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Commercial Valuation 1
COMMERCIAL VALUATION REPORT FOR
298-295 SUSSEX STREET SYDNEY NSW 2000
Location of the Institution:
Commercial Valuation 2
APPENDICE 1: Picture of the property (circled in red)
In accordance with the instructions contained in your official communication to me
dated 1st April 2020, I have duly inspected the property named above while making all the
relevant enquiries to provide my opinion of the current Market Value as at the date of
inspection of the Freehold interest, subject to an existing lease and the Market rental value.
I understand that my valuation is needed for a safe lending purpose for my client, who
is proposing for a property refinance.
2. BASIS OF VALUATION
This valuation has been carried out to conform the ANZPI (Australia & New Zealand
Institute) professional practice standard, having being inspected
by…[NAME]…on the 15th of April 2020.This is also the inspection date.
According to ‘RICS-sustainability and Commercial property valuation 2nd edition’
(January 2020), a person valuing the property is asked to express his/her opinion on the
property’s suitability for various reasons. I refer in this report matters in my knowledge and
which may assist you in practice of the above named reasons for the valuation of the property.
The valuation is subject to there being no unusual matters or factors not revealed to us and to
comments in this report.
The property is located in Sussex Street, New South Wales in the central business district
of Sydney, Australia. The area itself is a prime CBD precinct with only a minute walkway to
Town Hall station and Sydney’s popular Chinatown.
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APPENDICE 2: Location of the Property
The Property is located in the ground floor of a 13-storey building at the mentioned
location. According to real commercial.com, the property is leased until 24 March 2023 to an
established hairdresser. It also offers two basement secure car space and storage, access to
gymnasium, sauna and swimming pool facilities. New fit-out of internal kitchenette and
bathroom, immaculately designed and occupied by the established tenant are also a feature.
I am not aware of any factors which would result to probable adverse effects on the sale
or use of the property for any legally bound means.
A photograph of the front-view of the property is shown at the front page.
Having previously measured on site the property in relation with IPMS and RICS
measuring practice code. I calculate the internal floor area to be one hundred and eight (108)
square meters. The size details of the properties’ features are listed on the [TABLE 1 below.]
I understand that the property is connected to all main services, which include water, gas,
electricity and drainage through the main premise. Heating and hot water is provided through the
individual gas fired boilers to wall mounted radiators.
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I did not notice any defects in equipment or service in the property during the course of
The property is part of a large 13-storey premise made of concrete walls and furnished
with glass on the front part of the building. The property-which resides on the ground floor-has
steel curtain doors on one part of its front walls while transparent glass fully covers the other
part. The inside of the property boasts large a round concrete counter furnished with Glass on
one corner, and transparent mirrors mounted on both sides of the walls with chairs behind them.
It is important to note that it’s a tenanted investment rented by a hairdresser.
I did not carry out a building survey as instructed. We did not test any services.
However, I would like to voice a non-liable comment; during the inspection course for valuation
purposes, we observed that the property is in generally excellent and satisfactory condition
I am not aware of any immediate repairs required for exterior or interior property
encompassing, or defects affecting the sale or use of the property in legally bound means.
There is no evidence of past or current structural movement affecting the building, nor is
the building of age and type susceptible to insinuate the presence of any materials which are
deleterious, hazardous or likely to give rise to structural defects of the property/premises.
There is no evidence that any construction technique that was far from usual had been
used to construct the building from which the property above mentioned is adjoined. There are
no items where specialist investigations are required or where re-inspection will be required.
Should a more detailed report on the structure condition and repair state be needed, a
further report and inspection is bound to be carried out.
9. ENVIRONMENTAL CONSIDERATION
According to the report Environmental wind assessment: 230-232, 234-238 Sussex Street,
Sydney. (p.3), Sussex Street footpath will continue to be exposed to strong southerly wind
conditions channeling along Sussex Street. However, the above named premises has being built
to withstand those conditions. This means that potential customers to the above named premises
may have difficulties walking down the street, dictating the desirability of the above named
property. I have not carried out any investigation to make certain that there is a use to the landlargely in the past-that may have resulted to possible pollution that is hazard to the human health.
However, should it be established subsequently that this property, or any near property to
the above named premise may have been put to contaminative use, I reserve the right to review
my valuation advice.
10. TOWN PLANNING AND HIGHWAYS
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The property is located along the Sussex Street and also adjoins the Bathurst Street on
the other hand. The premises holding the property are registered residential and commercial use,
with the above named property build out for commercial purposes. The property current use also
complies with this arrangement. I have not made any enquiries to the local planning authority as
I have assumed that all necessary planning consents and approvals have been obtained.
I am not aware of any policies in the relevant structure plan that is likely to have any
adverse effects upon the property.
It was brought to our attention that the above named property had no tax obligations.
After valuation of the freehold interest in the property subject to leases/tenancies and
also with the benefit of full vacant possession. Assumptions are that full rights access are
enjoyed; with no third party enjoying any rights over the subject property.
I have not seen a copy of any report on title nor made any enquires to the relevant
land/property authorities. My attention has not been drawn to the existence of any such
restrictions or of any known easements, servitudes or rights of way that may adversely affect the
property. I have come to conclusion to the assumption that none exist for the purpose of our
The property in question is leased until 24 march 2023, with net income of $116,330 plus
GST per annum.
13. MARKET OVERVIEW
13.1 RETAIL MARKET
According to CBRE (2020)
“The retail environment is changing dramatically, putting pressure on retailers and transforming
the way consumers shop and spend money. Landlords and tenants continue to adapt in order to
remain relevant and capture trade from customers whose spending is under pressure from
increasing costs of living and deteriorating balance sheets”
Australia’s retail spending improved in 2018, averaging 3.0% growth compared to 2.7%
in 2017 although those results are well below the 5-year average of 3.9%. Retailers felt those
conditions to be challenging –conditions that persisted to 2019-20. The COVID-19 pandemic
also marked a major blow to the retail market.
13.2 OFFICE MARKET
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According to CBRE (2020), sales volume for 2019 were $23 billion across 226
transactions, a 32% increase on 2018 ($12 billion).Cost of debt to investors has in many
instances fallen to below 2.75% in part due to the three 25bps interest rate cuts
Top prime CBD performers were Perth and Canberra, registering annual net effective
rent (NER) growth of 11.7% and 10.9% respectively.
Top non-CBD performers were Crow’s Nest/St Leonard and Southbank, with a (NER) growth
rate of 8.9% and 7.6% respectively.
13.3 RESIDENTIAL MARKET
In reference to the above mentioned source, Sydney has seen a return of price growth
with the September quarter recording the first quarterly rise in Median prices since 2007.
Melbourne’s price rebounded like that of Sydney, propelled by state economic and
population growth which were the highest.
Brisbane continued to present itself as a significantly more affordable hub in the
country as price spreads widened again.
Perth started showing some positive signs to the end of a long negative price cycle
while Adelaide is showing mixed performance indicators.
13.4 HOTEL MARKET
Hobart, Brisbane and Adelaide had positive annual Rev PAR growth for the year
ending December 2019.However, National occupancy declined 0.9% to 73.9%
A Spending by domestic visitors in the year to September 2019 was $79.1bn, up
13.3% on 2018, while visitors of the overnight nature spending was $31.3bn, up 5.0% on 2018.
Hotel sales volume for 2019 was approximately $1.8bn.
14.0 MARKET VALUATION
Market Value, according to RICS (2019) is defined as follows:
“The estimated amount for which an asset or liability should exchange on the valuation date
between a willing buyer and a willing seller in an arm’s length transaction after proper marketing
and where parties had each acted knowledgeably, prudently and without compulsion”
Having carefully considered the property as described above, I am of the opinion
that the current value, on the basis specified below, of the freehold interest, subject to and with
the benefit of the leases described above with the full vacant possession benefit is as follows:-
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14.1 MARKET VALUE (DIRECT COMPARISON APPROACH)
(SIX HUNDRED THOUSAND DOLLARS)
In arriving at the market value of the proposed security, considerations of the
sales transactions below have been made.
1. A commercial property(150 square meter) on 149 Lang Street, Kurri Kurri, NSW 2327
that has two parking spaces sold for $452000.This property is far below the quality of the
property being valued
2. A commercial property (187 square meter) on 457 Pacific Highway, Wyoming NSW
2250 and with 3 parking spaces sold for $500000. This property is also below the quality
of the property being valued.
3. A commercial/residential property (184 square meter) on 274 Princes Highway, DAPTO
NSW 2530 with 8 parking spaces sold for $615000. This property is far more spacious
and better than the subject property.
14.2 MARKET VALUE (DISCOUNTED CASH FLOW ANALYSIS)
Using this method, it should be noted that the values used are as follows:
Gross market rent: $116330.
Rental growth rate: 3% for the next four years.
Vacancy level: 0%.
Outgoing: 20%, with a flat growth of 2% per year.
Terminal CAP rate: 8%
Discount Rate: 9%
Holding period: 4 years.
After due calculation as per the table shown below, the market value of the above named
(SIX HUNDRED AND EIGHTY THREE THOUSAND, SEVEN HUNDRED AND FOURTY
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TABLE 1: DISCOUNTED CASH FLOW ANALYSIS FOR THE PROPERTY FOR A
HOLDING PERIOD OF FOUR YEARS.
This report contains numerous assumptions of general and specific nature. The
valuation contains various information supplied by others.
I recommend that you satisfy yourself on all these points either by verification of
points or by judging the relevance of each point.
Finally, it should be clearly stated that this report is given forth for the specific
purpose stated above. It is secret to and for the use only of the party to whom it is addressed.
No responsibility is accepted for a third party for the whole or a part of this report. Any
such parties use this document at their own risk.
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1. Martin-Henry, B. (2020) CBRE Australia Real Estate Market Outlook
2. SLR Consulting Australia, (2020) 232-230and 234-238 Sussex Street, Sydney
Environmental Wind Assessment Report No. 610-14201 R1R3 Third revision
3. Real Commercial. com (realcommercial.com.au)
4. Sustainability and Commercial Property valuation 2nd Edition (2020) (7, 2.6)