Project Analysis and Appraisal Assignment BN3060

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Title Assignment
Module BN3060
Module Title Project Analysis and Appraisal

Title Assignment

Module BN3060
Module Title Project Analysis and Appraisal
Module Tutor Tony Tang
HK QF Level 5
Hand in Date 8 July 2019

Module learning outcomes addressed by the brief:

1. Assess the viability of development proposals, using techniques of property valuation and financial appraisal

2. Evaluate development proposals with regard to design acceptability, sustainability and environmental impact

In particular, on completion of the assignment you will be able to:

• Draft a developer’s appraisal and report with appropriate calculations and justification, which confirm the extent to which a proposed development project is viable.

Requirements of the assessment

Please note that your work should be an individual submission. Make sure that you retain a copy of your submission.

Marking Scheme

This piece of assessment carries 50% of the weighting for this module. Marks for the assignment will be allocated as follows:

Criteria Mark (%)
Background of the development proposal 5
Justification of the proposed type(s) of development (e.g. using PEST analysis and data from property market reports) 10
Design of proposed development (with calculations and design drawings) 10
Residual method calculation (and other valuation methods such as comparison method if needed), NPV and IRR. All figures should be fully justified indicating researched source material. 30
Sensitivity analysis of the developer’s appraisal, explaining the particular areas of risk within the developer’s appraisal and proposing mitigating measures. 25
Presentation style and delivery. Reference can be made to ‘The HKIS Valuation Standards’. 20

Assignment Brief

Your firm is in competition with other practices to act as principal adviser to Goliath, a developer client, regarding a potential development project which is located in Tsing Yi.

The proposed site is indicated as ‘Public Housing under Construction’ as indicated below.

Regarding the proposed usage of the land, it is assumed that all uses as shown in Column 2 of Residential (Group A) are permitted without conditions on application to the Town Planning Board.

Other particulars / development constraints of the site:

– Site area: 22900 m2
– Existing land use: vacant land (no demolition shall be required)
– Existing zoning: ‘Residential (Group A)4” on the Outline Zoning Plan No. S/TY/27.
– Maximum Plot Ratio: Domestic Plot Ratio (PR) of 6 and non-domestic plot ratio of 9.5
– Local Open Space requirement: 6500 m2
– Parking facilities: a minimum of 83 nos. for private cars
– Principal Datum level of the site: 20.00 m
– Height restriction: a height of 140.00 m above the Hong Kong Principal Datum

Goliath is constantly looking for investment opportunities in any field which looks promising in the context of its need to achieve the necessary growth and return to support its pension payment obligations. As such, the company is flexible about the nature of the development project provided, of course, that it complies with the local structure plans and policies for Hong Kong.

Goliath is keen to make swift progress on this proposal because the land has just been registered for auction in April 2019. Goliath would like to make an offer to the vendors before the auction date to secure the site. Your proposals will need to make a recommendation for an offer.

On behalf of your consultancy firm, you are required provide a fully detailed and justified developer’s appraisal, for an outline proposal you have decided should be taken forward from your preliminary feasibility study.

You will have to submit a report to Goliath’s board of Directors of the proposed development. The presentation will include market research analysis, design drawings, a detailed explanation of all of the figures for your proposed development. All figures should be fully justified indicating researched source material.

Furthermore, you will have to explain the sensitivity of the developer’s appraisal, using sensitivity analysis, explaining the particular areas of risk within the developer’s appraisal and proposing the corresponding mitigating measures.

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