Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are required to value an unimproved business erf, measuring 2 0 0 0 m 2 , that is ripe for development and is situated
You are required to value an unimproved business erf, measuring that is ripe for
development and is situated on a corner stand just outside the central business district of
Johannesburg Coverage is and height is restricted to floors.
No comparable sales can be traced. Date of valuation is July
It is established that optimum development would consist of an office block with ground
floor shops. After thorough investigation and analysis of the particular submarket the
following is established:
Ai Construction Costs: Concrete column and slab
construction, multistoreyed building
ii Shop windows : Rm Need
iii Elevators : R per unit Need
iv Air conditioning: R
The above escalate at per year.
v Professional fees amount to of the construction costs.
vi Various municipal fees amount to R
vii Assessment rates: c in R on Rmunicipal valuation with
expected escalation of pa
viii Refuse and sanitary fees: R paexpected escalation pa
ix Period required for planning and calling for tenders: year.
x Period of construction: years.
xi Payments would be made as follows:
Assessment Rates and Fees: Payable on June of each year.
Construction costs: on June and balance on completion of
project.
Municipal fees: on June
xii Rate of finance:
Bi Market rental: Shops R per month.
Offices R per month.
ii Net lettable area amounts to of the total area.
iii Market rental escalates at pa
C Other expenses after completion of building:
i Maintenance: R paincludes maintenance of building, air
conditioning and elevators
ii Management: of gross income.
iii Insurance: R per R pa
iv Water and electricity: R pa
v Cleaning: R pa
vi Vacancies: provision @ of gross income.
D Initial return:
E Initial letting costs amount to of the gross income.
F Transfer cost amount to of land value
Use the residual approach and determine the value of the property as at July
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started