VALUATION REPORT
Outline
This assignment is about market data analysis and valuation techniques.Students are required to apply the appropriate techniques to analyze the market data and value aninvestment property.Anindustry standard valuation report has to be prepared to report the findings.
Details
Hypothetical Scenario:
TheChina Fund(CF) is amajor investmentfundmanager inChina.Based onits diversificationinvestmentstrategy,itispreparedtoinvestsomeofitsfundsoverseas, includingAustralia.CFhas neutral risk profile, butis preparedtoconsider aggressive investment opportunitiesifthereturnisright. Therelativelyhealthy Australian economyinthecurrentglobalfinancialclimatehas attractedtheattentionofCF.Itis interestedinnon-residential propertiesinAustralia.CFis prepared toinitiallyinvest upto$A100millionin Australia.AsthisistheirfirstinvestmentinAustralia,theyare happy tostart withanynon-residential investmentwithinthebudget.
CF hasrecentlyretainedyourfirmforinvestmentadvice,i.e.identify asuitable property andprovide valuationofit.Forthepurposeofthis assignment,youare assumedtobeanexperiencedlicensedvaluerofaleadingproperty-consultingfirmin Sydney.Your bosshasgivenyouthetasktoidentifyasuitableinvestment property for theclientand prepare thevaluationreport.
Tasks
Identifyasuitablepropertyandcarryoutafullvaluationofthispropertyforinvestment purpose, bearin mind the client’s budget. The report should comply with the industrystandardlaiddownintheAustralianPropertyInstitute’s(API)&NewZealand PropertyInstitute(PINZ)Valuation andPropertyStandards 2012andcontain all essentialinformation tohelptheclientmake investment decision.Sincetheclientis an overseas investor, there shouldbeachapter in thereport outlining theregulations oftheFIRB(ForeignInvestmentReviewBoard)onacquisitionof property byforeign investors andcommentif theclient’s investmentis subjecttotherelevantregulation.
As this is aninvestmentvaluationreport,return/yieldtotheclientis akey indicator. Your clientrequiresyoutousetheDCFmethodastheprimary valuationmethod.An incomeprojectionforatleastthenext5yearsisrequired.Afterwards,youshoulduse thecapitalisationmethodasacheckmethod.Forthepurposesof thisassignment, thereis noneedtocommentonthetaxissues.Rememberthe clientpaysforthe contents,nottheweight or thicknessofthereport.
Other instructions:
Youmaymakeup necessary detailsand otherreasonable assumptionstocomplete thereport.UWShassubscribedtoRPData (https://rpp.rpdata.com/rpp/login.html)andyouareallowedtoassessthedatabaseusingthefollowing usernamesand password.
1.statval01
2.statval02
3.statval03
The3 usernames havethesamepassword,i.e.“PoVPw150615”
Giventhatother studentsofthisunit alsotry to accessRPData,onceyouhave collectedthedatarequired, pleaselogoffimmediately so thattheywouldhavethe opportunitytologin.
Other relevantinformation for this assignmentcanbeobtainedfrom: Newspapersand property magazines
Property JournalsandNewsletters
Australian BureauofStatistics
Marketreports(suchasJonesLangLaSalle,ColliersJardine,CBRichardEllis, etc.)
Friends intheproperty industry
Internetresources
Thevaluationreport shouldbeword-processed and boundfor submission(again, usingcorner staplesortransparentdocumentsleevesis notacceptable).Itshouldbe double linespacedwith 12-point font size.Appropriate property documents, graphics andphotosshouldbe includedforillustration.Don’tforgettoincludeareferencepage usingtheHarvard system ofreferencing.
FortheDCFmethodofvaluation,donotusethevaluationsoftwareatyourworkplace becauseotherstudentsmay nothaveaccesstothesamesoftware.Asamatter of fairnessand forthe purposeofdemonstratingtheknowledgeyouhavelearnedfrom thisunit, you need toconstruct theDCFmodelmanually using ordinaryspreadsheet software suchasMSExcel. Marks willbe heavily deducted ifyou breach this requirement.