Property Economics: Report This report will develop your understanding of value, valuation and highest and best use through a client-based report that involves you collecting and analysing real market data, making judgements, and developing arguments to support your findings. The address of the property is 21 Parkmore Avenue, Sturt, SA 5047. Click to the link to see the advertisement, but remember this is just for you to gain information about the property, you are to ignore the fact that it is on the market. Please remember that you should not visit the property and must not contact the owners or agents regarding this matter. The valuation date is 10th August 2021. You must not use data or information that only became available after this date. You will be provided with title and transaction information (these are from subscription services) but otherwise, you will collect your own data. You may share and discuss the data collection, but all analysis and reporting are to be individual. Discussions on the actual property, opportunities to collect and share data and approaches to the analysis, will occur in the workshops or virtual classrooms. Your tutor will take the role of your workplace manager, and classroom time will be used to develop a set of tasks and approaches based on the client’s instructions. Effectually, the student group will establish the specific requirements of the report through this classroom discussion. This will include opportunities for “formative feedback” from your “workplace manager”. This will be in the form of general pointers and issues to reconsider. It will not involve telling you how to solve the problem. This will emulate the roles in business. You, as the trainee, will draft work and seek comment from your workplace manager. In this way the assignment is exploratory. You will learn how to do the work as you complete the assignment. But this will require you to work progressively and seek feedback. Obviously, in the workplace, you would not give your manager the first draft when the client wants the report so you should not expect to be able to complete the work at the last minute. There will be a specific valuation date for your report, which will be set by the client. This date will be just after the address is published and you may only use data that occurs on or before that date. If this were a professional report, then we would expect that this work would be completed within one or two days and it would not be possible to use information from after the valuation date. To allow you more time in an educational setting, we have set this date well before the report is due, but you will need to restrict the information you use to what was available at the date of valuation. Structure the report as shown below. You should carefully read the full report details together with the marking rubric, to see the extent of work required to achieve specific grades in each section. For example, it is not appropriate to spend 30% of your time and report length on a section with a 10% weighting. Report Sections: Introduction and Description. This short section will introduce the report and provide a written summary description (not a data table) of the property and market. You do not need to visit the property and must not contact the owners or agent regarding this matter. You are to use the information from publicly available sources e.g. title, development plans and websites as well as the information provided on the internet advertisement for the property. This section should identify key aspects of the property that affect value and development opportunity as well as a summary of the property market, socio-economic characteristics and current trends in the specific neighbourhood of the subject property [15% weighting] Assessment of Potential Uses. With specific reference to the relevant title and development controls, outline the potential uses of the site and draw a sketch plan of a proposed development that you believe maximises the development opportunity. You may need to consider multiple opportunities if you are unsure which one would maximise the opportunity. You may use completed projects of a similar nature as evidence of the style and nature of developments but not the extent of the development which will be determined by the specific site characteristics of your subject property. [10% weighting] Assessment of Value and Highest and Best Use. You need to assess the value, and highest and best use for each of the following criteria. [60% total weighting] Value-in-use estimate based on the IVSC standards, the premise of the value being the Current/Existing Use. You will specifically use the Market Approach and the Comparable Transactions Method. Base your analysis on recent comparable transactions and apply dollar and percentage adjustments using a Market Data Grid. Justify our adjustments using market evidence. From this grid, estimate the value and incorporate this into your argument. Specifically, discuss how your choice of transactions supports the specific premise of Current/Existing Use. [25% weighting] Investment Value estimate based on the IVSC standards using Investment Value as the defined basis of value, but with the premise of Current/Existing Use. Estimate the Market Rent (IVSC standard) using a Quality Point system and include a scatterplot and estimate from the regression line then incorporate this into your argument. Then estimate the Investment Value, using the estimated rent and a market capitalisation rate. You should assume that the owner requires a rate of return consistent with other market participants and provide evidence of this by analysing market transactions. Specifically, discuss the choice of transactions. [15% weighting] Market Value and Highest and Best Use. This requires you to simultaneously establish the Highest and Best Use (H&BU) and the Market Value as defined by the IVSC. In arriving at the H&BU you should consider 4 options; Continue existing use (part a above) Change use from owner occupation to investment (part b above) Rehabilitate the property by renovating the existing building and then letting it at a higher rent. You should use this list of basic construction costs. Redevelop the site by assessing the residual value of the site for new development. You should use this list of basic construction costs. Remember to consider the risk elements and “reasonableness” of these options. You should concentrate on quantitative rather than qualitative analysis. Be specific about any adjustments that you make and ensure that you have a solid argument for each option. [20% weighting] Conclusion. You should include a short conclusion. This is assessed as part of the mark for Report/References/Structure/Use of Language. Make sure that you specifically answer your client’s questions in this section. This will include value estimates for each of the 4 options as well as your conclusion as to the Highest and Best Use and the Market Value. [5% weighting] Excel Workings. Throughout the report, you must substantiate your findings with relevant data and clear, concise arguments. Putting forward an opinion without an articulated argument is not acceptable. This is a business report and should be client-focused. This should answer “what you found”, not “what you did”. You should refer to the work that you have done previously (e.g. Professional Development in Property) as regards the requirements for a professional business report. Use Harvard Style referencing. All calculations must be completed in Excel using relevant functions and formulae. Correct workings with formulas will attract marks. No marks will be given for simply typing numbers in the spreadsheet. This part of the assessment meets the requirements for Enterprise Skills Development. [10% weighting].
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