17771 Valuation Methodology

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.

Subject handbook information prior to 2024 is available in the Archives.

UTS: Design, Architecture and Building: School of the Built Environment
Credit points: 6 cp

Subject level:

Postgraduate

Result type: Grade and marks

There are course requisites for this subject. See access conditions.
Anti-requisite(s): 12525 Property Analysis 1

Description

This is a core subject in the Master of Property Development program (valuation sub-major). This subject focuses on the role, functions and obligations of valuation profession and purpose for which valuations are undertaken. It explores the concepts of different types of value, different interests in property, general valuation principles and case law. This subject will also engage students in learning valuation methods, including the Market Approach - Comparable Transactions Method, Cost Approach and Income Approach. The subject prepares the students to be able to apply the different methods of valuation to different property types. Subsumed in the methods of valuation are the concepts of identifying risk and accounting for risk. An overview of valuation reporting standards is also discussed. A basic knowledge of a spreadsheet program such as Microsoft Excel is assumed.

Assessment is designed to assure students' proficiency in achieving the learning objectives of this subject. A quiz will test students’ understanding of basic concepts, valuation theory and valuation methods. Students are required to conduct a group work to value a property using the learned principles. The final examination tests students' understanding of valuer’s responsibility, valuation methods and risks involved in the valuation.

Subject learning objectives (SLOs)

1.	Understand the purpose of valuations and the role of valuers in undertaking such valuations.
2.	Understand different methods of valuations for different types of properties.
3.	Demonstrate an understand of valuation theory versus practical application and the ability to compile a professional report that articulates a strong analysis of market data and a rationale for establishing an assessment of value.

Course intended learning outcomes (CILOs)

This subject also contributes to the following Course Intended Learning Outcomes:

• Effectively apply a variety of communication skills and technologies in professional contexts (C.1)
• Demonstrate a comprehensive theoretical understanding of property valuation methodologies together with the capacity to prepare valuation assessments to a professional standard (P.1)
• Demonstrate knowledge of research principles and methods applicable to property development (R.1)

Contribution to the development of graduate attributes

The term CAPRI is used for the five Design, Architecture and Building faculty graduate attribute categories where:

C = communication and groupwork

A = attitudes and values

P = practical and professional

R = research and critique

I = innovation and creativity.

Course intended learning outcomes (CILOs) are linked to these categories using codes (e.g. C-1, A-3, P-4, etc.).

Teaching and learning strategies

This subject is undertaken in block mode over two Thursday/Friday / Saturday blocks. Students learn through the use of complex hypothetical scenarios derived from live case studies and applying practical context to the principles and theories that underpin the topics in this subject. Working collaboratively using hypothetical cases will engage students in problem solving using qualitative and quantitative methods and promote the ability to articulate solutions in both written and verbal format.

In the first block, students will focus on the purpose of valuations, the role of valuers, interests in land. In addition, students will be introduced to the Market Transactions Approach and the Cost approach methods of valuations. Class examples and exercises will be undertaken to reinforce these concepts.

In the second block, students will be introduced to further methods of valuation, namely The Income Approach, which consists of Discounted Cashflow analysis and Capitalisation of Income. In addition, the method of Hypothetical Development Approach will also be demonstrated to students. All of these topics will include examples and exercises in class.

Content (topics)

Topics covered by this subject include:

• The role and expertise of valuers
• Different types of interests in land that could have an impact on value or could be valued separately
• Market Value and other types of Value
• How property markets operate to provide evidence of market transactions
• Precedents set by court cases in establishing guidance for valuations
• The Market Approach method and application.
• The Cost Approach method and application.
• The Income Approach method and application.
• Going Concern Valuation
• Identifying different Risks associated with different property types and how they may be accounted for within a valuation.
• The impact of economic, political and statutory factors that can impact on the demand and supply of property that affects value.
• Valuation Report compilation.

Assessment

Assessment task 1: Written Assessment- Valuation Methodology

Intent:	The intent of this assessment is to assess the students understanding and application of principles covered in the class lectures from Block 1.
Objective(s):	This task addresses the following subject learning objectives: 1 and 2 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): P.1 and R.1
Type:	Report
Groupwork:	Individual
Weight:	20%
Criteria:	Correct answers are provided.
Criteria linkages:	Criteria Weight (%) SLOs CILOs Understanding different interests and Land Titles 20 1 P.1 Demonstrate knowledge in interpreting market transactions 20 2 R.1 Applying valuation methods 20 2 P.1 Calculate constituent parts of valuation methods 20 2 P.1 Understanding Case Law precedents 20 2 R.1 SLOs: subject learning objectives CILOs: course intended learning outcomes

Assessment task 2: Case analysis

Intent:	The intent of this assessment is to provide a group environment for students to work on a practical case study in relation to the valuation of a commercial property.
Objective(s):	This task addresses the following subject learning objectives: 2 and 3 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): C.1, P.1 and R.1
Type:	Case study
Groupwork:	Group, group assessed
Weight:	30%
Criteria linkages:	Criteria Weight (%) SLOs CILOs Prepare a valuation report in accordance with industry standards for sale purposes 20 2 C.1 Provide a detailed description of the property being valued along with planning controls 20 2 R.1 Undertake a review of current prevailing market conditions that the property is to be sold under. 20 3 P.1 Analysis of available market data into constituent value parts that can be applied towards the subject property. 20 3 P.1 Rationale and detailed explanation of valuation assessment into a logical and credible argument. 20 3 P.1 SLOs: subject learning objectives CILOs: course intended learning outcomes

Assessment task 3: Examination

Intent:	The intent of this assessment is to measure on an individual basis the understanding of principles, valuation application and case law with their application in relation to material covered within the lectures.
Objective(s):	This task addresses the following subject learning objectives: 1, 2 and 3 This task also addresses the following course intended learning outcomes that are linked with a code to indicate one of the five CAPRI graduate attribute categories (e.g. C.1, A.3, P.4, etc.): P.1
Type:	Examination
Groupwork:	Individual
Weight:	50%
Criteria linkages:	Criteria Weight (%) SLOs CILOs Explain the purpose/s of valuation 10 1 P.1 The role of valuers and their responsibilities 10 2 P.1 Understanding the Market Approach Method of Valuation and its application 20 2 P.1 Understanding the Cost Approach 20 2 P.1 Understanding the Income Approach method and its application method and its application 20 2 P.1 Identifying Property & Property Market risk 10 3 P.1 Comprehension of economic, political and Factors impact on supply and demand 10 3 P.1 SLOs: subject learning objectives CILOs: course intended learning outcomes

Minimum requirements

The DAB attendance policy requires students to attend no less than 80% of formal teaching sessions (lectures and tutorials) for each class they are enrolled in to remain eligible for assessment.

Required texts

International Valuation Council: International Valuation Standards 2020

www.ivsc.org

Australian Property Institute: Valuation & Property Standards

www.api.org.au

Australian Property Institute: Standard Instructions for Office, Industrial and Retail Valuations

www.api.org.au

Recommended texts

• Hyam, A. The Law Affecting the Valuation of Land, 2009 4th Ed, Federation Press]
• Baum, A., Mackmin, D. and Nunnington N. (2018). The Income Approach to Property Valuation. 7th Edition,

Routledge: London and New York.

• Blackledge, M. (2017). Introducing Property Valuation. 2nd Edition, Routledge: London and New York.
• Ling, D. C. and Archer, W. R. (2017). Real Estate Principles: A Value Approach. 5th Edition, McGraw-Hill,

New York.

• Whipple, R. T. M. (2006). Property Valuation and Analysis. 2nd Edition, Lawbook Co.: Pyrmont, Australia.
• Isaac, D. and O’Leary, J. (2012). Property Valuation Principles. 2nd Edition, Palgrave Macmillan:

Hampshire, United Kingdom.

• Isaac, D. and O’Leary, J. (2013). Property Valuation Techniques. 3rd Edition, Palgrave Macmillan:

Hampshire, United Kingdom.

• Australian Property Institute (2007). Valuation Principles and Practice. 2nd Edition, API: Deakin, Australia.
• Australian Property Institute (2015). The Valuation of Real Estate. 2nd Edition, API: Deakin, Australia.
• Scarrett, D. and Osborn, S. (2014). Property Valuation: The Five Methods. 3rd Edition,

Parker, D (2021) Principles & Practice of Property Valuation in Australia-Routledge-Taylor&Francis Group

References

LexusNexus legal database library

Austlii.edu.au

Readings online (UTS online)