PROPERTY VALUATION REPORT

576 North Road Ormond, 3204

Abstract
The purpose of this report is to undertake a property valuation for 576 North Road Ormond and arrive at
a market value or probable price.

SRQ764 Building Project Evaluation

Student Name Withheld

29 September 2015|Word Count 2,748

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29 September 2015

Regarding: Property at 576 North Road Ormond, VIC 3204

Dear Client,

In compliance with you request, the researched market data and completed valuation analysis has been
undertaken for the above described property.

The purpose of this report is to estimate the market value of the subject site “as is”, on the date of inspection, 24
September 2015 for pre-purchases purposes. The valuation method used was ‘direct market comparison’ as it is
the most relevant.

This report is written in compliance with the requirements and limitations set out in section 6 of this report.
Assumptions have been made which are outlined in section ‘5.3.2 Assumptions’ when arriving at the market value.

Based upon the analysis conducted from the information available, the Market Value of the subject site, as
described herein, as of 24 September 2015, is considered to be:

$1,820,000

One Million Eight Hundred Twenty Thousand Dollars

With a transaction zone of $1,085,000 – 2,646,000.

The report will lead a reader through the valuation process and provide a summary of the documentation, support
and reasoning in arriving at the estimated value. Therefore it is recommended to complete a full review of this
report.

It is also suggested that a debriefing session is undertaken so that this report can be discussed fully.

I look forward to hearing from you,

Sincerely,

(student Name Withheld)

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1 TABLE OF CONTENTS

PROPERTY VALUATION REPORT ................................................................................................... 4

1 EXECUTIVE SUMMARY ............................................................................................................................... 4

1.1 Summary Of Facts and Conclusions ......................................................................................................... 4

2 PROBLEM ANALYSIS & VALUE DEFINITION ................................................................................................ 5

2.1 Reason(S) For The Valuation .................................................................................................................... 5
2.2 Evaluation Date ........................................................................................................................................ 5
2.3 Assumptions From Client ......................................................................................................................... 5
2.4 Definition Of Value Adopted .................................................................................................................... 5
2.5 Definition of Interest(s) To Be Valued ...................................................................................................... 5
2.5.1 Items to be excluded in this valuation ............................................................................................. 5

3 PROPERTY ANALYSIS & SPECIFICATION OF ALTERNATIVE USE ................................................................... 6

3.1 Physical Characteristics ............................................................................................................................ 6
3.1.1 Site Description ................................................................................................................................ 6
3.1.2 Improvements .................................................................................................................................. 6
3.1.3 Conclusions....................................................................................................................................... 7
3.2 Legal Characteristics ................................................................................................................................. 7
3.2.1 Restrictions on Title .......................................................................................................................... 7
3.2.2 Current Lease(s) ............................................................................................................................... 7
3.2.3 Town Planning Constraints ............................................................................................................... 7
3.2.4 Political Factors ................................................................................................................................ 8
3.2.5 Conclusions....................................................................................................................................... 8
3.3 Locational Characteristics......................................................................................................................... 8
3.3.1 Regional Location ............................................................................................................................. 8
3.3.2 Conclusions....................................................................................................................................... 8
3.4 Environmental Characteristics ................................................................................................................. 8
3.4.1 On Site Factors ................................................................................................................................. 8
3.4.2 Off-Site Factors ................................................................................................................................. 8
3.5 Psychological Characteristics.................................................................................................................... 9
3.5.1 The Locality....................................................................................................................................... 9
3.5.2 The Property ..................................................................................................................................... 9
3.5.3 The Market ....................................................................................................................................... 9
3.5.4 Conclusions..................................................................................................................................... 10

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4 EVALUATION OF ALTERNATIVE USES AND SELECTION OF PROBABLE USE ............................................... 11

4.1 Possible Alternative Uses ....................................................................................................................... 11
4.2 Selection of Probable Use ...................................................................................................................... 11

5 PRICE PREDICTION ................................................................................................................................... 12

5.1 Most Probable Buyer .............................................................................................................................. 12
5.2 Methodology To Predict Price ................................................................................................................ 12
5.3 Comparable sales ................................................................................................................................... 13
5.3.1 Table of Data Collected .................................................................................................................. 13
5.3.2 Assumptions ................................................................................................................................... 14
5.3.3 Adjustments ................................................................................................................................... 14
5.4 Results – Probable Price ......................................................................................................................... 15

6 CONCLUSIONS ......................................................................................................................................... 16
6.1 Limiting Conditions ................................................................................................................................. 16

7 APPENDIX ................................................................................................................................................ 17

8 REFERENCES ............................................................................................................................................ 19

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PROPERTY VALUATION REPORT

1 EXECUTIVE SUMMARY
Both primary and secondary data sources were used in the analysis contained in this report. Secondary data was
employed in gathering general information regarding market demand, sales prices, demographics and trends.
Primary data was gathered from the subject site through physical inspection and relevant documents.

1.1 SUMMARY OF FACTS AND CONCLUSIONS

Subject Property Address 576 North Road Ormond, VIC 3204
1/576 North Road Ormond, VIC 3204
Type of Property Commercial retail space with residential apartment and
onsite carparking
Ownership Private
Date of Value 29 September 2015
Physical Attributes Frontage: 14.72m
Land Size: 591m2
Building Size: 350m2
Improvements: 2 storey building, ATM
Legal Attributes No Restrictions on title
Maximum Building Height of 9m
Within Commercial 1 Zone
Locational Attributes Frontage to North Road
Close to buses and trains
Close to amenities, parks, shops etc.
Psychological Attributes Suburb consists of young individuals and families
High market demand
Mostly renters
Environmental Attributes Palm tree on site
No environmental hazards on-site
Probable Use ‘As is’
Probable Buyer Investor or developer
Initial price transaction zone Transaction Zone: $1,295,000 – 2,415,000
Adjustments Adjustments made for building size, land size and site
improvements/characteristics
Adjusted price and transaction zone Market Value: 1,820,000
Transaction Zone: $1,085,000 – 2,646,000.

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2 PROBLEM ANALYSIS & VALUE DEFINITION

2.1 REASON(S) FOR THE VALUATION

The purpose of this report is to estimate the current market value of the subject site (576 North Road Ormond)
on behalf of the client who is viewing the site as a potential buyer/developer. This report will also discover
alternative uses for the subject site and therefore determine most probable use and future buyer.

2.2 EVALUATION DATE

The date that the property was inspected and the relevant date of the valuation are summarised as follows:

Date of Valuation: 29th September 2015

Date of Inspection: 24th September 2015

2.3 ASSUMPTIONS FROM CLIENT

The client has specified that they would like to buy the property as is, for investment purposes, with the potential
to develop later on.

2.4 DEFINITION OF VALUE ADOPTED

The ‘market valuation’ definition adopted for the purpose of this report is as follows:

“The estimated amount for which an asset should exchange on the date of valuation between a
willing buyer and a willing seller at arm’s length transaction after proper marketing wherein the
parties had each acted knowledgeably, prudently and without compulsion.”

International Assets Valuation Standard Committee

2.5 DEFINITION OF INTEREST(S) TO BE VALUED

The subject site located at 576 North Road Ormond is to be valued. This also includes the unit with the address
of 1/576 North Rd Ormond located on the first floor.

2.5.1 Items to be excluded in this valuation

 A small shed and shipping container reside on the property and are to be excluded from the valuation as
they are separately owned items.

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3 PROPERTY ANALYSIS & SPECIFICATION OF ALTERNATIVE USE

This section of the report analyses the property in terms of productivity. This means weighing the advantages and
disadvantages of the property to determine the alternative uses that the property might have which ultimately
helps to define the value of the property.

3.1 PHYSICAL CHARACTERISTICS

3.1.1 Site Description

There are two properties identified on this site:

Property One Property Two

Address 576 North Road, Ormond 3204 1/576 North Road, Ormond 3204
Type Commercial Residential
Description Commercial Retail space Residential unit occupying second
occupying ground floor floor
Current Owner Private owner (owns entire site)

The site is rectangular in shape and has a frontage to North Road of 14.72m and a Depth of 40.19m giving an
approximate land area of 591m2. Refer to Appendix 1.

The corner site is somewhat flat and is bound on the northern side by North Road and to the east by Wheeler
Street. There is a laneway running behind the site and the current building shares a party wall with the
neighbouring commercial tenancy.

3.1.2 Improvements
Building Improvements
Erected on site is a substantial 1920’s two storey building containing a retail shop on ground floor and residential
apartment on top. This building is relatively well maintained, however has not been updated a long period of time.
The total building area on site accounts for approx. 350m2 of the total land area. The ground floor formerly
accommodated a banking chamber and there for is constructed with triple brick walls. Currently it is fitted out as
a retail tenancy with a Commonwealth ATM on the buildings North Rd frontage.

There is also a large backyard that is currently uses as a carpark that houses a small carport and can hold up to 6
car spaces. This carpark is used by both tenancies and can be accessed by Wheeler Street.

The upper floor comprises a well-proportioned 3 bedroom apartment which has its open separate entrance on
Wheeler Street.

Non-Building Improvements

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Non-building improvements include corrugated metal boundary fencing, concrete driveway and path in backyard.

Services that are linked to the site are water, gas, sewer and electricity.

3.1.3 Conclusions
The site contains a few beneficial features that will affect the valuation of the site. These include:

 two types of tenancies (commercial & residential)

 large onsite car parking space at rear
 large site for neighbouring area (beneficial for development)
 addition of ATM which would generate passive income
 Corner site

**Refer to appendix 3-5 for images of site.

3.2 LEGAL CHARACTERISTICS

3.2.1 Restrictions on Title

The Title was not made available. This valuation is therefore made subject to the land and Title being unrestricted
by any encumbrances, covenants, easements or other planning restrictions which might otherwise adversely
affect the value of the land.

3.2.2 Current Lease(s)

The information regarding the term of the current leases for this site were not made available. However it can be
assumed that the property is under three sets of leases, commercial lease for ground floor retail, upper floor
residential lease and a lease for the space held by the Commonwealth bank ATM. All of these would contribute
to the cash flow achievable by the property.

3.2.3 Town Planning Constraints

Gen Eira Council is the responsible authority. The site is currently under the Commercial 1 Zone (C1Z) outlined
under Clause 34.01 of the Gen Eira Planning Scheme (refer to Appendix 2). Under this clause it states that no
permits are required for retail/shop tenancies and there is no maximum lettable floor area. The site is also
covered by a car parking overlay.

Under clause 55.03-2 outlining building heights, it states that the maximum building height should not exceed 9
metres where the site is flat and changes of building height between existing buildings and new buildings should
be graduated.

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3.2.4 Political Factors

The government is currently funding the re-development of Ormond train station among others. This will see the
train line/station run underneath North Road, positively affecting traffic flow and noise on North Road close to
the subject site.

3.2.5 Conclusions
It can be concluded that the site has the potential to increase from two storeys to three storeys (9 metres) in
height and is assumed to have no title restrictions. It can also be seen that the re-development of Ormond station
will increase the desirability of the subject site in terms of reduced noise and aesthetics.

3.3 LOCATIONAL CHARACTERISTICS

3.3.1 Regional Location

Ormond is an adjacent suburb to Bentleigh, East Brighton, Caulfield and Oakleigh. All of these suburbs are mature
and virtually fully developed.

North Rd runs through Ormond and adjacent to the site (refer to Appendix 1). North Road is a major access way
for cars and buses and contains the local commercial activity centre. Retail shops, Primary School, health services,
an IGA and restaurants/cafes are located closely to the site. There are also a few parks (E.E Gunn Reserved &
Joyce Park) located within walking distance of the site.

The subject site is well serviced by trains (150m to Ormond station) and buses to the CBD, Monash University
Campuses, Southland Shopping Centre and Chadstone.

3.3.2 Conclusions
Ormond is a mature and well serviced suburb. The subject Site itself benefits from being located on North Rd as
it is extremely close to Ormond Train Station and other amenities such as restaurants, schools, parks and shops.

3.4 ENVIRONMENTAL CHARACTERISTICS

3.4.1 On Site Factors

The backyard is predominantly clear with the exception of one fully grown palm tree on Wheeler Street side.

Other environmental characteristics onsite could not be determine as no environmental reports/surveys have
been conducted/searched. Therefore it is assumed that there are no environmental hazards on site.

3.4.2 Off-Site Factors

The site currently adjoins the property 574 North Rd Ormond but does not currently affect it. There does not
seem to be any social or physical impact of the site onto the greater community. However the site is close to a
train line (Frankston) and this could impact the site.

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3.5 PSYCHOLOGICAL CHARACTERISTICS

3.5.1 The Locality

Ormond can be classified as an up and coming suburb where many older buildings are being rejuvenated or re-
developed. Ormond currently consists of a mostly younger generation and families, which can be seen in the
graphs below.

Source: realestate.com.au

The subject site is located in a high traffic density area and therefore noise from North Road and train station is
quite high.

3.5.2 The Property

The property itself is a 1920’s art deco style building that is in reasonable condition. The upper floor balcony has
a view of North Road but nothing significant.

When the Ormond train line/station is set to run underneath North road, it will increase the desirability of living
on north road near the station such as this site.

3.5.3 The Market

The property market in Ormond currently consists of mostly houses at 43.6% and mostly renters at 37.1%.

Source: onthehouse.com.au

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Ormond has become one of the ‘million dollar suburbs’ where the median house price is $1,140,000 and median
unit price is $480,000. These median prices have remained steady over the last year which is shown in the below
graph.

Source: realestate.com.au

According to realestate.com.au, Ormond has a much higher market demand than the average for Victoria for all
property types. This could be due to population increases or socioeconomic perception changes in this area.

Source: realestate.com.au

The market for such a unique site (its size, and commercial and residential combination) would be high for
investors and developers as it would produce high rental returns and has the potential to be developed into
something more.

3.5.4 Conclusions
The type of people living in Ormond are young and/or families which consists with the majority being renters.
The market is generally steady for units meaning low risk in terms of investment and the Ormond property market
demand is very high in comparison with Victoria.

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4 EVALUATION OF ALTERNATIVE USES AND SELECTION OF

PROBABLE USE

4.1 POSSIBLE ALTERNATIVE USES

The alternative uses for this site are determined to be from the previous findings;

 Keep the site as it is (The site already has three sources of income – commercial shop, residential unit,
ATM) – This option would benefit as it would require none or minimal improvements and hence no capital
to develop.
 Redevelop into mixed use of commercial shops and residential units with a maximum height of 9m or three
storeys. – This option would benefit as it would increase the amount of lettable tenancies and therefore
rental return as well as potential site value.

4.2 SELECTION OF PROBABLE USE

As the client has stated that they would like to momentarily invest in the site as it is now, this will become the
most probable use. Therefore the following valuation of the site assumes that the site will remain the same.

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5 PRICE PREDICTION
This section is the detail valuation analysis based on the conclusions of the previous findings for probable use and
property analysis.

5.1 MOST PROBABLE BUYER

The most probable buyer is found to be someone looking for an investment opportunity in terms of rental return
and capital growth. As the site also has the potential for development later on, developers would also fit as a
most likely buyer type for this site.

5.2 METHODOLOGY TO PREDICT PRICE

The objective of this valuation section is to deliver a well-supported analysis of the subject site specific to the real
estate economic characteristics. Usually, the valuer studies the property from each of the traditional approaches
to value analysis - cost, income, and sales comparison. The three approaches are interrelated and used to provide
an analytical process to form a check and balance for a comparison in the final conclusions of value.

However the direct market comparison approach is the most applicable to this report, and therefore will be used
as the valuation method to predict market value of the property.

In preparing this valuation, the following has been conducted;

 Inspection of the subject site and neighbourhood

 Gathered sales and inspected each of the comparables, as well as verified and confirmed each sale and
rental.
 Confirmed and analysed the data and applied the Sales Comparison Approach to value.
 Compared the price per m2 of building area to give a comparable estimate range
 Adjusted the results for differences

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5.3 COMPARABLE SALES

From the below data collected it can be found that the unadjusted comparable range of price per building area is
3,700 – 6,900 $/m2. Price per building area has been selected as a comparable rather than price per land area as
it is equated easier. Adjustments can be made later for differences in improvements such as larger undeveloped
land (car parking on subject site).

The following comparable properties have been selected, taking into account location, land size, building area,
use and quality.

5.3.1 Table of Data Collected

Address Comparable? Sale Attributes Rental Land $/Land Buildi $/Buil Price
Date ($pa) Area Area ng ding ($)
(m2) (m2) Area Area
(m2) (m2)

1 351 Centre Road, Bentleigh Similar use, April

 Up to 6 onsite car parks
Up to 264 5,833 358 4,302 1.54M
layout, near 15 with rear access 64,000
train station,  Significant development
commercial potential (STCA)

zone  Retail ground floor &

upstairs 2 bed dwelling
 Well maintained inside

2 452 Centre Road, Bentleigh Similar use, March

 Commercial 1 Zone
85,000 260 7,538 285 6,877 1.96M
layout, near 15 (retail:
 Retail and unit
train station combination 66,000

 Outdated decor & Unit:

19,000)

3 193-195 McKinnon Road, Similar area, March

 Has planning permit for 4
n/a 419 3,568 405 3,691 1.495
McKinnon frontage 14 storey with 2 retail & 12 M
apartments
 11.62m frontage to a
commercial road

4 525 North Road Ormond Similar use & 14

 Well maintained
n/a 222 6,300 380 3,684 1.4M
location
 Retail & apartment
 Close to train station
 Small store frontage

Image Sources: GoogleMaps

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5.3.2 Assumptions

 The above direct market comparisons have been selected on the basis that the client would like to retain
the site as is momentarily.
 The site is unique in size to the Ormond area and as such it was difficult to find matching property types.
Therefore the above have been selected to equate in terms of comparable location, use & building size.
Adjustments to be made after.
 All comparable properties were transacted at arms-length.

5.3.3 Adjustments
Market Conditions (Date of Sale)
Market conditions often change between the sale dates of the comparable and the effective date of the valuation.
These conditions tend to vary depending upon the economic conditions, effective demand and inflation rates.
This adjustment is made depending upon market conditions not the actual time between date of valuation and
sale date of comparable. Therefore if market conditions have remained unchanged no adjustment would be
necessary. For this subject site market conditions it has been deemed to be stable for the last few years and
therefore no adjustment for time needs to be made.

Quality
All of the above sites are of similar condition to the subject site and therefore no adjustment for quality has been
made.

Building Area
All the comparables are of different building areas and therefore need to be adjusted to be comparable to the
building area of the subject site, 350m2.

Address Building $/Building Reasons to Indicated Adjusted

Area Area (m2) adjust Adjustment (%) amount $/m2
1. 351 Centre 358 4,302 Very similar 0% 4,302
Road, Bentleigh
2. 452 Centre 285 6,877 Area is smaller + 18.5% 7,560
Road, Bentleigh than subject
site
3. 193-195 405 3,691 Area is larger -16% 3,100
McKinnon Road, than subject
McKinnon site
4. 525 North Road 380 3,684 Very Similar 0% 3,684
Ormond

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Site Improvements/Characteristics

Unlike the comparable sites, the subject site land size is much larger. However this extra land is currently
underused as a large onsite carpark and therefore has a small to medium benefit as an investment property. The
extra land would benefit later on for development purposes.

The site also has a large frontage to North Road which is very desirable. This would be comparable to number 3
(refer to 5.3.1).

The use and locations are all very similar, all located on main roads, activity centres and contain a combination of
retail and residential.

Summary of Adjustments

From the building area adjustment, the resulting range is 3,100 - 7,560$/m2. Therefore the resulting price range
is $1,085,000 – 2,646,000. However due to the sites improvements mentioned above and the price jump recorded
on comparable 2, the subject site would be sitting around mid range - 5,200$/m2 or $1,820,000.

5.4 RESULTS – PROBABLE PRICE

In consideration to all of the sales and analysis of the area, the adjusted current market value of the subject site
is:

$1,820,000

One Million, Eight Hundred and Twenty Thousand Dollars

(5,200$/m2)

**This value is the market price that would most likely paid by the probable buyer outlined in 5.1.

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6 CONCLUSIONS
This statement of the work has been carried out according to the code of ethics and guidelines of the Australian
Property Institute (API). The valuer is a fully registered member of such body and is a Certified Practicing Valuer
(CPV).

6.1 LIMITING CONDITIONS

This report and letter of transmittal are made expressly subject to the following limiting conditions. If the client
accepts or uses this valuation study, he or she is accepting all limiting conditions:

 The report is based, in part, upon information assembled from a wide range of sources and, therefore, the
incorporated data cannot be guaranteed.
 The valuer assumes no responsibility for economic or physical factors which may affect the opinions in this
report occurring after the date of the letter transmitting the report.
 The possession of this report, or a copy of it, does not carry the right of publication. This report may not be
used for any purpose or by any person other than the party to whom it is addressed without the written
consent of the appraisers. This report, in all cases, is to be used with proper written qualification and in its
entirety.
 It must be acknowledged that any assumptions made by the valuer have been made to the best of their
ability at the time of this report.

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7 APPENDIX
Appendix 1: Area map

SITE

Source: GoogleMaps

Appendix 2: Map showing town planning zones around site

Source: http://services.land.vic.gov.au/

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Appendix 3: Street View from North Road (Site Frontage)

Source: GoogleMaps Streetview

Appendix 4: Street View of site from Wheeler Street

Source: GoogleMaps Streetview

Appendix 5: Street view from site including laneway from Wheeler Street

Source: GoogleMaps Streetview

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8 REFERENCES
Ksou 2015, Property Report, Retrieved 25 September 2015, <http://house.ksou.cn/report.php?q=193-
195+McKinnon+Road,+McKinnon&sta=vic&askid=86855>

Onthehouse 2015, Ormond, Retrieved 24 September 2015, <onthehouse.com.au>

Real Commercial 2015, 351 Centre Road, Bentleigh, Vic 3204, Retrieved 25 September 2015,
<http://www.realcommercial.com.au/property-land+development-vic-bentleigh-501496783>

Real Commercial 2015, 452 Centre Road, Bentleigh, Vic 3204, Retrieved 25 September 2015,
<http://www.realcommercial.com.au/property-retail-vic-bentleigh-501444315>

Realestate 2015, Ormond, Retrieved 26 September 2015,

<http://www.realestate.com.au/neighbourhoods/ormond-3204-vic>

Residex 2015, Suburb Report Ormond, retrieved 22 September 2015, <www.residex.com.au>

State Government Australia 2015, Property Report: 576 North Road, Ormond, retrieved 22 September 2015,
<www.land.vic.gov.au>

Tim Sproat, Deakin University, Propery Markets

Tim Sproat, Deakin University, Property Valuation Reports

Tim Sproat, Deakin University, Property appraisal and evaluation

Whipple RTM 1995, Property valuation and analysis, Law Book Co, North Ryde, NSW

PROPERTY VALUATION REPORT | 576 North Road Ormond, 3204