DRAFT REPORT

INTRODUCTION

Valuation process is about the steps to be taken in implementing valuation works. The

purpose of the steps is to give overview about valuation works process. The valuation

process is consist of several stages in order to get the best quality of valuation works.

The valuation for any property must be follow the sequence of stages in valuation works

process. There are three stages involved in valuation process. They are before

inspection , during inspection and after inspection.

Firstly is process before inspection where it starting from receiving the instruction from

Registry Title until collecting important data from relevant Department or organisation.

The instruction letter should be include the purpose of determining the market value of

subject property. This is important as stated in Standart 7 in Malaysian Valuation

Standart (MVS) where the statement is to ensure that the appropriate basis of valuation

is adopted in relation to the purpose of the valuation for which the valuation is required.

This will avoid the wrongful use of valuation for a purpose for which the valuation was

not intended. After receiving the instruction letter, check the data that given together with

the letter. So that the checklist can be prepared before going to inspection.

The next stages is during inspection process which starting from going inspection to the

subject property until taking the measurement of the buidings as well as its photographs.

According to the Standart 8 in Malaysian Valuation Standart (MVS), the correct valuation

of a property very much depend on the collection and analysis of all relevant information.

Therefore, a proper inspection and referencing of the subject property and the

neightbourhood are important. The valuer must ensure that he has taken all the

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necessary steps to ensure that this is done so. Though a Designated Assistant is

allowed to carry out the inspection and collection of data, nevertheless, the valuer has to

taken responsibility for the accuracy of all the data used in the valuation.

Lastly is after inspection stages where by the valuation works for the subject property

has been done. This stage is starting from collecting data, calculation works, complete

the valuation report, as well as report it to the client and keep the case file to the file

room. After inspection, the collection of data should be done and the valuer should

check whether the data is complete or vise versa in order to used it in determining the

value of subject property. So that the valuation of subject property can be done.

The flow chart is shows about the stages of valuation process:

APPLICATION

SEND BACK TO THE CLIENT

YesNo

START

RECEIVE CASE FROM CLIENT

REGISTER IN VIS

MANUAL CASE

DETERMINATION OF LOCATION IN GIS

2

IDENTIFY THE CASE FILE

IDENTIFY DATA

UPDATE RECORT

END

APPROVAL

VALUATION WORKS

INSPECTION

DATA COLLECTION

SEND REPORT TO THE CLIENT

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BEFORE INSPECTION PROCESS.

1.0 RECEIVING APPLICATION FROM CLIENT.

There are several steps before inspection process. When we received the application

from client, firstly is checking the application whether it is complete or vice versa. The

application should include the instruction letter, document of title for subject property,

sales and purchase agreement, site plan, building plan and other relevant document. If

the application incomplete, we should sent it back to the client and the valuation work

need not to run for that case. We need not to register the case in Valuation Information

System (VIS). If the application complete, then the application will be sending to the

technicians for registration in Valuation Information System (VIS).

The Valuation and Property Services Department has received the application from

Registry Title on 18th February 2010. The application is valuation on Wisma UOA

Centre . factory for the purpose of registration of title. The valuation is only on the the

land and buildings which not include plant and machinery. The transaction is between

Wisma UOA Centre . and Sony EMCS (Malaysia) Sdn. Bhd.

Then, the application will be checking by technician in Information Technology Unit

whether it is complete or not. The Registry Title has sent the complete application that

include the instruction letter, document of title together with site plans, the buildings plan,

Form 14A, as well as sales and purchase agreement of Wisma UOA Centre . After the

registration in VIS, the technician will filled the Q Checklist (JPPH/T/Q1a/VIS(Pind.1/03)

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and it will attached together with the application. The example of Q Checklist is shows in

apendixes.

2.0 REGISTRATION OF APPLICATION IN VALUATION INFORMATION SYSTEM.

Valuation Information System is the system where it save all the details of each case

which have been received from Valuation and Property Sercives Department that have

been regirtered by techticians in this system. The details of subject property that should

be fiiled in that system are as follows:

State : Pulau Pinang

District : Seberang Perai Tengah

Mukim : 1

Type of Lot : Final Title

Lot No. : PT 1864 & PT 2704

Type of Title : H.S.(D)

Title No. : H.S.(D) 43954 & H.S.(D) 41618

Date of valuation : 19 August 2009

Refference No. : 02100989

Name of valuation officer : Eng Lin Sin

Name of Applicant : Wisma UOA Centre .

Company No. : 155813-H

Name of Recipients : Sony EMCS (Malaysia) Sdn. Bhd.

Company No. : 183842-X

Consideration : RM 50,302,826.73 & RM 38,441,702.23

Share : 1/1

Category of land use : Industrial

Land area (sq.metre) : 101,236.5139 & 70,293.7268

Express condition : Others

Restriction in interest : Nill

Encumbrances : Leasehold 60 yrs

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The technician will put one slip as reference for the planners, other technicians as well

as Assistant Valuation Officer and Valuation Officer. The example of the slip is as

follows:

JPPH:P1T175/07/ 001/01/        Type of Lot 1        Lot No. PT 1864 PT 2704      Type of Title H.S.(D) H.S.(D)      Title No. 43954 41618      

This is a time table for all techinicians’ reference in order to know the flow of the case. It

will be recorded on the instruction letter. The example of the time table is as follows:

3.0 DETERMINATION OF SUBJECT PROPERTY POSITION.

After registration the application in VIS system, the application will send to the plan units

for determining the position in Goegraphic Information System. Geographic information

is information about geography, that is, information tied to some specific set of locations

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Plan/Syit No.  12-C-II (L) Previous Case:      Y    /   N

Officer                Nuriha Bt. Ramli

Receive Date/Time

Sent  Date/Time

Receive              24/2-8.00am  24/2-9.00amPlanner                24/2-9.00am  24/2-11.00amFile Room           24/2-11.00am  24/2-12.30amU.T.M (Open File)      

on the Earth’s surface. This system has capability of providing a quick and easy access

to large volume of data, ability to select detail by area or theme, link, or merge one data

set to another, analyze spatial characteristic of data, update data quickly and cheaply,

and new as well as flexible forms of output tailored to meet particular needs. The planner

will filled the details of subject property such as state, district, mukim, lot no., purpose of

valuation, date of valuation, as well as reference no. After filled in that system, the

planner can find the position of subject property in the plan. Then, the planner will be

chatting in the GIS system by including the purpose of valuation as well as the date of

valuation. After that, the planner will sent it to the file room.

4.0 FILE MANAGEMENT SYSTEM.

The clerk will find out the PT 1864 and PT 2704 file. The file arrangement system in the

file room is very systematic where the file is arranged separately between Seberang

Perai Utara, Seberang Perai Tengah, as well as Seberang Perai Selatan. It will be

arranged according to the district, followed by number of mukim, and lastly lot number.

The example of reference file no. is T/01/PT1864 & T/01/PT 2704. After identifying the

case file, the clerk will send the file to the valuation officer who in charged the case by

region and district.

5.0 IDENTIFY DATA.

When receiving the application from technician, the valuation officer (VO) should

determine the purpose of valuation, make sure that the application given is complete in

order to make easier to go there for inspection. After that, VO should determine any

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interest that should be valued from the application given. The interest that should be

valued based on the following items:

i) Tenure of property whether freehold or leasehold and the expired date

should be given.

ii) Share of the property

iii) Other interest such as:

a. Land and building with vacant possession or vice versa

b. Land with vacant possession or vice versa.

iv) Check the interest that should be valued such as:

a. Landlord’s interest

b. Lessor’s interest

c. Lessee’s interest

The Valuation officer will determine the date of valuation. The date of valuation for

registration of title case, it should be either the date of signing sales and purchase

agreement of the date of signing Form 14A whichever is earlier. The date of valuation for

Sony electronic (M) Sdn. Bhd. is on the date of signing Form 14A, 19 August 2009

because it is earlier than the date of signing sales and purchase agreement, 20

December 2002.

The valuation officer will check the application and identify the important data for

valuation works. There is one of the data is not include in the application which is about

measurement of Sony factory buildings. Then the valuation officer will write and send the

letter to Wisma UOA Centre .

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6.0 COLLECTING DATA.

The Valuation Officer will determine the method of valuation to be adopted to enable

complete collection data to be made. Determining the suitable method of valuation to be

used is very important as mentioned in Standard 9 in Malaysian Valuation Standard

(MVS). It should be mention in the valuation report clearly and it should be comply with

Standard 12 in MVS. The Sony factory has sent the previous document of title of subject

property. So that the valuation officer need to do titles search at Seberang Perai

Municipal Council (MPSP) in order to know the latest transaction on the subject property

and other relevant information. Before inspection, the location of subject property must

be identified on the Revenue Survey Sheet (RSS). It is important in order to know the

location and surrounding area before going inspection.

DURING INSPECTION PROCESS

During the inspection, we get the permission from the guard before entering the Wisma

UOA Centre . The inspection has been done by Miss Eng Lin Sin, Mrs. Hajjah Satariyah

Bt. Md. Daud, and Miss Siti Zanariah Binti Abdullah and helping by Mr.Noor Azilan Bin

Abdullah (Assistant Manager, Accounting & Finance Division), an agent from Wisma

UOA Centre . The things that we have bring together are the letter from JPPH in order to

get the permission from Sony factory to enter the property, the building measurement

list, buildings plan, note book, pencils and camera. Mr. Noor Azilan has gives us the

description of building factories and give us a good co-operation.

1.0 Locality/ Neighbourhood.

The subject property’s locality/ neighbourhood should be observe and take note. The

valuation officer will pay attention to landmark, main roads, and access roads to the

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property. The immediate vicinity of Wisma UOA Centre is mainly developed with high rise

office buildings, hotels, commercial complexes and high-end service condominiums.

Prominent landmarks in the locality include the Petronas Twin Tower, Suria KLCC, Maxis

building, KLCC Convention Centre, Impiana Hotel and Menara Pinang.

Shopping, retailing, educational and public facilities are available in the locality.

Other developments in the larger neighbourhood are Crowne Plaza Mutiara Hotel,

Equatorial Hotel, Wisma Genting, Kirana Condo, The Ascott Apartment and Istana

Hinggap Johor.

2.0 Land.

Wisma UOA Centre is erected on part of Lot No. 1312, Section 57, Town of Kuala Lumpur.

It contains a titular land area of 6,697 square metres (72,086 square feet).

The land is near trapezoidal in shape, flat in terrain and lies about the same level with the

surrounding service roads.

Wisma UOA Centre and Wisma UOA II are erected on the western and eastern portions of

the site respectively.

3.0 Building

The building within which the Property is sited is a 33-storey purpose-built office building

inclusive of 6 levels of carparks known as “Wisma UOA Centre”. It is constructed of

reinforced concrete floors, reinforced concrete framework infilled with plastered brickwalls

and a reinforced concrete flat roof.

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Generally the external walls are of curtain walling consisting of glass and aluminium

composite panels. The internal walls of the lift lobbies are lined with polished granite to

ceiling height whilst the internal walls of the toilets are finished with glazed wall tiles to

ceiling height.

The basement car park is accessible from the ground floor via a reinforced concrete

ramp. Vertical access to the upper floors within the main block is facilitated by six

passengers’ lifts and two sets of reinforced concrete emergency staircases located at

strategic positions of the building.

The floor finishes of the common areas such as foyer, lift lobby corridor and covered

terrace are furnished by granite and marble slabs, the toilets are of ceramic tiles whilst

other area are basically of cement render.

The doors are generally of glass panels doors, sliding and swing types glass panel doors in

timber and aluminium frames, fire-rated timber doors, solid and flush timber doors.

The windows are generally of powder-coated aluminium framed tinted glass panels.

The ceilings are generally of cement plaster and suspended ceiling boards with additional

decorations, cornices and inset lightings.

The total gross floor area of the building is about 48,881 square metres (526,151 square

feet) whilst the total net lettable area is about 30,088 square metres (323,865 square feet).

Wisma UOA Centre has been issued with a Certificate of Fitness for Occupation by Dewan

Bandaraya Kuala Lumpur on 20 August 1997. The building is about 12 years old and was

observed to be in a good state of repair. Several photographs that have been taken are

as follows:

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Factory Building Office Building

Guard House Surau

Loading Bay Motorcycle Shed

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AFTER INSPECTION PROCESS

1.0 Data Collection

Covered Way

Internal View of production AreaInternal View of Production Area

Cafeteria

Fire Extinguisher Sprinkler

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The information on subject property must be callated by conducting referencing works at

various relevant deparment or organisations. During the inspection, there are one office

building does not include in building plan because it is a new building. So that the

valuation Officer must check whether the building has an approval by Planning

Department or not. Then, Valuation Officer has get the latest Wisma UOA Centre .

Building plan for knowing the measurement of the office building.

2.0 Data Analysis

Information and data collection must be compiled and analysed carefully to derive at the

most suitable basis for valuation works. Apart from analyzing the data collection, other

factors must also be considered such as local, national, and international economy that

will affect the opinion of value. The example of the factors to be considered are the

remaining years of leasehold property, location, size, date of valuation, category of land

use, type of building, and other relevant factors that may affect the value of subject

property.

3.0 Valuation

The valuation of subject property is conducted based on the purpose of valuation. The

difference types and purpose of valuation require difference approaches of valuation.

The method of valuation used in order to determine the market value of subject property

are Comparison Method of Valuation for determining the land value, Cost Method of

Valuation for determining the buildings value. Investment Method of valuation also use

for determining the market value of property.

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Opinion of value resulting from the said method will be presented in the form of a

complete precise and concise valuation report. After the valuation report complete, the

valuation report should get the approval from District Valuation Officer and State

Valuation Director. Then, the case will be reported to the client and in the VIS System.

T3 Form from VIS system will be printed out and it will compile together with all

document and valuation report of about subject property and keep it in the case file.

Lastly, the file will kept in the file room.

4.0 Valuation Fee.

There is no valuation fee that has been charge to the client for this case. This is because

The Department of Director General of Lands and Mines (Federal) who has been

instruct the JPPH Department to value the subject property. The fee is not been charge

to any government department. For any registration of title case, there are no fee will be

charging to the client.

5.0 Valuation Works.

5.1 Method of Valuation

According to the Standard 12 in MVS, the cost method is calculation on land

value and building value where the building, structures, and improvements on

subject property are included as factors to be taken for valuation calculation.

Comparable cost data as are available to estimate the cost new of all buildings,

structures, and improvements to the site must be compiled, verify, analysed, and

kept by the valuer. The method of valuation to be use is Cost method. It is

suitable method to be use in determining the market value of special property like

these factory buildings. Cost Method is suitable method to be used because the

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construction of these factory building is special and it has their own design. Other

than that, it is also has no market or general demand because it is a special

property. The value is made up of the value of the land, together with the

replacement cost of the building. It is required the cost of providing the same

accommodation in a similar form using up-to-date construction techniques.

Land Value.

In order to determine the land value, we should use comparison method for

determining the current price of land in the locality. Firstly is finding the

comparison lots which have the same category with the subject lot and it should

be in the same locality. There are several factors to be considered which may

give effect to the value. They are:

i) Date of Valuation – We give about 5% per year. So that the

adjustment for the comparison 1 about 10% because the date of

valuation is on 26/09/2007. About 5% has been given to the

comparison 2 and 3 because the date of valuation is on

18/07/2008 and 12/08/2008.

ii) Location – the location of all comparison lot are in the same

locality. So, there is no adjustment has been given.

iii) Access road and level – all the comparison lots have the same

level and access road with the subject property. So, there is no

adjustment has been given.

iv) Land area – -15% has been given to the comparison 1 and 4 as

well as -20% for comparison 2 and 3 because they are smaller

than the subject property. Negative symbol is mentioned that the

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comparison lots are better than subject property. It is because the

smaller the land area, the higher the price.

v) Shape – the shape of comparison lots are the same as subject

property. So, there are no adjustment has been given.

vi) Topography – all the comparison lots are flat and level like subject

property. No adjustment has been given there.

vii) Planning – planning for comparison lots as same as subject

property which is industrial lot. There are no adjustment has been

given.

viii) Others (site improvement include cost of infrastructure and layout

plan area) – comparison 1, 2and 3 as same as subject property

which is factory and office building except comparison 4 which is

vacant land with industry plot. So, 15% has been given because

subject property is better than the comparison lot.

ix) Tenure (the remaining years) – in order to give adjustment on

remaining years of leasehold property, we should use single rate

years purchase in our calculation. The current ARY for industrial

property (leasehold) is 8.5%. The ARY for freehold and leasehold

land is shows in appendixes.

Then the rate of subject property will divided by the rate of comparison lot. The

adjustment will multiply by land price psq.m. After adjustment, the current land

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value is around RM130.00 to RM180.00 psq.m. We assume that RM180.00

psq.m as acceptable price.

Building Value.

For Wisma UOA Centre , the price of main factory building in 2008 is around

RM650 to RM700 psq.m and office building is around RM 750 psq.m. The price

for ansilary area is around RM250 to RM300 psq.m. But the prices have increase

in 2009. The price of main factory building ia about RM750 psq.m. and the price

of office building is about RM 850 psq.m. The price of ansilary area is about

RM300 to RM400 psq.m. The depreciation will be given to the building value

based on the age of the building. But it is also depend on the conditin of the

building. The depreciation given to the building s is about 15%. It is reasonable

because of the age of the buildings which around 20 years old. But the building

condition is very good and well maintain.

The formula and calculation works for cost method are as follows:

Market Value = Land Value + (Building Value- Depreciation)

PT 1864 :

1) Land : Land Area : 101,236.5139 sq.m. @ RM180.00 p.sq.m RM18,222,572.

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2) Building :

Main Building :

a) Production Area :58,669.03

sq.m

RM750.00 =

RM44,001,772.50

b) Office Building :4,687.17

sq.m

RM850.00 =

RM 3,984,094.50

c) Others : 416.61sq.m

RM750.00 =

RM 312,457.50

Ansilary Building :

d) Loading Area :5,582.45

sq.m

RM400.00 =

RM 2,232,980.00

e) Car Shed :1,956.40

sq.m

RM300.00 =

RM 586,920.00

f) Motorcycle Shed : 1,392.66

sq.m

RM300.00 =

RM 417,798.00

RM51,536,022.50

Less :

Depreciation : 15% RM 7,730,403.38

RM43,805,619.13

Total

RM62,028,191.63

SayRM62,000,00

0.00

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PT 2704 :

1) Land :

Land Area : 70293.7268 sq.m @ RM180.00 p.sq.m RM12,652,870.82

2) Building :

Main Building :

a) Production Area : 15,200.50sq.m

RM 750.00 =

RM11,400,375.00

b) Office Building : 5,002.48sq.m

RM 850.00 =

RM 4,252,108.00

c) Others : 1,950.00sq.m

RM 750.00 =

RM 1,462,500.00

Ansilary Building :

d) Loading Area: 1,611.63sq.m

RM 400.00 =

RM 644,652.00

e) Car Shed: 306.38sq.m

RM 300.00 =

RM 91,914.00

f) Motorcycle Shed: 695.64sq.m

RM 300.00 =

RM 208,692.00

RM18,060,241.00

Less :

Depreciation : 15% RM 2,709,036.15

 

RM15,351,204.85

Total

RM28,004,075.67

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SayRM28,000,00

0.00

Other method to be use is investment method of valuation. It involves coverting a

property income flow or rent into an appropriate capital sum. We choose this

method because the capital value of a property is therefore directly related to its

income producing power. So that we know whether the investment in this kind of

property is good or not give any profit for their owner. The Years Purchase (YP)

is a multiplier that converts rental income into a capital sum. In a property

context, it coverts rent into value. Today, Single Rate Years Purchase has been

adoted for all freehold and leasehold property.

To arrive at the valuation of a property for investment purposes, the formula is:

Capital Value = Rent x Years Purchase (Abbreviated as YP)

Capital Value = Rent x YP for __ Yrs @ ARY %

The terms that we must have are as follows:

i) Full Rental Value (FRV)

ii) All Risk Yield (ARY)

iii) Capital Value (CV)

For the Sony Electronic (M) Sdn. Bhd, we do not have any information or data

about the current full rental value for that property. In order to get the FRV of

subject property, we must use this formula:

FRV = CV x ARY

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After we get the FRV for the subject property, we should adopt all the terms in

investment method in order to get the capital value of subject property. The

calculation is as follows:

PT 1864:

FRV = CV    x ARY

=  RM 50,302,826.73 8.50

%=  RM   4,275,740.27 

FRV =  RM   4,275,740.27 CV =  RM 50,302,826.73 ARY = 8.50%

FRV

RM 4,275,740.27

38Year

FRV = RM 4,275,740.27x YP for 38 yrs @ 8.5% = 11.2347CV = RM 48,036,659.21

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Say RM 48,000,000.00

PT 2704:

FRV = CV    x ARY

=  RM 38,441,702.23 8.50

%FRV =  RM   3,267,544.69 CV =  RM 38,441,702.23 ARY = 8.50%

FRV

RM 3,267,544.69

 

40 Year

FRV = RM 3,267,544.69x YP for 40 yrs @ 8.5% = 11.3145CV = RM 36,970,634.39

Say RM 37,000,000.00

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After that, we should conclude that the market value of subject property determined by

using the two methods. The market value of property determined by using cost method

is RM90,000,000.00. While the market value of property determined by using the

investment method is RM85,000,000.00. We choose the value which ever is greater

than consideration price. So that the market value of Wisma UOA Centre . is

RM90,000,000.00.

CONCLUSION

In conclusion, the there stages that involve in valuation process is very important.

When we use the stages as our guide line, our valuation process will be running

smoothly. In order to make sure that all the important data have been collected, we

should follow all the steps in each stages.

The steps involved before inspection process is checking the application when

receiving it from the client. Then, determine the location, identify the data, and lastly

collect the important data for valuation works. Bring together the Form JPPH/T/3/A-3,

measuring tape, pencil, paper as well as camera.

During inspection process, we should get the permission from the owner to enter

the subject property. After that, take the internal and external potographs of subject

property. Then write down the building measurement and sketch the building plan.

Lastly, check the measurement and building plans with the Architect Plan at Seberang

Perai Municipal Council (MPSP).

Lastly, we should prepare site plan, location plan, building plans together with its

measurement and also comparison plan after inspection have been done. Then, start

doing valuation works such as preparing report together with the valuation calculation as

well as adjustment table. After valuation works complete, get the approval from District

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Valuation Officer and State valuation Director. After getting the approval, send the report

to the client and lastly is updating the records in case file and keep it in the file room.

All the steps above should be followed carefully to make sure that our valuation

process may not get the wrong information or an error in the valuation calculation. It is

also to make sure that our valuation works have a good in quality.

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