Principles of Valuation II

At the end of this course, students should be able to: 1. advise on the value of landed properties; 2. undertake valuation for sale or exchange; 3. gain understanding of different types of interests in property; and 4. apply the knowledge in undertaking property valuation.

Analysis of sales and letting of freehold and leasehold property, use of valuation tables. Effect of income tax on sinking fund, premiums, surrender and renewals of leases. Investment/ income method of valuation approaches: term and reversion, hard-core; traditional/conventional (initial/all-risks yield cum fixed annuity capitalization), modern/contemporary (equated yield cum variable annuity capitalization). Determination of freehold and leasehold investment/initial/all-risk yield: analysis of transactions involving sales and lettings of comparable freeholds let at rack/full rental value. Virtual/sitting rent calculations. Valuations involving freehold currently let at full rental value (FRV) on full repairing and insuring (FRI) basis and currently not let at FRV and not on FRI basis. Valuations involving deferred receipts and payments, and varying incomes. Effects of capital expenditure and present and future premium payments on rental values and valuations associated therewith. Valuations of leaseholds: long and short terms. Effects of income tax on freehold and leasehold valuations and adjustment to the year’s purchase. Applications of statistics and computer techniques in valuation.