Valuation essay.. (Uk property)

TASK 1 : (20 marks) You have been instructed to provide your client with a residential property market

analysis before he makes a decision on investment into residential sector in the UK.

You have to analyse all factors, which may influence the residential property value for both occupation and investment purposes.

TASK 2: (40 marks)

Your client is a relatively new property investor and is keen to invest in the commercial sector. One retail and one office freehold investment opportunity has recently come to the market and, as your client has not purchased a commercial property before, they have asked your assistance in the following:

• • Explain to your client how retail and office properties are valued. Also, analyse the rental information provided and advise your client on:

o the current Zone A value for the retail unit and o the market rent that could be achieved for the office block.

• • Supporting your answers with appropriate justification, advise your client on the key factors they should consider when determining the quality of investment offered by each property.

14 Harrington Street (retail)

The property is situated in a good position on a busy pedestrianized high street in the centre of a north-eastern town. It enjoys a frontage of 6.5 metres and a depth of 23.4 metres. Three years ago the property was let for ten years at a rent of £112,500 per annum (p.a.) with a rent review in the fifth year to market rental value. The current market rent is estimated at £124,000 p.a. net.

The property is currently let to a regional retailer, who is looking to expand the business but there is little opportunity to extend the premises in this location. A new shopping centre development is proposed within the town centre, with the earliest opening date estimated as March 2021.

Malham House (office)

A four-storey office block situated on the fringe of the central business district (CBD) of a major city in the Midlands.

The building was constructed in 2006 and offers a serviced reception and security facility, raised floors, air conditioning, lifts to the upper floors and WC facilities on each level. A service charge is levied to cover the provision of cleaning, lighting etc to the communal facilities. The property has not undergone any refurbishment since construction. Each floor has 350m2 of lettable space and the existing tenants are as follows:

Ground and First Floor: let two years ago to a firm of local accountants on a ten year FRI lease at a total rent of £84,000 p.a.

Second and Third Floors: let to a specialist insurance broking company. They renewed their lease for further twelve years in 2014 and are currently paying a total rent of £80,500 p.a.

The most recent letting within the CBD was for a suite of first floor offices in a building constructed during 2017.The tenant occupies 500m2 of Grade A space at a rent of £81,250 p.a.

TASK 3: (40 marks)

Your firm have received instructions in connection with a modern factory unit situated in a convenient location close to all major road and rail links and within easy reach of ports and airports.

2 The unit is rectangular in shape with a net floor area of 425m . It was let three years

ago for 15 years at a rental of £22,500 p.a. on the basis that the landlord retains responsibility for external repairs. The lease contains a provision for the rent to be reviewed to Market Rent every five years and the landlord has covenanted to replace the roller shutter doors in four years time at a current cost of £12,000.

A similar unit nearby having a net floor area of 450m2 recently let at a net rent of

2 £65 per m . The freehold then sold for £266,000.

A second unit, on an estate about four miles away let two years ago on internal

2 repairing terms at a rent of £23,500 per annum. The unit extends to 375m , was

constructed in 1995 and the lease was for five years only.

TASK: 1. Analyse the transactions involving the comparable properties. 2. Use the information to value the freehold and leasehold interests in the unit forming the subject of your instructions.