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Asset Valuation Report

This asset valuation report values a 10 acre land parcel in Noida Sector 143 intended for a group housing project to be developed over 5 years. It analyzes the micro market, assumes sales rates and product mix based on comparable projects. A discounted cash flow model is used considering construction phasing, sales phasing and cash flows. Sensitivity analysis is done. Based on the analysis, the market value of the land as of the valuation date is estimated to be Rs. 158 Crore for investment purposes assuming the development generates a 20% internal rate of return.

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Anik Maity
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521 views8 pages

Asset Valuation Report

This asset valuation report values a 10 acre land parcel in Noida Sector 143 intended for a group housing project to be developed over 5 years. It analyzes the micro market, assumes sales rates and product mix based on comparable projects. A discounted cash flow model is used considering construction phasing, sales phasing and cash flows. Sensitivity analysis is done. Based on the analysis, the market value of the land as of the valuation date is estimated to be Rs. 158 Crore for investment purposes assuming the development generates a 20% internal rate of return.

Uploaded by

Anik Maity
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Asset Valuation Report

Anik Maity
Rohan GK
MBA REUI
Semester II
Group 1
Contents
Scope of Work.......................................................................................................................................2
Micro Market Analysis...........................................................................................................................2
Product Mix...........................................................................................................................................2
Assumptions from Noida Bye Laws........................................................................................................2
Fixing of Selling Rate..............................................................................................................................3
Purpose of Valuation.............................................................................................................................3
Basis of Value........................................................................................................................................3
Date of Valuation...................................................................................................................................3
Approach of Valuation Adopted............................................................................................................3
Locational Attributes of the Subjected Site...........................................................................................3
Pictures of the Subjected Site................................................................................................................4
DCF Analysis..........................................................................................................................................5
Assumptions..........................................................................................................................................8
Inference...............................................................................................................................................8
References.............................................................................................................................................8

List of Figures

Figure 1: Subjected Site........................................................................................................................3


Figure 2:Subjected Site Pictures...........................................................................................................4
Figure 3: Product Mix............................................................................................................................4
Figure 4:Assumptions...........................................................................................................................6
Figure 5: Construction Phasing.............................................................................................................6
Figure 6: Sales Phasing..........................................................................................................................7
Figure 7: Cash Flow Statement.............................................................................................................7
Figure 8: Profit & Loss Statement.........................................................................................................7
Scope of Work
Valuation of the 10 acres of land parcel as on date in the Noida Sector 143 is the scope of work. The
land parcel is vast and intended use for the land parcel is establishing a group housing project over 5
years of time period.

Micro Market Analysis


Noida Sector 143 is fully residential sector consisting of several group housing projects likes Sikka
Kaamna Greens, Logix Blossoms Zest, Saha Amedeus, Gulshan Ikebana. Price rates of the residential
dwelling units are ranging between Rs. 4500-5000/ Sq.ft. in the primary market, commercial units
are prevailing at the rate of Rs. 20000-25000/Sq. ft. There is oversupply in the micro market and the
sales velocity is low due to less demand in the primary market.

Product Mix
The intended use of the land parcel is developing a group housing project over five years period of
time. Analysing the micro market of the Noida sector 143 and the nearby sectors though the
oversupply is prevailing over the market, it is expected to achieve the sales velocity and demand
over five years period of time. So, our product mix is being formulated consisting of dwelling units of
2 BHK, 3 BHK and 4 BHK.

Assumptions from Noida Bye Laws


Particular Details
FAR 2.75
Ground Coverage 40%
Convenient Commercial (Min) 1%
Green Area 15%
Amenities 2%

Fixing of Selling Rate


After analysing the prevailing micro market, the pricing trends, sales velocity, the sales rate for the
residential dwelling units are kept at Rs. 4700/sq. ft, commercial units at Rs. 25000/sq. ft and Parking
units at Rs. 2000/sq. ft. escalated at an inflation rate of 5% per year.

Purpose of Valuation
Investment decision in the micro market in buying land on outright purchase basis to generate 20%
Internal rate of return.

Basis of Value
The basis of value here is market value.

Date of Valuation
Date of valuation is 17th March 2020.

Approach of Valuation Adopted


The approach for the valuation assignment adopted here is Income approach. The reason behind is
the vastness of the subjected land parcel and tenure for establishing the group housing project over
here. Time value of money plays an important role over here as the completion of the project
requires more than a year of time. So, the Income Approach will be suitable for analysing the market
value of the land. For that purpose, Discounted Cash Flow model has been developed in order to
justify the market rate of the subjected land parcel and residual method is being applied to justify
the market value of the land parcel.

Locational Attributes of the Subjected Site

Figure 1: Subjected Site

Pictures of the Subjected Site

Figure 2:Subjected Site Pictures


DCF Analysis

Figure 3: Product Mix


Figure 4:Assumptions
Figure 5: Construction Phasing

Figure 6: Sales Phasing

Figure 7: Cash Flow Statement

Figure 8: Profit & Loss Statement


Assumptions
(1) The said lease being a very long term lease for 99 years, we consider it as
equivalent to freehold while doing calculating for market value estimation.
(2) No legal case is pending in any of the questioned units in any Court of law in
India.
(3) The Valuer renders no opinion as to legal fee or title; it is assumed to be
marketable. Prevailing leases, liens, encumbrances, and assessments have
been disregarded, unless otherwise noted, and the property was appraised as
though free and clear, under responsible ownership, and competent
management.
(4) The effective date of the valuation sets the basis of value, which is based on
the purchasing power of the Indian Rupee as of that date.
(5) The purpose of the valuation also sets the basis of value, this valuation report
shall not be used for any other purposes apart from that mentioned in this
report.
(6) This valuation report may give completely different result if any of the above-
mentioned assumptions found to be not true.
(7) There is no legal complexity in the ownership of the property.

Inference
Based upon the actual observations, scrutiny of the micro market, careful consideration to
the various important factors like specification, potential for marketability, present condition
of the real estate market, etc. we are of the opinion that for the purpose of investment only,
the Market Value of the leasehold interest of the land premises of 10 acres in Nida Sector
143 as on the date of valuation, is, more or less, Rupees One Hundred and Fifty Eight
Crore only.

References
1) RICS Valuations Global Standards-2017
2) International Valuation Standards (IVSC)
3) NOIDA Building Bye Laws

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