 2017, p.271).
The property is located close to two main facilities, namely the Friends of Geelong Botanic Gardens and the Eastern Beach Recreation reserve. This means that the property can easily be accessed using the Eastern Beach Road and the Hearne Parade which leads to the Geelong Play Space and the Friends of Geelong Botanic Gardens (Georges and Clive, 2012, p.130).
The property sits on an area of 6249 sq. m. with two storeys and surrounded by a serene beach. The land has been improved since 1979 with precast concrete and concrete masonry luxury and prestigious residential apartment. According to our valuation, the building provides A plus quality luxury residence. The property can be accessed from Eastern Beach Road, Brougham Street, and Alexandra Avenue, when coming from different directions of the city.
The property offers an exclusive and luxurious space of water front living as it is located on the second street from the beach. The location is also one of Geelong’s most premium residential locations, as it showcases views that face towards the north overlooking the sparkling waters of the bay at Geelong. Since the building’s construction in 1979, the interiors of the building offer a retro aura which is detailed with quality fittings and features. It is also fitted with stainless steel appliances and footsteps that lead to a Porsche overlooking the Botanical gardens and the water front of the Bay. From the property, one can walk to the CBD and the different sites within sight. The building is also luxurious as it has an open plan that allows occupants to enjoy the breeze as is related to the terrace. The terraces also have gardens that are facing the sun allowing them to be more productive for gardening. The kitchen is fitted with bench tops, pantry and microwave, stainless steel oven, dishwasher, electric cook-top. The master bedroom is a master en-suite has a bed that has robes which flow into the terrace. The other bedrooms have a laundry an d a main bathroom. The house also comes with a fitted air-con system, storage space, and a security system, parking on and off the street.
Some of the risks involved in this process include;
The project is advantageous because it helps the owners and their real estate agent to identify the market price of the property. This will aid them to understand their options with regard to the sale of the property or even the mortgage security of the property if there was a need to look
The methodology used in valuing this property as has been earlier stated will be to directly compare the market value of other property in the same class and locale as the one being valued. The project will be reconciled with the capitalization of net income of the other properties. The method will guarantee a value rate of the property to the other properties in the area. The value is also computed using a given rate per square meter of the area occupied by the property. The value of the land also tends to adopt the value that is derived from the other factors that affect the value of property and the prices associated with other properties that are comparable in elegance and capital of net income (Washington, Stevens, and Underwood, 2015, p.321). Applying a capitalization rate that is guided by the prices of other properties in the market has a tendency of affecting the capitalization of net income. This implies that the net annual market rent is used to come up with the core investment value of the property which is the price of a fully leased property given the current rates of rent in the market. This therefore marks the below the line adjustment for the investment characteristics of the property (Russell and Wagner, 2017, p.227).
This section looks into the different attributes that are considered very valuable to the property as well as the market sales and exchanges that would have an impact on the price and value of the property. Considering the comprehension of the market parameters at the date of the valuation exercise the following valuation parameters contributed to the value opinion for this property.
The Interest to valued was the fee which was a simple subject to the value of the land. The fee was set at 5% (Gregory, 2016, p.331)
The entire project sits on a total area of 5900sq. m. The property is also situated a good distance from the sparkling waters of the bay. The site is extremely accessible to the nearby facilities and also the city centre, although it is quite a distance from it that walking would be ambitious. The property is also close to other amenities like the nearby kindergarten. It is also exposed to good other social amenities due to its proximity to the city, where we find all the schools, shopping markets, and even healthcare facilities. The site however faces a serious disadvantage of its orientation with regard to the recently blowing winds. This can be easily fixed by installing wind breaking facilities on the site.
This option presents a bigger property with older and less modern fittings and the fixtures showing that it is a worse option than the property.
The property sits on an area of about 4200 sq.m. which is way smaller than the area of the property at hand . The property however sits in an environment that appears more modern and elegant, making it the choice of many luxury apartment tenants and buyers. The area is a serene and peaceful environment which makes it very suitable for residential spaces. A number of social amenities like health care centres, supermarkets and schools.
The property sits on a small piece of land and has a wider forest cover that make it susceptible to visits from small animals from the forest.
The property sits on an area of 6500sq.m. which is bigger than the size if the main property. The site is however located very close to many commercial buildings. The property is very well connected to the transport system that leads to the main amenities of the area. While it is surrounded by many commercial facilities, the social amenities required for residential purposes are located quite far from the property. It is however situated next to the Silicon IT Company offices and the commercial park of Geelong.
However, the area has a high traffic of commercial vehicles, clients, and employees of different companies that are situated in the locale making it a rather unsuitable place for residential purposes.
The property has an area of about 6000 sq. m. although is located in an environment that has not been fully explored as a residential area. For this reason, this property lacks social amenities that would make residential purposes easier. The transport system in the area has also not been advanced and perfected s not many people go to this part of town as often.
Due to the state of the property, the value of the property cannot be guaranteed as there are no signs of budding settlements in the region.
Conclusion
The property that was being valued in this exercise is an existing luxurious waterfront apartment overlooking the sparkling bay waters of the Geelong Beach. The property can be accessed with through the Hearne Parade or the Eastern Beach Avenue. The valuation exercise was aimed at determining the market value of the property for the owners, in order for them to be aware of the potential property sale value. Since the property is already owned by the couple, there was really no need to conduct a surveying exercise. The property sits on an area of 6249sq.m. The rate per square meter of the property was found to be $184. 31due tothe expensive and luxurious space that the property offers(Wright, Smith, and McIntire 2016, p. 224).
The definition of the market value highlights that the valuation has been conducted assuming no special valuation exercises. The foregoing matters thus become the biggest factors of consideration when conducting a valuations exercise. After all these considerations the value of the property was found to be $1,150,000.
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Georges, P. and Clive, R. (2013). SystematicMethod For Property Valuation. London: McGrawhill Inc.
Gregory, R. (2016). Interpreting measures of economic loss: evidence from contingent valuation and experimental studies. Journal of Environmental Economics and Management, 13(4), pp.325-337.
Kunis, J. (2015). The process of valuing natural resources: Following non-market valuation Econometrics. New York : Taylor & Francis.
Li, V. (2017). Pricing what is priceless: a status report on non-market valuation of environmental resources. Queensland : Bloomsbury Publishing.
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Reed, R. (2015). The valuation of real estate. Victoria: Atlas Publications.
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