Property Investment is all about timing and choosing the right sector; when the conditions are right you cant go wrong; when the conditions are wrong you cant get it right
Discuss with specific relationship to a country or city of your choice.
Word limit: 1,000 words
A modern office building, Alpha Court is situated in the West End office area of central London. It was built approximately 3 years ago and has a good specification. It has a net lettable area measured in accordance with International Property Measurement Standard (IPMS) 3 of 2,000 sq metres arranged over 5 floors. When it was built it was let immediately to one tenant with a good covenant on a 10 year full repairing lease at a rent of some 900 per square metre but with a rent free period of 12 months. The lease provides for a single upward only rent review at year 5. It is believed that rental values have risen significantly since the time the building was let and that top rents approach 1,250 per square metre. However as this building is no longer new it is more likely that, if offered in the market today, it would achieve in the region of 1,150 per square metre with a 12 month rent free but this is subject to further investigation.
When it was first let it was sold to an overseas investor for 40 million. The owner is now seeking to sell.
Explain what is meant by and the reasons for:
International Property Measuring Standards
Full Repairing lease
Upward Only Rent reviews
Rent Free periods
Provide an estimate of the likely price that the investor will achieve in the market today, including a commentary as to the reasons for your valuation. (nb: You will need to satisfy yourself regarding appropriate rents/yields to apply).
On the assumption that they succeed in selling for the price you suggest, calculate the overall return they would have achieved during their period of ownership. What does this represent on an annual basis
Advise as to what value lies in the leasehold interest at the moment, explaining and justifying the figures taken
Word Limit: 1000 words
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