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PDM611S - PROPERTY DEVELOPMENT AND MARKETING - 2ND OPP - JULY 2023 |
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n Am I BI A u n IVER s I TY
OF SCIEnCE
TECHnOLOGY
FACULTY OF ENGINEERING AND THE BUILT ENVIRONMENT
DEPARTMENT OF LAND AND SPATIAL SCIENCES
QUALIFICATION{S): BACHELOR OF PROPERTYSTUDIES
DIPLOMA IN PROPERTYSTUDIES
QUALIFICATION{S) CODE: 08BPRS
06DPRS
NQF LEVEL: 6
COURSE CODE: PDM611S
COURSE NAME: PROPERTYDEVELOPMENT AND
MARKETING
EXAMS SESSION: JULY 2023
PAPER:
THEORY
DURATION:
3 HOURS
MARKS:
100
SECOND OPPORTUNITY/SUPPLEMENTARY EXAMINATION QUESTION PAPER
EXAMINER{S)
SAMUEL ATO K. HAYFORD
MODERATOR:
UAURIKA KAHIREKE
INSTRUCTIONS
1. Read the entire question paper before answering the Questions.
2. Please write clearly and legibly!
3. The question paper contains a total of 4 questions.
4. You must answer ALL QUESTIONS.
5. Make sure your Student Number is on the EXAMINATION BOOK(S).
PERMISSIBLE MATERIALS
1. Non-programmable Scientific Calculator
THIS QUESTION PAPER CONSISTS OF 6 PAGES (Including this front page)
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Property Development and Marketing
PDM611S
Question 1
For each of the following statements indicate whether it is 'TRUE' or 'FALSE'. Each correct answer carries 1
mark.
(20)
a) A Listing Contract indicates among other things a broker's fee as a specified amount or as a
percentage of the selling price if the broker finds a buyer from a particular class of people who is
"ready, willing and able" to purchase the property.
(1)
b) For a specific property development project, market research is important in getting to know the
relevant clientele in a specific real estate sub-markets and respond to their needs with a suitable
product offering.
(1)
c) Real estate market analysis has the potential to identify some features lacking in the existing supply
of properties, which if included in the proposed project, will offer a competitive advantage.
(1)
d) If the actual vacancy rate is below the natural vacancy rate, landlords feel they can afford to wait for
better tenants and those who can pay higher rents; this will exert upward pressure on rents.
(1)
e) When real estate demand keeps up with the supply of housing and the local economy is declining,
increase in rentals generally reflect in continued appreciation in real estate prices.
(1)
f) Vacancy levels for commercial and retail spaces are measured in terms of rental units as those for
apartments are measured in square footage.
(1)
g) Rental rates or levels provide a good indicator of the supply and demand situation for income
producing properties.
(1)
h) Market occupancy rate is important because it tells the potential of a property. Low vacancy rates
and a lower number of permits generally show that real estate prices will appreciate.
(1)
i) High vacancy rates indicate an oversupply of real estate which ultimately pressures rental rates
downward because there is so much competition among landlords for tenants.
(1)
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Property Development and Marketing
PDM611S
j) When low occupancy rates occur, it is a landlord's market. The low rates create higher demand for
existing units which, in turn, keeps market prices higher.
(1)
k) Increase in number of property listing is a reflection of a situation in which the cost of renting a home
is low as compared to the cost of buying a home.
(1)
I) Increase in listings of real estate with agents is an indication that the market is becoming saturated.
This provides an incentive for real estate investor to embark on increased property developments.
m) Market areas that boast of better highway network capacity usually tend to have competitive
advantage that enhances their ability to command rent.
(1)
n) Rental revenues can be estimated by looking at comparable properties in the market and
benchmarking existing rental rates. Leasing brokers are the best sources for this type of information.
(1)
o) A more general market study may require demand and pricing analysis of a given site for a proposed
development.
(1)
p) Too many listings give buyers the opportunity to be more picky making investment opportunities
even much more attractive for real estate investors.
(1)
q) Decrease in property listings indicates demand is greater than supply. Price will trend downwards and
so will the opportunity for appreciation will diminish.
(1)
r) Concessions items like upgrades, special deals are normally associated with landlord's market. (1)
s) Natural vacancy rate is that rate where rent increases are zero. Rent growth is negative or falling
when_prevailing vacancy rate is above the natural vacancy rate.
(1)
t) In order to establish the Highest and best use for a given real estate development, the development
concept will normally involve analysis of the real estate space market, physical analysis, legal and
political analysis and financial analysis.
(1)
[20)
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Property Development and Marketing
PDM611S
Question 2
a) As a property investment analyst, you are required to provide Mr Aliguntu Muctam with a
professional advice as to which of these mutually exclusive investments should be undertaken by him
if his (investor) target rate is 10%.
Particulars
Outlay
Cash Inflows
Year 1
Year2
Year3
Investment A
N$
7 000
4 000
3 000
2 500
Investment B
N$
9 000
5 000
4000
3 000
In the process of carrying out the investment appraisal, you are informed that the projected Cash
inflows for year two and year three of Investment A and Investment B respectively were inclusive of
municipal taxes. These expenses are estimated at N$250 and N$165 for Investment A and
Investment B respectively. (Adopt 4 decimal places for all PV N$1 calculated figures).
(11)
b) Enumerate the four (4) reasons for property development from demand perspective.
(2)
c) According to Reed and Sims, Property Development, (2015), undertaking property development is
largely about the 'process' of developing a property. Chose any two (2) of the following major stages
of property development process and briefly explain.
(8)
i) Market Analysis (for viability)
(4)
ii) Design and Costing
(4)
iii) An Enforcement Order and Stop Notices/orders as a requirement for consent and permission.
(4)
[21)
Question 3
a) Briefly explain the process of qualifying the buyer in a professional manner by an Estate Agent. (9)
b) Briefly account for any six (6) actions by an estate Agent that may be deemed to constitute an
improper conduct.
(12)
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Property Development and Marketing
c) Elaborate on the process of selling real estates under estate agency business.
PDM611S
(13)
[34)
Question 4
a) Outline any three (3) Demand factors or indications of apartments (residential facilities as a major
type of property.
(3)
b) Kaluchas CC owns Primrose site for which it has to make site-looking-for-a-use decision. The site
could reasonably be expected to be used for Apartment building, an Office building or a Commercial
building. Below is the detail construction and market information on the respective uses;
Types of Use
Apartments
Office
Commercial
Area for Construction
(sq. m)
3 500
3 380
2 880
Rental
(N$ sq. m)
23
34
36
Vacancy
rate(%)
2
3
2
Credit losses
(N$)
10 500
14 000
12 000
The following estimated expenses in N$ were to be incurred per square metre to erect the respective
structures;
Residential
Office
Commercial
Labour
4
4
5
Materials
6
5
6
You are further informed that the following estimated expenses in N$ were expected to be incurred
in the course of operating the property;
Property taxes
Insurance
Utilities
Residential
550
700
350
Office
655
675
460
Commercial
662
875
550
Assume a market return of 10%, 12% and 13% on Apartment, Office and Commercial buildings
respectively.
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Property Development and Marketing
PDM611S
Sales of comparable properties have just been concluded for all the three types of uses in N$ as
follows;
Sales price
Residential
2 500 000
Office
3 800 000
Commercial
3 560 000
Buyer's expected Net operating income
During the first year of ownership
250 000
320 000
382 000
You are required to carry out an appraisal to determine the highest and best use that maximizes the
value of Primrose site.
(22)
[25]
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