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PDM611S - PROPERTY DEVELOPMENT AND MARKETING - 2ND OPP - JULY 2022 |
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nAmlBIA unlVERSITY
OF SCIEn CE Ano TECHn OLOGY
FACULTYOF ENGINEERINGAND SPATIALSCIENCES
DEPARTMENT OF ARCHITECTURE AND SPATIAL SCIENCES
(LANDAND PROPERTYSECTION}
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 2022
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
PDM6115
Question 1
For each of the following statements indicate whether it is 'TRUE' or 'FALSE'. Each correct answer
carries 1 mark.
(16)
a) The trend in the local property development for sale market that most investor watch
continually in order to make real estate investment decision is the trend in occupancy rate.
b) Given the way supply and demand cycles works in the property market, a low absorption
rate causes softer rental market (falling market rentals) rather than falling property prices.
c) The rental demand cycle of property owners is defined and determined on the basis of
absorption rate, and the trend can be observed by following the local absorption trend.
d) If existing properties are experiencing higher occupancy rates, prospective tenants may see
an opportunity to negotiate lower rents in older properties, thereby limiting the income
potential of a new building.
e) Real estate market analysis can be defined as identification and study of demand and supply.
The supply side are competitors; both existing stock and those at various stages in the
development pipeline.
f) Public development spending by government tends to correlate directly with the economic
climate, being increased when expansion of the economy is desired and decreased when it is
necessary to apply the brakes.
g) Public development decisions by government as a stakeholder in property development are
mostly undertaking on a political grounds.
h) Insurance companies enjoy the benefit of more control with an investment in property
company share than a direct Investment in property.
Second Opportunity Examination Question Paper Page 2 of 6
July 2022
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Property Development and Marketing
PDM6115
i) Commercial estate agents are employed by firms to find accommodation. Estate Agents are,
therefore, a source of information on the assessment of unsatisfied demand relating to the
quantity and quality of space and preferred location.
j) The demand for space is to some extent a function of the strength of the local economy.
Types of employment and level of unemployment can help to show where the gaps exist in
the market or the manner in which the local economy might more successfully be filled.
k) Rentals are a reflection of scarcity, rising rent will tend to indicate unsatisfied demand whilst
static or falling rent are likely to indicate an oversupply of premises.
I) Real estate research for investment decision making focuses exclusively on design, layout,
services and building specifications required by users.
m) Market analysis for proposed real estate development considers market area, economic
trends, supply and demand indicators, market conditions, and feasibility factors. No due
cognizance must be given to Institutional factors such as culture, customs and traditions,
habitual ways of thinking and of doing things.
n) Residential developers who focus on building owner-occupied facilities usually only require
short-term development finance often over months rather than years.
o) The amount of money Residential developers need to borrow is comparatively larger in
contrast to commercial real estate developers.
p) Private sector developers may become involved in the initial land acquisition stage. To
assemble a large site from many landowners with smaller units they can use their legal
powers of compulsory purchase to ensure the tenure to the land is secured.
[16]
Second Opportunity Examination Question Paper Page 3 of 6
July 2022
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Property Development and Marketing
PDM611S
Question 2
a) Enumerate the four (4) reasons for property development from demand perspective. (2)
b) According to Reed and Sims, Property Development, (2015), undertaking property
development is largely about the 'process' of developing a property. Briefly account for any
two (2) of the following major stages of property development process.
(8)
i) Market Analysis (for viability)
ii) Design and Costing
iii) An Enforcement Order and Stop Notices/orders as a requirement for consent and
permission.
c) Two investment opportunities are available to you, with the expected income flows as
follows:
Year
1
2
3
4
5
Investment Options
Beach Front Apartment (N$) M Plaza Hotel (N$)
7,500
&~
6,500
9,000
9,000
10,500
9,300
11,300
12,500
Beach Front Apartment maybe purchased for N$125 000 and M-Plaza Hotel for N$120 000.
In 5 years' time, the investments are expected to sell for N$175 000 and N$ 180 000
respectively. If you require a 12% return on capital, which investment would be more
preferable?
(17)
[27]
Second Opportunity Examination Question Paper Page 4 of 6
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Property Development and Marketing
PDM611S
Question 3
a) Identify and briefly explain any two (2) types of listing contract (mandates) that may be
created in an agency relationship.
(6)
b) Discuss any three (3) significance of fiduciary relationship that exist between an estate agent
and their principals regarding their duties in an agency relationship.
(9)
c) Estate agents, in their relationship with prospective purchasers or lessees, have certain legal
and ethical obligations to serve their interest in a professional manner.
i) Briefly explain the process of qualifying the buyer in a professional manner by an Estate
Agent.
(8)
ii) Briefly discuss any three (3) areas that constitute rendering a professional service to a
prospective buyer.
(9)
[32]
Question 4
Okachana square site could reasonably be expected to be used for any of these types of property
development; residential building, an office building or a commercial building. Below is detail
construction and market information on the respective uses;
Types of Use
Residentia I
Office
Commercial
Area for
Construction
(sq. m)
4500
3580
2850
Cost of
construction
(sq.min N$)
899
750
689
Rental
(N$ sq. m)
150
200
194
Vacancy
rate(%)
3
2
3
Credit losses
(N$)
10,000
15,000
12,000
Operating expenses to be incurred are estimated to be 15%, 20% and 18% of the respective
effective gross income for residential, Office and Commercial developments.
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Property Development and Marketing
PDM611S
Assume a market return of 12 percent on all three buildings.
Sales of comparable properties have just been concluded for all the three types of uses in N$ 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
It is anticipated that Concession stands in the Office and Commercial developments will generate
annual revenue of N$2,400 and N$1,850 respectively.
You are required to conduct an appraisal to determine the highest and best use that maximizes
the value of Okachana square site.
(25}
[25]
All the best of luck.
Second Opportunity Examination Question Paper Page 6 of 6
July 2022