VALUATION OF JTC PROPERTIES - PRACTICE, STANDARDS AND GUIDELINES

Abstract

At present, Singapore does not have a set of valuation standards and guidelines pertaining to local practice. The valuation guidance notes of the Royal Institute of Chartered Surveyors (RICS) and International Valuation Standards Committee (IVSC) are deemed inadequate as the Singapore real estate market is subjected to legislation and practices which are different from those of United Kingdom and other western countries. The standard of practice and professionalism in the valuation industry can be improved with a set of standards and guidance notes. This dissertation proposes to set up standards and guidance notes for the valuation of JTC properties. A review of the salient features of the Jurong Town Corporation (JTC) properties and their lease policies was carried out in order to acquire a better understanding of the factors affecting the valuation of such properties. Interviews with practising valuers and JTC officers were conducted to determine the current valuation methodologies of JTC properties. It was found that there are many problems and difficulties in utilising both the market comparison and income approaches in the valuation of such properties. These problems are highlighted in the dissertation. The wider usage of the income approach, especially the DCF model, for the valuation of JTC properties is recommended. It is also felt that both the market comparison and income approaches should always be used to counter check each other as both approaches have their limitations when applied to the valuation of JTC properties. A set of valuation standards and guidance notes is proposed to define the special features of JTC properties and recommend the appropriate valuation methodologies to be used and guidelines to be followed when valuing JTC properties. The proposed valuation standards and guidance notes are relevant to the local context and should help to raise the level of professionalism in the industry.