VALUATION REPORT

ON
EMBASSY HOSTEL BUILDING
AT FUTA SOUTHGATE, AKURE, ONDO STATE

PREPARED BY: QSV- GROUP 6

OLAGOKE OLAYINKA QSV/08/4272

OLAORE FATAI OLADAYO QSV/08/4274
OLAWUMI TIMOTHY OLUWATOSIN QSV/08/4275
OBEH EERE DAVID QSV/08/4276
OLOFINYOKUN ADIJAT O QSV/08/4277
OLORUNDARE MICHEAL QSV/08/4279
OLORUNGBAJO A ISRAEL QSV/08/4280
OLOTU ADENIRAN P QSV/08/4281
OLOTU IDOWU B QSV/08/4282

BEING
A TERM PAPER
ON
OFFICIAL VALUATION REPORT
Submitted to:
Mrs. Ajayi
Of the
Department of Estate Management,
School of Environmental technology,
Federal University of technology Akure, Ondo State.

AUGUST 2010

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 TABLE OF CONTENTS
1.0 INTRODUCTION
2.0 VALUATION- ITS SCOPE AND CONECPT
2.1 Valuation
2.2 Importance Of Valuing A Property

3.0 APPLICATION OF VALUATION: A CASE STUDY OF EMBASSY

HOSTEL BUILDING

4.0 THE DESCRIPTION OF PROPERTY

4.1 Nature

4.2 Location And Dimension Of Property

4.3 Facilities And State Of Repair

5.0 COMPUTATION OF VALUATION

5.1 Accommodation Schedule (Rental Value)

5.2 Outgoings
5.3 Years Purchases (Y.P)
6.0 CONCLUSION

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1.0 INTRODUCTION
Property valuation is the practice of developing an opinion of the value of a
real property; also the need for appraisal arises from the heterogeneous nature of
property as an investment class. No two properties are identical, and all properties
differ from each other in their location, age, design. All these are the determinant of
the value as in the case of Embassy Hostel Building.
Property valuation is an important component of property transaction. The
valuation process evaluates the market value of the property. A comprehensive
valuation report contains value of all the major assets of a property and also the basis
and manner in which the valuation has been performed. Valuation or assessment of a
property can be a self-assessment or through an external source. One can seek the
service of various professional agencies or hire a Government registered valuer for a
fee as prescribed by the valuer association. Some real estate agents too conduct
valuation based on prevalent market rates.
This term paper tends to bring to the fore, the importance of valuation to the
society and the most suitable method that can be used in carrying out valuation of
building for investment purpose, taking Embassy Hostel Building as a case study.

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2.0 VALUATION: ITS SCOPE AND CONCEPT
2.1 Valuation
Valuation means the provision of a written opinion as to the capital, price or
value, or rental price or value, on any given basis in respect of an interest in
property, with or without associated information, assumptions or qualifications.
However, it does not include a forecast of value.
Property valuation is an important component of a property transaction.
The valuation process evaluates the market value, worth and price of the property. A
comprehensive valuation report contains value of all the major assets of a property
and also the basis and manner in which the valuation has been performed. Valuation
or assessment of a property can be a self-assessment or through an external source.
There are some determining factors used in determining the value of a
property.
 Demand & Supply

The factors that have an impact on the market value of a property are demand
and supply forces operating in the market, type of property, quality of
construction, the local infrastructure available and maintenance of the
property as well as that of the premises.

 Layout
Layout of premises and ancillary costs too are given importance in a property
valuation. The layout of the premises in terms of optimum space utilization in
an efficient manner helps the premises notch up valuable points. Ancillary
costs of holding the premises like society outgoing for maintenance of the
building, municipal taxes, etc would also determine the marketability of the
premises.

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  Location
Another prime determining factor, when it comes to property valuation, is the
location or setting of the property. The valuation of an apartment or
independent house, which is set near to the bustling market or office area can
be quite high than that placed in a remote area.

 Safety & Security

Safety and security of the apartment is another factor which is closely looked
upon in the present times. With incidents of robberies, burglary or theft
increasing day in and day out, people are shifting base straight away. Today, a
property located in or near the riot prone area has lower rates, even if it is in
the best of location and filled with all the modern conveniences and amenities.

 Other Factors
Additional factors, such as plush green surroundings, good quality roads
nearby, civic amenities like safe drinking water and systematic drainage
system add to the valuation of the property. Good connectivity of the property
with the bus depot, railway station and airport is equally important and adds to
the face value of the apartment or house.

2.2 Importance Of Valuing A Property

The importance of valuation is to determine the price, value and worth of a

property.
Worth is a specific investor’s perception of the capital sum which he would
be prepared to pay (or accept) for the stream of benefits [real or inferred] which he
expects to be produced by the investment.

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Price is the actual observable exchange price in the open market.

Value is the estimate of the price that would be achieved if the property were to be
sold in the market.

Cost is a production-related concept, distinct from exchange, which is defined as the

amount of money required to create or produce a commodity, good or service. Once
the good is completed or the service rendered, its cost becomes an historic fact.

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3.0 APPLICATION OF VALUATION: A CASE STUDY OF EMBASSY
HOSTEL
The Embassy Hostel Building under consideration is well known to be
a residential building mainly built by the owner for investment purposes, to secure
invested capital and for increase or growth in income in terms of the review of the
rents payable.
Valuation of property is usually used to determine the capital value and
rental value of a property by using investment method of valuation, it is possible to
determine the value of a property to one particular investor and it is usually higher
than the market value of a property as in the case of Embassy Hostel Building under
consideration.
The fact that Embassy Hostel Building is a residential building being owned
by a private investor named Chief Awoseyila ( The Alamo of Ikole Ekiti) and
managed by Akin Olaifa & Co Estate surveyor and valuer whose aim is to
maximize profit makes Investment Method Of Valuation the most appropriate
method to be used.

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4.0 THE DESCRIPTION OF PROPERTY
4.1 Nature Of Property
Embassy Hostel Building is a freehold property owned by Chief Awoseyila
(The Alamo of Ikole Ekiti) at about 18 years ago. There is no tenement rate or fee
paid on this property since it has being acquired by the owner. The increase in rate
of rental value is affected by the rate of increase of student in Federal University of
Technology.

4.2 Location And Dimension Of Property

Embassy Hostel Building is located at south gate area of Federal University of
Akure, Ondo state. The total land area of the building is 1336.68 . The
male hostel which is a three storey building consist of 48 rooms in total occupying a
land area of 329.478 while the female hostel which is a storey building consist of
16 rooms and occupied a land area of 172.1968 . The remaining area
of the compound unoccupied by building is 835.01
The male hostel is located towards the main gate while the female hostel is
located at the back. The remaining area which is partly occupied by a small mosque
which serves both male and female Muslim students staying inside the hostel and
also the conveniences is located outside the main building at the left hand side of the
male hostel. The property has two main gate entrance located at the front of the
building.

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 4.3 Facilities And State Of Repair
Water supply : The water used by the resident of the building is mainly from a
well that is located outside the compound of the building. No water facility was
present in these building as at the time of valuation.
Electricity power supply does not exist in the building till the beginning of
this year when the landlord carried out electric wiring in the building. Before these
time, students are known to tap light from an improper sources which is of high risk
to both the resident and the building itself .
5.0 COMPUTATION VALUATION
5.1 Accommodation Schedule (Rental Value)
The following information about the accommodation schedule of Embassy
Hostel Building was given by Mr Adebiyi who is working as an Estate surveyor at
Akin Olaifa & Co Estate Surveyor And Valuer at 19 Oyemekun Road Akure Ondo
State who serves as the Caretaker of these building.The rental value were given
according to the size of the room.

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 MALE HOSTEL
TABLE 1.O
Description Dimensions Area Rental Value No of Total Rental Electricity Total
of room (m) ( ) Per Rooms Value Per Due (₦) Electricity
Annum(N) Annum (₦) Due (₦)
Single size 2.92 1.88 5.4896 9,000 6 54,000 1500 9,000

Standard 3.66×3.65 13.3590 18,000 18 324,000 1500 27,000

size
Double 4.35×3.63 15.7905 28,000 24 672,000 1500 36,000
size
Total 34.6391 55,000 48 1,050,000 72,000

Table 1.0 showing the rental value of the male hostel

Full rental value for Male Hostel (₦) = 1050,000 + 72,000 = ₦1,122,000

FEMALE HOSTEL
TABLE 2.0
Description Dimensions Area Rental Value No of Total Rental Electricity Total
(m) ( ) Per Annum Rooms Value Per Due (₦) Electricity
(₦) Annum (₦) Due (₦)
Single size 2.92 1.88 5.4896 9,000 4 36,000 1500 6,000

Standard 3.66×3.65 13.3590 18,000 8 144,000 1500 12,000

size
Double 4.35×3.63 15.7905 28,000 4 112,000 1500 6,000
size
Total 34.6391 55,000 292,000 24,000

Table 2.0 showing the rental value of the female hostel

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 Full rental value for female hostel (₦) = 292,000 + 24,000 = ₦316,000
The total full rental value of Embassy hostel building is
= Male hostel + Female hostel
= #1,122,000 + #31,600
= #1,438,000
5.2 OUTGOINGS
Since the property is freehold, the outgoings on this property are mainly on
repairs, maintenance, security and management fee which were given by Mrs.
Adebiyi who is working as an Estate Surveyor at Akin Olaifa & Co. Estate Surveyor
and Valuer at 19 Oyemekun Road, Akure, Ondo State. This firm serves as the
caretaker of Embassy Hostel Building.

REPAIRS AND MAINTENANCE

Description of Work Amount
Plumbing work which include soak away amendment as N 50,000
well as replacement of pipes inside the building.
Electrical work which include the re-wiring of the whole N 200,000
building (both male and female).
Carpentry work which include replacement of leaking roof N 17,000
and fixing of faulty doors.
Total N 267,000

SECURITY

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Description of Work Amount
Employment of three (3) security men for security N 17,000 x 12
purpose, the three of them taking a salary of N 17,000 per =
month, N 204,000

Fixing of two (2) new Aluminum painted gates N 76,000

Total N 280,000

MANAGEMENT FEE

Mrs. Adebiyi said, 10% of Total rental value is usually paid for management fee by
the Landlord which serves as the amount of money paid to the Firm (Akin Olaifa &
Co.) as the Caretaker.
10 x N 1,438,000 = N 143,800
100

TOTAL OUTGOINGS

Repairs and Maintenance = N 267,000

Security = N 280,000
Management Fee = N 143,000
Total = N 690,000

NET INCOME
The net income or net rent is given as;
Gross Rental Value – Outgoings
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 N 1,438,000 – N 690,800
Net Income = N 747,200

5.3 Years Purchases (Y.P)

According to Mrs. Adebiyi who is the Estate Surveyor at Akin Olaifa & Co.
Estate Surveyor and Valuer, she said there is a rapid increase in the interest rate each
and every year on the building due to the increase in population of student which
leads to increase in demand for hostel with fixed number of rooms available. She
said this condition use to force the price or rental value up, thereby leading to a
successive increase in interest rate.
The estimated rate of interest on this hostel was given as 15% by this firm due
to the conditions stated above.

Calculation
If Interest = 15%
YPperp 15%= 100 = 6.67

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Y.P= 6.67
CAPITAL VALUE
The Capital value of Embassy hostel building is given as C.V= N.I x Y.P
C.V = Capital value
N.I = Net Income
Y.P = Year’ Purchase
Where N.I = N 747,200
C.V = 6.67
C.V = N.I x Y.P
= N 747,000 x 6.67
= N 4,983,824
The Capital Value of Embassy Hostel building is N 4,983,824

7.0 CONCLUSION
In conclusion, the capital value of Embassy Hostel building shows the worth
of the property and the condition in which it is subjected to as at the time of
valuation as being given by this report. The capital value being derived by using the
investment method of valuation due to the nature of the property whereby the rental
value, outgoings and years purchase of the building are taken into consideration.

8.0 REFERENCES
• David Richmond’ Introduction To Valuation

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• Mr. Akanji Ifeoluwa : Resident of Embassy Male Hostel Building.
• Mrs. Adebiyi :Estate surveyor at Akin Olaifa & Co. Estate Surveyor
and Valuer Nig. Ltd
• Miss. Olusoji Folake ; Resident of Embassy Female Hostel Building.

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