1. Critically review advanced techniques of valuation for special properties

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1 TITLE Advanced Valuation Techniques MODULE CODE C LEVEL 6 CREDITS 20 JACS CODE N234 DEPARTMENT Natural and Built Environment SUBJECT GROUP Construction & Quantity Surveying MODULE LEADER DATE OF APPROVAL 16/17 July 2014 MODULE DESCRIPTOR MODULE AIM This module presents advanced techniques in valuation for application to complex properties or properties under special circumstances. The module serves to enhance skills in applying concepts, principles and techniques to appraise development and determine values of properties, plant and machinery, reclaimed and contaminated land, and land with easements and rights of ways. The module is situated within a UK context. The module seeks to: 1. Critically review advanced techniques of valuation for special properties 2. Provide exposure to the application of advanced techniques in special properties such as easement and right of ways, contaminated land, reclaimed land, plant and machinery, privatisation and joint venture. MODULE LEARNING OUTCOMES By engaging successfully with this module a student will be able to: LO Ref Learning Outcome 1 Explain the circumstances rendering valuation of special properties 2 Determine relevant valuation techniques used for special properties 3 Appraise the market value of special properties such as easement and right of ways, contaminated land, reclaimed land, plant and machinery, privatisation and joint venture

2 INDICATIVE CONTENT The module content addresses the following: Privatisation and joint venture - history of privatisation - introduction of privatisation - Three essential components - Objectives of privatisation - Methods of Privatisation 1. Sale of assets or equity 2. lease of assets 3. management contracts 4. concession a. Built-operate-transfer (BOT) b. Build-operate (BO) c. Build-operate-own (BOO) 5. Corporatisation 6. Joint Ventures - Policy of Privatisation - Returns from privatisation projects 1. Return in cash 2. Return in kind - Common approaches adopted 1. Land Value + % of profit sharing from proposed development before tax 2. Lease value for specified term 3. Lease value + % of profit sharing from proposed development before tax 4. Lease value + % of profit sharing from operation before tax (Project implementation as business operation) - Terms and agreements of privatization projects - Three basis of Valuation:- 1. Existing use basis 2. Highest and best use 3. Value based on developer s proposal - Three method of Valuation:- 1. Comparison method (including residual method) 2. Income method 3. Cost method - Return to government/land Owner - Conditions during valuation of on-going business - Complexity and problems - Content of proposed development report 1. Introduction 2. Description of proposed project site 3. Proposed development/project:- a. Terms of financial proposal 4. Implementation of programme 5. Feasibility study: a. Development cost b. Revenue c. Gross profit d. Project returns 6. Market Study 7. Valuation report (based of proposed development, plans and construction schedule) 8. Company s profile Valuation of Plant and Machinery - Definition of Plant and Machinery - Practice of Plant and Machinery - Differentiate between building fitting and fixture with plant and machinery

3 - Indentified three main categories:- 1. Landlord s fixture and fitting 2. Plant and machinery 3. Borderline items - Role and function of valuer in the valuation of plant and machinery - Purpose of valuation for plant and machinery - Basis of valuations:- 1. Going concern or market value (value-in-use) 2. Insurance value/indemnity 3. Liquidation value (forced sale auction realizable value) 4. Scrap value/salvage value 5. Antique value - Reviews PME based on MVS and IVS - Types and classes for plant and machinery 1. Production machinery 2. Support Equipment 3. Motor control centre and switch gear 4. Power wiring 5. Process piping 6. Foundation 7. Structural Support 8. Material handling and storage equipment 9. General plant equipment 10. Rolling stock 11. Laboratory and test equipment 12. Office furniture, fixture and equipment 13. Computer equipment 14. Tools and special tooling - Method of computing depreciation:- 1. Observed deterioration 2. Straight line deterioration 3. Decline and balance deterioration - Working schedule and matters to be considered:- 1. Identified of plant and machinery 2. Field inspection 3. Transcription/Description of plant and machinery 4. Price research and pricing 5. Determine obsolescence/depreciation (physical condition) 6. Application of valuation techniques Techniques of Valuation for Plant and Machinery 1. Comparison method 2. Cost method 3. Investment method:- a. Point of view of lessee b. Point of view lessor c. Term and reversion 4. Profit method Easements and right of way - Definition of easement and right of way - Ownerships of an easement - Usage of an easement - Causes of an easement - Effect of easement in property value - Compensation of an easement - Ways that easement can be created Ways to terminate easement

4 Advanced Valuation (Contaminated Land) - Introduction - Type of contaminate:- a. Seriously contaminated (Unmarketable) b. Mildly contaminated (Limited marketability) - Category of contaminated land - Causes of contaminated land - Effects of contaminated land - Value influencing factors:- a. Costs of cleanup b. Liability to the public c. Stigma after cleanup - Type of Stigma - Issue of Stigma - Main cost factors needed to be calculated 1. Direct costs 2. Indirect cost 3. Property costs - Steps to value contaminated land a. Site investigation b. Desk study - Valuation methods a. Sales comparison approach b. Income approach - Valuation techniques a. Discounting the market value b. Before and after method c. Market value (cleanup cost) d. Going concern value (mild condition) Going concern value (severely contaminated condition) Advance Valuation (Land Reclamation) - Introduction - Examples on Land Reclamation (Disused irrigation pool, disused dock, extensive cellar area, and etc.) - Notable Examples (Washington, D.C., Monaco and the British territory of Gibraltar, the southern Chinese cities of Hong Kong and Macau) - Reasons of Land Reclamation - Benefits of Land Reclamation:- 1. Land Oriented Benefits 2. Water Oriented Benefits LEARNING, TEACHING AND ASSESSMENT STRATEGY AND METHODS Students will be supported in their learning, to achieve the learning outcomes, in the following ways: students will be provided with a blended teaching approach which includes ongoing face-toface teaching activities, such as lectures, seminars, workshops, etc. These sessions will enable tutor-student interaction, discussion and in-class reflection, teaching activities will be supported and enhanced through the use of a range of e-learning tools within a Virtual Learning Environment. Specifically, Blackboard will provide full access to module guides, teaching materials, reading lists, assessment information and activities, and a full range of other online resources and links, face-to-face tutorial support will be provided to enhance student engagement and understanding, a module handbook will be made available at the start of the module. This will detail the module's aims, learning outcomes, assessment, marking criteria, methods of feedback, learning and teaching methods and strategy, and key reading lists and relevant any online information.

5 formative and summative activities, tasks and feedback will be provided within the module to support and develop student's academic, personal and professional development. ASSESSMENT DESCRIPTION Assessment is based on applied case study coursework (50%) and an examination (50%). The examination and coursework will both address issues and practices related to advanced valuation in a UK context. ASSESSMENT PATTERN - TASK INFORMATION (STANDARD ASSESSMENT MODEL) Task No. Description of Assessment Task Task Weighting % Word Count or Exam Duration Subtasks Y/N IMR Y/N Final Task Y/N 1 Report 50% 3000 N N N 2 Examination 50% 2 hours N N N FEEDBACK TO STUDENTS Students will receive feedback on their performance in the following ways: both formative and summative feedback will be made available within the delivery of the module to support student learning, the approach to feedback will adhere to the Faculty Feedback Policy. formative feedback will provide opportunity for students to develop academic, personal and professional development summative feedback will be clearly linked to the assessment criteria which will be made available with the dissertation handbook and made available on Blackboard. LEARNING RESOURCES FOR THIS MODULE (INCLUDING READING LISTS) Full electronic reading lists and the identification and access to other related learning resources (which could include lecture slides, seminar/workshop activities, internet links) will be identified within the Module Blackboard site. Main references supporting the module Askham P (2003). Valuation Special Properties and Purposes, London: Estate Gazette, London. Derry,C (2007). Valuation of Plant and Machinery Handbook, College and Estate Management International Valuation Stardards Council, (2011). The International Valuation Standards, International Valuation Standards Council. The Board of Valuers, Appraisers and Estate Agents, (2006). Malaysian Valuation Standards, The Board of Valuers, Appraisers and Estate Agents Malaysia.

6 Additional references supporting the module Baum, A, Nunnington N & Mackmin D (2011). The Income Approach to Property Valuation, 6 th edn, Estate Gazette, London. Fischer D (2000). Property Valuation Methodology, Swan Press Geltner D and Miller N (2001). Commercial Real Estate Analysis and Investments, Thomson Larsen, JE (2003) Real Estate Principles & Practices, John Wiley Millington, A (2008). Introduction to Property Valuation, 6 th edn, Estate Gazette, London. Richmond, D (1994). An Introduction to Valuation, 3 rd edn, Palgrave Macmillan Shilling, J D (2002). Real Estate, 13 th edn, Prentice- Hall MODULE STUDY HOURS Module Study Hours - Breakdown of Hours by Type Scheduled Learning and Teaching Activity type Hours by type KIS category Lecture 24 Seminar Tutorial 12 Project supervision Demonstration Practical classes and workshops 12 Supervised time in studio/workshop Fieldwork External visits Scheduled Learning and Teaching Activities sub-total 48 Guided Independent Study 152 Independent Placement (Not SW year - see KIS definitions) Placement Work-based Learning (see KIS definitions) Placement Year Abroad (see KIS definitions) Placement Total Number of Study Hours (based on 10 hours per credit) 200 CHECKED Date October 2015 Reason Checked Against SI - correct