RENTAL VALUATION REPORT - Kempsey Shire...3 Killuke Crescent, CRESCENT HEAD NSW 2440 18 August 2017...

MVS Mid Coast (Mid Coast Property Consultants Pty Ltd) Suite 1, 3 High Street, WAUCHOPE NSW 2446 t/02 6585 1177 f/ 02 6585 3413 [email protected] www.mvsvaluers.com.au ABN 73 106 381 800

RENTAL VALUATION REPORT

3 Killuke Crescent CRESCENT HEAD NSW 2440

Instructed By:

Kempsey Council Attention: Mr Ian Russell - Property Consultant

PO Box 3078 West Kempsey NSW 2440 [email protected]

Date of Inspection: 18 August 2017

Valuation No. N14892

mailto:[email protected]

3 Killuke Crescent, CRESCENT HEAD NSW 2440

18 August 2017

MVS Mid Coast Pty Ltd Ref. No. N14892 Page 1 of 20

TABLE OF CONTENTS 1. Address: ..................................................................................................... 2

2. Instructions: ............................................................................................... 2

3. Basis of Valuation: ....................................................................................... 2

4. Property Description: .................................................................................... 3

5. The Land: ................................................................................................... 5

6. Improvements: ............................................................................................ 6

7. Occupancy Details ........................................................................................ 8

8. Market Rental Evidence: ............................................................................... 9

9. Sales Evidence: ......................................................................................... 11

10. Valuation Rationale: ................................................................................... 14

11. Valuation Statement: ................................................................................. 15

12. Qualifications & Disclaimers: ....................................................................... 16

13. Photographic Study: ................................................................................... 17

14. Instruction ................................................................................................ 19

15. Maps ........................................................................................................ 20


18 August 2017


1. Address:

3 Killuke Crescent, Crescent Head NSW 2440

2. Instructions:

Acting on written instructions from Mr Ian Russell on behalf of Kempsey Council the

subject property has been inspected to assess the current market rent for lease

negotiation purposes.

This valuation may only be relied upon by the instructing party and the Department of

Industry - Lands & Forestry.

The report has been prepared for the private and confidential use of the above parties

and it should not be reproduced in whole or in part or relied upon for any other purpose

or by any other party without our express written authority.

This valuation has been prepared in accordance with the Australian Property Institute

Practice Standards and Guidance Notes.

The valuation is based on the instructions and subsequent information supplied

containing a full disclosure of all information that is relevant. Whilst the Valuer has

attempted to obtain all necessary information and verify the material and data provided,

the Valuer and valuation firm does not accept any responsibility or liability whatsoever in

the event the Valuer has been provided with insufficient, false or misleading information.

It is confirmed that MVS Mid Coast and the inspecting Valuer have no pecuniary interest

that could conflict with the valuation of this property.

3. Basis of Valuation:

This valuation has been prepared on the basis of market rent as defined by the

International Valuation Standards Committee (IVSC), and endorsed by the Australian

Property Institute, as follows:

“The estimated amount for which a property would be leased on the valuation date

between a willing Lessor and a willing Lessee on appropriate lease terms in an arm’s

length transaction, after proper marketing and where the parties had each acted

knowledgeably, prudently and without compulsion”.


18 August 2017


4. Property Description:

Title Details: Lot 9 in Deposited Plan 40088

Registered Proprietor: Crown Land owned by the State of New South Wales

Encumbrances: None disclosed or evident.

This valuation is made on the basis that the property is free of mortgages, charges and

other financial liens.

Site Area: 1,738m²

Dimensions: Nothern Boundary 52.9 metres

Eastern Boundary 30.0 metres

Southern Boundary 40+4.2+12.8 metres

Western Boundary 35.0 metres

Zoning: The land is zoned R3 - Medium Density Residential under the

provisions of Kempsey Local Environmental Plan 2013.

Zone R3 – Medium Density Residential

1 Objectives of zone

To provide for the housing needs of the community within

a medium density residential environment.

To provide a variety of housing types within a medium

density residential environment.

To enable other land uses that provide facilities or services

to meet the day to day needs of residents.

To encourage urban infill and redevelopment in areas that

surround existing or proposed facilities and services.

2 Permitted without consent -

Environmental protection works; Home-based child care; Home

occupations

3 Permitted with consent

Attached dwellings; Boarding houses; Child care centres;

Community facilities; Group homes; Home industries; Multi

dwelling housing; Neighbourhood shops; Places of public worship;

Respite day care centres; Roads; Seniors housing; Any other

development not specified in item 2 or 4

4 Prohibited

Agriculture; Air transport facilities; Airstrips; Amusement centres;

Animal boarding or training establishments; Biosolids treatment

facilities; Boat building and repair facilities; Camping grounds;

Caravan parks; Cemeteries; Commercial premises; Correctional

centres; Crematoria; Depots; Eco-tourist facilities; Emergency


18 August 2017


services facilities; Entertainment facilities; Exhibition villages;

Extractive industries; Farm buildings; Farm stay accommodation;

Forestry; Freight transport facilities; Function centres; Heavy

industrial storage establishments; Helipads; Highway service

centres; Industrial retail outlets; Industrial training facilities;

Industries; Information and education facilities; Marinas; Mooring

pens; Mortuaries; Passenger transport facilities; Public

administration buildings; Recreation facilities (indoor); Recreation

facilities (major); Recreation facilities (outdoor); Registered clubs;

Restricted premises; Rural industries; Rural workers’ dwellings;

Service stations; Sewage treatment plants; Sex services

premises; Storage premises; Transport depots; Truck depots;

Vehicle body repair workshops; Vehicle repair stations; Veterinary

hospitals; Warehouse or distribution centres; Waste or resource

management facilities; Wholesale supplies

Current Use: Community Pre-School

Heritage Issues: None advised.

Marketability: Moderate.

Environmental

Issues:

Bushfire Prone

Highest & Best

Use:

I consider that the highest and best use of the land is for medium

density residential development.

The valuation assumes the proposed use is permitted within the

zone and approved by way of development consent.

Comments in relation to zoning, heritage conservation orders/classification, road

widening or realignment proposal or any Council policy restricting the development of

the land by reason of likelihood of landslip, flooding or drainage issues are based on

verbal advice or records available to the public and have been confirmed by obtaining a

Section 149 Certificate under the Environmental Planning and Assessment Act 1979.


18 August 2017


5. The Land:

Identification: Zoning Maps, SIX Maps, Crown Plan and RPData

Title Search: No.

Location &

Neighbourhood:

The subject is located at the northern end of Killuke Crescent,

about 800 metres west of the Crescent Head town centre.

Crescent Head is a coastal village about 20 kilometres south-east

of Kempsey and about 435 kilometres north of Sydney on the Mid

North Coast of New South Wales. It is a popular tourist destination

and has convenience shopping and a primary school.

Surrounding development comprises residential dwellings generally

single level in good condition, low rise residential unit

developments, Crescent Head Resort & Conference Centre,

Crescent Head Public School, Sporting grounds and facilities and

vacant scrubland land.

Description: The subject property is a near rectangular shape parcel of land

which has been cleared to shade timber and is generally level in

topography.

Access is via concrete driveway off Killuke Crescent which is

bitumen sealed.

Services The site is connected to mains electricity, reticulated town water &

sewerage services and telephone.

Killuke Crescent is a bitumen sealed 2 lane road with cul-de-sac

end and central median.


18 August 2017


6. Improvements:

Style and street appeal: Single storey conventional style of average appeal.

Position: Eastern alignment with large vacant yard area.

Built about: 1985.

Additions about: None Advised.

The above are noted to be Lessee built improvements.

General Construction:

Main walls and roof: Brick and Metal Sheet.

Flooring: Concrete Slab.

Windows: Aluminium Framed.

Interior linings: Painted Brick.

Accommodation:

Lessee improvements are excluded from the assessment, but, essentially comprise a

Free Standing Preschool Building having:

Store Rooms (2);

Play Room;

Kitchen;

Office;

Children Toilet & Wash Room;

Separate WC;

Verandah.

Finishes:

Vinyl plank flooring, Split System Air Conditioning, Ceiling Fans & Fluorescent Lighting.

Kitchen with laminated bench tops and cabinets, tiled splash back, 1.5 bowl stainless

steel sink .

Children Toilet & Wash Room with 3 L.D Suites and Sink, Additional LD Suite and Vanity.

Building Areas:

Internal 138 m²

Verandah 48 m²

Porch 7 m²

Total 193 m²

Defined Areas:

The building areas are based on our physical measurement on site.

Ancillary Improvements:

Driveway, Paving, Fencing, Established lawns and gardens, Shade sails (2), Sandpit with

mock stone perimeter, Cubby house, Metal sheet roof awning and Pergola.


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Repairs and Maintenance:

N/A

Fire Services:

Fire extinguishers and exit signs were noted during inspection.

Asbestos:

The valuer has not physically inspected enclosed cavities or air conditioning plant and

equipment and this valuation assumes that these areas do not feature asbestos based

materials for insulation.

The subject property was constructed prior to the banning of asbestos products in

construction. Inspection did not reveal any obvious use of asbestos based materials that

appears to be of concern.

Qualifications:

A structural report on the building and/or its plant and equipment has not been sighted,

and nor have we inspected unexposed or inaccessible portions of the premises (including

sub-floor areas, roof and roof cavities). Therefore, comment on the structural integrity,

any defects, rot or infestation of the improvements, any use of asbestos or other

materials now considered hazardous, or areas of non-compliance with the building

standards, regulations or codes and Local Government, other than matters which are

obvious and which are noted within this report, is not possible. Persons or entities

involved in dealings with the property may need to make further investigations in this

regard if considered necessary.

This report is not a structural survey and no advice is given in any way relating to

structural matters. Any opinion given as to the condition of the improvements on the

property is not given in the capacity as an expert.


18 August 2017


7. Occupancy Details

We are instructed that Council wishes to renew its expired lease with the current Lessee.

We have been provided with a copy of the current lease which has a terminating date of

30 June 2017. We note the tenant remains in occupation of the premises under the

holding over provisions provided in the Lease. This valuation assumes the proposed use

is permitted within the zone.

The lease term proposed is five (10) years with no option period.

According to the Department website, Leases may be granted by:

public tender;

invitations for expressions of interest; or

direct negotiation.

The rent payable is assess on the basis of market value and reviewed by annual

Consumer Price Index (CPI) adjustments.

Rebates may be granted in certain circumstances for non-profit community organisations

but the rental must be set above the minimum charge of $483.00 per annum as at 31

Jul 2017 (adjusted quarterly by CPI).

The following is an extract from the Department’s “Market Rent Redeterminations – FAQ”

sheet:

In determining the annual rent of a lease or licence the following principals are

applied in accordance with Section 143 of the Crown Lands Act 1989;

Rent shall be the market rent for the land having regard to any restrictions,

conditions or terms to which it is subject

Improvements on the land which were made by the holder, or are owned or

in the course of being purchased by the holder shall be disregarded

Regard may be had to any additional value which, because of the lease of

licence, has accrued or is expected to accrue, to other land held by the

holder

Regard may be had to the duration of the time for which the rent is

determined will be payable.

An assessment of the market rental value of the land and any improvements

owned by the Crown is undertaken by an expert Valuer.

The market rental value is determined based on a comparison with current market

evidence which may include rentals recently negotiated for similar premises or

where little recent market rental evidence is available, an assessment of the

market return on the value of the Crown owned property.

For some tenures, the market rental is determined by specialist Valuers using

industry recognised methods which are specific to that particular use. These

methods may include the assessment of rent as a percentage of the potential

income of the site based on the permitted use stated in the tenure agreement and

taking into account any physical, environmental planning or legal constraints on

the site.


18 August 2017


8. Market Rental Evidence:

In finalising the assessment of rental value, we have investigated the following evidence:

Date Rental

2-6 Yaelwood Street,

Kempsey

4 July 2016 $25,000

excluding GST

Description

Converted church and masonry block building.

Accommodation includes five separate office areas,

meeting room, storage areas, kitchen, disabled toilet,

ramp, timber deck, small room, mezzanine storage area

and external toilets.

Term:5 Years with Annual 3% reviews

Option: 1 x 5 Years

Gross Building Area: 391m²

External Amenities building: 37m²

Outdoor: 64m²

Site Area: 2,780m²

This rental equates to

$50.81/m² p.a Nett of combined gross building area or

$63.94/m² p.a Nett of main gross building area.

$8.99/m² p.a of site area.

Comparison

Larger area in Kempsey, superior construction and quality

finishes. Supports lower rate per square metre for subject.

Lot 58 Jindalee Road

PORT MACQUARIE

Date

September

2015

Rental

$20,940 p.a.

Excluding GST

Description

Vacant corner industrial site at the southern end of

Jindalee Road with gravel base and chainwire perimeter

fence.

1,396m² of site area

Leased from September 2015 for a 3 year term with CPI

increases annually.

This Rental equates to

$15/m² p.a. excluding GST gross

Comparison

Superior position in Port Macquarie industrial precinct..

Smaller site area. Supports lower rate per square metre

for subject.


18 August 2017


Lot 27 Merrigal Road

PORT MACQUARIE

Date

2011

Rental

$35,096 p.a.

excluding GST

Description

Vacant industrial site at the south-western end of the

industrial area used for brick storage with fully fenced

site.

1,867m² of site area

Leased from 2011 for a 1 year term with 4 increases

annually. Passing rental of $42,700 per annum.

This Rental equates to

$18.80/m² p.a. gross and $22.87/m² p.a. gross passing

rental.

Comparison

Superior position in Port Macquarie industrial precinct.

Comparable site area. Supports lower rate per square

metre for subject.


18 August 2017


9. Sales Evidence:

In order to assess the rental value based on a fair return for the value of the Crown Land

and improvements, a series of sales has been investigated, a selection of which follows.

Sales outside the area of the subject property or in excess of 10% variation on value are

included for comparative purposes.

Date Sale Price

38 Pacific Street

Cresent Head, NSW,

2440

12 February

2015

$285,000

Description

A vacant parcel of land zoned R3 Medium Density

Residential. Near rectangular shape cleared holding in

residential area.

Site area: 1,518m²

This sale equates to

$187.75 per square metre of land

Comparison

Well located site with comparable zoning and land area.

Sold in weaker market conditions. Supports comparable

rate per square metre for subject.

Date Sale Price

3 Roy Kemp Close

Cresent Head, NSW,

2440

28 April 2017 $232,500

Description

A vacant parcel of land zoned R1 General Residential.

Irregular splay shape lot, moderate cross fall, some

clearing would be required before development. Located

in an established residential area.

Site area of 608m²


$382 per square metre of land

Comparison

Smaller block in established residential area. Supports

lower rate for subject site.


18 August 2017


Date Sale Price

3 Terence Brassel

Place Cresent Head,

NSW, 2440

21 December

2015

$217,500

Description

A vacant parcel of land zoned R1 General Residential.

Irregular splay shape lot, moderate cross fall, cleared

lot. Located in an established residential area.

Site area of 613m²


$355 per square metre of land

Comparison

Smaller block in established residential area. Supports

lower rate for subject site.

Date Sale Price

7 John Shaw Close

South West Rocks,

NSW, 2431

22 September

2016

$620,00

Description

Vacant land. Comprises 3 adjacent blocks at the end of a

cul-de-sac sold in one line. Zoned R3 Medium Density

Residential. Well suited to individual sale or high density

development.

Site area of 5,514m²



Comparison

Larger block in central South West Rocks location with

existing separate titles located in comparable zoning.

Supports higher rate for subject site.


18 August 2017


Date Sale Price

8,9,10,14, & 15 Links

View Close South

West Rocks, NSW,

2431

31 January

2017

$565,000

Description

Vacant land comprising five adjoining and separately title

lots ranging in size from 611 m² to 3505 m². Zoned R3

Medium Density Residential. Sale price of total site area

for fully developed lots.

Site area of 6,473 m²



Comparison

Larger total area with five separate title in central South

West Rocks location. Fully serviced and developed lots.

Supports higher rate for subject site.


18 August 2017


10. Valuation Rationale:

The rental evidence ranges from $8.99/m² to $22.87/m² of site area. The lower end of

the range reflects a larger site area with improvements in Kempsey non-central

commercial location and while the upper end reflects those in more central commercial

locations.

Considerations:

Site area, conditions and location;

Vacant land assessed (improvements constructed by the Lessee);

Current zoning and potential uses; and

Low profile position.

Site Area 1,738 m² x 4.50$ per m² = 7,821$ p.a.

x 5.00$ per m² = 8,690$ p.a.

x 5.50$ per m² = 9,559$ p.a.

Due to a lack of suitable comparable rental information we have undertaken an

assessment of the market return on the value of the Crown owned property.

We have conducted a sensitivity based on direct comparison rates analysed in our sales

evidence, based on a vacant site with the current zoning our calculations is as

hereunder.

Rate/m2 of site area:

Area 1,738 m² @ 180$ /m² 312,840$

190$ /m² 330,220$

200$ /m² 347,600$

Range 312,840$ to 347,600$

Investigations have revealed commercial yields in the extended area are between 6% to

9% and residential yields at 4% to 5%. As the assessment excludes Lessee

Improvements, i.e. vacant land, there is reduced risk and minimal outgoings including

repair costs. Therefore we believe a fair gross return of 2% to 3% of the land value

exists for the subject property. A rental value is calculated as follows:

Return 2.5% 312,840$ 7,821$

330,220$ 8,256$

347,600$ 8,690$

Rent Range 7,821$ to 8,690$

On balance, I consider the subject has a fair rental value of $8,500 per annum gross

excluding GST.

No payments for outgoings in addition to the market rental are considered appropriate.


18 August 2017


11. Valuation Statement:

It is my professional and considered opinion that market rental value for the subject is:

EIGHT THOUSAND FIVE HUNDRED DOLLARS PER ANNUM GROSS

$8,500 P.A. GROSS

EXCLUDING GST

I hereby certify that I personally undertaken a restricted inspection of this property on the date below and have carried out the assessments above as at that date. Neither the valuer, nor any member of this firm, has any conflict of interest, or direct, indirect or financial interest in relation

to this property that is not disclosed herein. The report is not to be relied upon by any other party for any other purpose. MVS Valuers accept no liability to other parties nor do we contemplate that this report will be relied upon by other parties. Other parties who may come into possession of this report are invited to seek our written consent to them relying on this report. We reserve the right to withhold consent or to review the contents of this report in the event that our consent is sought. In summary, this valuation report is for the use of and may be relied upon only by the parties to whom it is addressed. No other party is entitled to use or rely upon it without our specific written

consent and MVS Valuers and the reporting valuer shall have no liability to any party who does so.

Date of Inspection: 9 August 2017

Valuation Firm: MVS Mid Coast Pty Ltd (Mid Coast Property Consultants P/L)

Valuer: Jeff Rogers

Qualifications/Reg. No.: AAPI 68953

Certified Practising Valuer

Signature: .......................................................................................


18 August 2017


12. Qualifications & Disclaimers:

The name MVS Valuers contained in this report relates to MVS Mid Coast Pty Limited

(Mid Coast Property Consultants Pty Limited).

Liability limited by a scheme approved under Professional Standards Legislation.

This valuation is current at the date of valuation only. The value assessed herein may

change significantly and unexpectedly over a relatively short period (including as a result

of general market movements or factors specific to particular property). MVS Valuers

Australia Pty Ltd does not accept liability for losses arising from such subsequent

changes in value. Without limiting the generality of the above comment, MVS Valuers

Australia Pty Ltd does not assume any responsibility or accept any liability where this

valuation is relied upon after the expiration of three months from the date of the

valuation, or such earlier date if you become aware of any factors that have an effect on

the valuation.

This report is not a site survey and no advice is given in any way relating to survey

matters. Any comments given in relation to the property are not given in the capacity as

an expert; however, are based on the inspection of the property and review of Title

Plans.

A structural report on the building and/or its plant and equipment has not been sighted;

nor have we inspected unexposed or inaccessible portions of the premises (including

sub-floor areas, roof and roof cavities). Therefore, comment on the structural integrity,

any defects, rot or infestation of the improvements, any use of asbestos or other

materials now considered hazardous, or areas of non-compliance with the building

standards, regulations or codes and Local Government, other than matters which are

obvious and which are noted within this report, is not possible. Persons or entities

involved in dealings with the property may need to make further investigations in this

regard if considered necessary.

This report is not a structural survey and no advice is given in any way relating to

structural matters. Any opinion given as to the condition of the improvements on the

property is not given in the capacity as an expert.

The insurance assessment is based upon current costs assuming a total loss situation

and includes an allowance for escalation in costs during the ensuing twelve months

(policy period), design and documentation period, professional fees, removal of debris

and site clearance plus Goods and Services Tax allowance. The assessment assumes a

fixed price contract during construction and, as such, no allowance has been made for

escalation during the rebuilding construction phase. The assessment should be taken as

indicative only. Should a precise estimate be required, this would be the province of a

Quantity Surveyor and/or Architect.

Neither the whole nor any part of this report, nor any reference thereto, may be included

in any document, circular or statement, without written approval from MVS Valuers

Australia Pty Ltd of the form and context in which it will appear.


18 August 2017


13. Photographic Study:

Front Elevation Rear Elevation

Landscaped Play Area Sandpit

Landscaped Play Area Storage

Landscaped Play Area Vacant side area


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Play room Toilets

Play room WC & Store Room

First Aid Kitchen

Storeroom Office


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14. Instruction


18 August 2017


15. Maps

RENTAL VALUATION REPORT - Kempsey Shire...3 Killuke Crescent, CRESCENT HEAD NSW 2440 18 August 2017...

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