MODULE DESCRIPTOR TITLE Investment Valuation MODULE CODE BTEM2044 77-5472-T0S CONFIRM LEVEL 16 CONFIRM CREDITS 20 DATE OF APPROVAL 16-17 July 2014 MODULE AIM This module aims to develop knowledge and practice relating to the valuation of different types of properties. It introduces the underlying knowledge and practice of theoretical investment methods and approaches to determining values of a wide range of interests in investment property MODULE LEARNING OUTCOMES - The TAR UC module delivers to the appropriate level as follows: By engaging successfully with this module a student will be able to: LO Ref Outcome 1 Explain the principles of investment valuation. 2 Apply the various techniques of investment valuation. 3 Relate the principles of investment valuation in determining values of a range of interests in investment property. ASSESSMENT SUITABILITY Assessment is by coursework (40%) and examination (60%). The module assessment is aligned to the module aims and learning outcomes. The module assessment is suitable in terms of relevance, level, challenge and alignment to learning outcomes. COMMENTS REGARDING INDICATIVE CONTENT This module covers the valuation appraisal of different types of property and real estate. A range of valuation methods are considered for a range of purposes. Section 17 of the attached module descriptors details the comprehensive module content. ANY ADDITIONAL REQUIREMENTS None
1. Name of Course Investment Valuation 2. Course Code BTEM2044 3. Name(s) of academic staff 4. Rationale for the inclusion of the course in the programme Basic fundamental knowledge on value is the foundation for practitioners engaging in real estate consultant practices. Knowledge on the concept of value and determination of range of interests in investment properties are primary factors leading to success in property investment. Thus this course introduces the underlying knowledge and practices in investment valuation. Course objectives: 1. To introduce the fundamental knowledge in the principles of investment valuation. 2. To provide the application of investment and income method of valuation. 5. 6. Total Student Time (SLT) Total Student Time (SLT) L=Lecture T=Tutorial P=Practical O=Others 7. Credit Value 4 Face to Face L T P 42 28 0 O Total Guided and Independent Total SLT 5 99 174 8. Prerequisite (if any) BTEM1014 Introduction to Valuation 9. outcomes Upon completion of the unit, students should be able to: - CLO1: Explain the principles of investment valuation (C2) (CTPS) CLO2: Apply the various techniques of investment valuation (C3) (EM,CTPS,LL,LS) CLO3: Relate the principles of investment valuation in determining values of range of interest in investment property. (C4) (CTPS,LL,LS) 10. Transferable Skills: Skills and how they are developed and assessed, project and practical experience and Internship Transferable Skills How they are developed Assessment Teamwork and cooperation Developed through tutorials, group coursework and presentation Assessed through group based coursework and group presentation Leadership skills Developed through tutorials, group coursework and presentation Assessed through group based coursework and group presentation Analytical and critical Developed through Assessed through tutorials,
thinking skills Problem-solving skills Make effective use of IT to obtain information Managerial and entrepreneurial skills lectures, tutorials, coursework and case studies Developed through lectures, tutorials, coursework and case studies Developed through coursework and case studies Developed through tutorials and coursework coursework and examination Assessed through tutorials, coursework and examination Assessed through coursework Assessed through group based coursework 11. Teaching-learning and assessment strategy Teaching-learning strategy Lectures Tutorials Group discussions Case Study E- Independent reading Assessment strategy Assignment Written work Mid-term test Examination 12. Synopsis This course introduces the underlying knowledge in the theoretical investment methods and approaches in determining values of a wide range of interests in investment property. Traditional methods are introduced and valuation issues are confronted with simpler treatments adapted to computer calculations (hardcore method and layer method, the valuation for respective interests of landlord and tenant for different purposes such as lease purpose, marriage value, the valuation of premium, surrender and leaseback). 13. Mode of Delivery Lecture and Tutorial 14. Assessment Methods and Types Assessment of this course is based on: Examination (60%) Coursework (two 1-hour tests, 1 assignment of approximately 2000 words, and 20 minutes presentation) (40%) 15. Mapping of the course to the Programme Aims Course Programme Objectives PO1 PO2 PO3 PO4 PO5 PO6 Outcomes CLO1 CLO2 CLO3
16. Mapping of the course to the Programme Outcomes Course Outcomes CLO1 Programme Outcomes PLO1 PLO2 PLO3 PLO4 PLO5 PO6 PLO7 PLO8 CLO2 CLO3 17. Content outline of the course and the SLT per topic Week Topic 1 Investment Method: Valuation of Landlord & Tenant: - Basis of Valuation: Investment Method - Roles of Lessor & Lessee (National Land Code): - Concept and Formula: 1. Gross Income/Rental Rate 2. Outgoings/Annual Expenses (Repairs and Maintenance, Quit Rent and Assessment, Fire Insurance, Others) 3. Net Income 4. Yield - Determine: 1. Capital Value for Landlord with Property subject to Lease 2. Interest of Tenant 3. Interest of Sub-Tenant 2 Investment Method: Terms & Reversion: - Introduction on Interest for landlord: 1. Formula & Concept 2. Freehold Interest 3. Freehold Title but subject to specified lease period 4. Freehold Title but subject to specified lease period (with lease start years ago) 5. Leasehold Interest 6. Leasehold Title but Subject to specified lease period 7. Leasehold Title but subject to specified lease period (with lease start years ago) 8. Multiple Interest - Illustration 3 Investment Method: Premium: - Introduction on Premium Student Time (SLT) Total Guided L T P O and Independent
- Implication of Premium Paid - Formula to determine Premium - Valuation Technique on Premium: 1. Starting a Lease Term 2. Started Lease Term 4 Investment Method: Payable Premium & Rental - Case 1 Premium paid at the beginning of lease term - Case 2 Premium paid during lease term. - Case 3 Premium paid at the end of lease term. 5 Investment Method: Marriage Valuation: - Introduction of Marriage Valuation - Application of Marriage Valuation: 1. Scenario 1 Two or more properties is merged 2. Scenario 2 Two of more interests is merged - Calculation of Marriage Valuation: 1. Present lease and New lease and Intermediate lease 2. New lease and Another New lease and Intermediate lease (if remaining) 6-7 Investment Method: Surrender and Leaseback: - Introduction of Lease - Terminology of Lease - Surrender of Lease - Property value subject to Long Lease - Extend and Renew Lease - Concept and Format - Valuation Technique 8-10 Income Method: - Introduction and it s role in valuation process - Review of Financial Maths 1: Financial Factors (Calculators and Excel) - Review of Financial Maths 2: Return Measurement(Calculators and Excel) 11 Income Method: - Income Property Flows: Operation and Disposition (Excel Illustrations) 12 Income Method: - Valuing Income Flows (Calculators and Excel) 6 4 - - 10 9 6 - - 15 13 Income Method:
- Valuation of Interest of Landlord, Tenant and Sub-tenants (Calculators and Excel) 14 Income Method: - Valuation of development projects with interim financing - (Calculators and Excel) - Assessment: Coursework Examination Sub-Total Total 42 28 0 5 99 Total SLT 174 Subject Credit 4 18. Main references supporting the course Damodaran, A (2011). Investment Valuation : Tools and Techniques for dertermining the value of any asset, John Willey & Sons, Inc Dominique, F (2000). Property Valuation Methodology, Swan Press. Geltner, D & Miller,N (2001)., Commercial Real Estate Analysis and Investments, Thomson. Malaysian Valuation Standards, The Board of Valuers, Appraisers and Estate Agents Malaysia. Titman, S & Martin, J.D (2011). Valuation : The Art and Science of Corporate Investment Decisions, Prentice Hall PTR Valuers, Appraisers and Estate Agents Act,1981 2 3 5 20 9 29 Additional references supporting the course Baum,A, Nunning, N & Macmin,D (2011). The Income Approach to Property Valuation, 6 th edn, Estate Gazette, London 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, JD (2002). Real Estate, 13 th edn, Prentice- Hall 19. Other additional information: Nil CHECKED Date October 2015 Reason SI correct - NB. SI records assessment as 100% coursework regardless of actual assessment strategy to enable recording of TAR UC assessment outcome.