THE VALUATION OF LEISURE PROPERTIES IN SINGAPORE - A CASE STUDY

Abstract

For most of us there is an involvement with leisure property at some point in our daily lives. However, property valuers only occasionally deal with the valuation of such properties. The very nature of leisure services and facilities means that a substantial part of the industry's increasing level of capital expenditure will go on land and buildings. Hence, from the investment viewpoint, leisure property is an area of investment with its own distinct characteristics which need to be understood fully. The valuation of this unique class of property often presents numerous difficulties that defy market analysis and value justification. In fact, the inherent limitations of various approaches to valuation are often more glaringly exposed when adopted for valuing leisure properties. Hence, this study aims to examine the difficulties that confront the valuer in valuing leisure properties. In this aspect, a survey was conducted to find out about the approaches adopted by local appraisal firms when they value such properties. There is also a case study which demonstrates the use of and the difficulties in using the various valuation approaches for such properties. Some of these difficulties are the lack of sales comparables and difficulties in obtaining accurate information such as trading accounts. It is also noted that there are no valuation guidelines and standards set for the valuation of leisure properties in Singapore. This implies that local valuers who are not members of any foreign professional societies will not be governed by any mandatory form of guidelines. Based on interviews with practicing valuers, it is noted that there is a need to develop a set of professional standards to guide the valuation of leisure properties in the local context, taking into consideration the unique characteristics inherent in such properties.