Parkinson Real Estate were recently approached by a Home Owners Association who required valuation and disposal advice of a parcel of land, which they were hoping to acquire from a well-known housing developer.
The few acre site, comprised predominantly of an area of woodland located within a residential development that was developed by the house builder in the 1990s and since then, has been utilised as a nature reserve. However, the subject of the valuation was not a vanilla land asset, in that the site to be acquired also incorporated a proportion of the service roads that serve the wider residential development.
Upon receipt of formal instructions from our client, Rob Greenwood from our valuation advisory team, attended the site and conducted a full inspection of the site which consisted of a walkthrough of the site at ground floor level only.
In formulating our opinion of value, we had regard to various factors that influence the valuation of such assets to include the quality of the land, the accessibility of the land, the percentage make-up of the roadways, the allocation of the site by the local authority and the likelihood of future development.
Our initial due diligence uncovered that the site was ‘unallocated’ by the Local Authority in their planning policy. However, given the limited accessibility to the site and its situation, we consequently judged any future development prospects for the site to be nominal.
Importantly, internal service roads are sometimes considered a liability as opposed to an asset as these aspects usually require regular maintenance, and the arrangement thereof is often management intensive for site owners. In this instance, the internal service roads accounted for 1/3rd of the total site area making this a considerable element of the land as a whole and something that the clients would need to consider carefully as to if they wanted to take on the responsibility for these.
After first carrying out an initial measurement of the site using the area measurement tool on the Ordnance Survey Promap website and confirming that the land was not subject to any occupational agreements, Rob then based his valuation on the comparable method and market approach due to their being no management accounts to assess.
This proved more complicated than usual as land of this nature is usually sold at auction where prices can fluctuate substantially. Consequently, a detailed hierarchy of recent market transactions of similar sites was compiled and assessed, before weighting the comparable evidence and arriving at an appropriate capital rate per acre.
In arriving at the capital rate applied, a weighted approach was adopted with differing rates applied to the woodland and the roadways.
How did we add value to this instruction?
We added value to this instruction through our thorough search of comparable evidence, forensic analysis and commercially minded application of the analysed rates.
We advised the client by providing them with a comprehensive, yet understandable, valuation report that surpassed the requirements of RICS Valuation: Global Standards (often referred to as ‘Red Book’) that enabled us to demonstrate our expertise in the valuation sector as well as our in-depth knowledge of the local market conditions.
Most importantly, the report detailed other material considerations, that the client was unaware of, that should be contemplated when apportioning value and the requirements of the clients in the short and long terms.
The report provided a Market Value which increased the Clients confidence when preparing an offer to submit to the landowner.
Rob Greenwood MSc MRICS
RICS Registered Valuer
Associate Director – Valuation Advisory
M: 07960 612765