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ITV521S - INTRODUCTION TO VALUATION - 2ND OPP SUPL - JAN 2023 |
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nAm I Bl A u n IVE RS ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF ENGINEERING AND THE BUILT ENVIRONMENT
DEPARTMENT OF LAND AND SPATIAL SCIENCES
(LAND AND PROPERTY SECTION)
QUALIFICATION(S): BACHELOR OF PROPERTYSTUDIES, DIPLOMA IN PROPERTYSTUDIES AND
BACHELOR OF LAND ADMINISTRATION
QUALIFICATION(S) CODE: 08BPRS, 06DPRS,
07BLAM
NQF LEVEL: 5
COURSE CODE: ITV521S
EXAMS SESSION: JANUARY 2023
COURSE NAME: INTRODUCTION TO
VALUATION
PAPER:
THEORY
DURATION:
3 HOURS
MARKS:
100
SECOND OPPORTUNITY/SUPPLEMENTARY EXAMINATION QUESTION PAPER
EXAMINER(S) AMIN ISSA
MODERATOR: SAMUEL AK HAYFORD
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 IS ALLOWED
THIS MEMORANDUM PAPER CONSISTS OF 5 PAGES (Including this front page}
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Introduction to Valuation
ITV5215
QUESTION 1
For each of the following statements indicate whether it is 'TRUE' or 'FALSE'. Each correct answer
carries 2 marks.
(20)
a) The comparative method of valuation can be used where there is a monopoly.
b) The residual method of valuation is frequently used to assess the viability of development
schemes.
c) The suitability of the investment method of valuation depends upon a variety of factors,
including the use of realistic yield, an accurate allowance for outgoings and, in the case of
leasehold interests, an appropriate tax rate.
d) The profits method of valuation is applicable to properties such as office buildings for rent
and residential houses in an active market.
e) When using the cost method of valuation, no account is taken of depreciation although the
estimated value of land is added to get a final value.
f) The residual valuation may be undertaken for one purpose only and that is the calculation of
maximum value of a development site.
g) In the Profits Method of Valuation, the Gross profit is obtained after deducting working
expenses (except rent).
h) Opportunity cost is the return or other benefit foregone in pursuing one particular
investment opportunity rather than another.
i) An appropriate basis of valuation is adopted for each purpose of Valuation.
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Introduction to Valuation
ITV521S
j} When the market is weak and few transactions are available, the applicability of the
sales comparison approach may be limited.
[20]
QUESTION 2
a} List the various purposes of valuation and their respective bases.
(8)
b} Highlight any six (6) types of Values other than open market value that are related to
valuation of landed property.
(6}
c} Highlight the eight (8} investment characteristics of real property.
(4)
d} List any eight (8) factors that affect property values.
(4)
e} Tepa invested N$100 000 with Standard Bank Namibia at the beginning of this year. Estimate
how much money he would have in his account by the end of the 5th year if the bank pays an
interest of 10% per annum and no withdrawals are made before the end of the 5th year. (5)
f} The owner of a house anticipates that he would need N$ 10 000 in 5 years' time to repair his
house. What sum of money should he set aside today (now} in order to meet this known
future expense assuming money can be invested to earn an interest of 10% per annum? (5)
g} A Freehold residential building is rented for period of 30 years at a rent of N$70 000 per
annum. It was recently sold for N$S00 000. What is the yield? Hint: Use CV=NI x VP.
(5)
[37]
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Introduction to Valuation
QUESTION3
ITV521S
a} John decides to save for 10 years so as to use the savings to buy himself a dream home.
Supposing he saves N$ 30 000 per annum at the end of each year in a bank that pays interest
at 12% per annum, determine whether or not he would be able to purchase the dream home
if such homes sell for around N$ 2 000 000.
(5}
b} A shop with an area of 126 square metres is currently let at N$5 000 per annum. Analyse the
transaction to value an adjacent shop which has an area of 144 square metres. Yields for
shops are 8%. Use YP in perpetuity.
(5}
c} The estimated gross earnings of Oshikundu Hotel is N$800 000 per annum. The cost of goods
sold amount to N$350 000 and working expenses amount to N$100 000. If tenant
remuneration for working in the business is N$150 000 and interest on capital is N$25 000,
calculate the rental value as well as the Capital Value. Interest rates for freeholds are charged
at 10% per annum.
(5}
d} Using the Cost Method of Valuation and the data provided, calculate the Depreciated
Replacement Value of the following subject property:
Area of the building= 120m 2
Building Rate per meter square = N$4 000
Cost of land improvements (e.g. Paving, landscaping}= N$30 000
Depreciation = 10%
Land Value = N$40 000
(5}
e} Assuming similar terms and conditions, analyse and calculate the rental value of Warehouse
Unit C with a net floor area of 1200 square metres currently vacant and to let. The following
are comparable properties:
i} Warehouse Unit A adjacent, recently let at N$9 000 per annum with a net area of 1500
square metres
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Introduction to Valuation
ITV521S
ii) Warehouse nearby was let 2 years ago at N$7 000 per annum in extent of 1000 square
metres
iii) A similar warehouse sold this year for N$112 500 with a net floor area of 1500 square
metres
{5)
[25]
QUESTION 4
a) Babarinde, a property developer, wants to build two houses and sell them at N$500 000 each
on completion. Each house has a gross area of 100 square metres. Current building costs are
N$4 000 per metre square. Siteworks will cost around N$ 20 000 and professional fees are say
N$40 000. Developers Profit is put at 4%. Advise the developer on the amount that he should
use to buy land to build the two houses.
(5)
b) What are the various roles of a valuation surveyor at central government level? Highlight any
five {5) roles.
(5)
c) Briefly explain the method of valuation that you would use to value the following properties.
{8)
i) A Police Station
ii) A private pleasure resort with bar, disco house and sporting facilities
iii) An arable farm
iv) An office building that is letting space to companies
[18]
END OF EXAMINATION PAPER!!
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nAmlBIA
UnlVERSITY
OF SCIEnCE Ano
TECHnOLOGY
P/Bagmaa
Wimlhoek
~JAMIBIA
2022-10-18