PROPERTY DEVELOPMENT AND

PLANNING
AUP 4261
(3 CREDIT HOURS)
LECTURE WEEK 1: INTRODUCTION TO PROPERTY
DEVELOPMENT AND PLANNING
PROF TPR. DR MARIANA MOHAMED OSMAN
INTRODUCTION
 PURPOSE OF THE SUBJECT
 TO TEACH THE STUDENTS ABOUT THE CONCEPT, PROCESS,
TECHNIQUE AND METHOD OF VALUATION AND PROPERTY
DEVELOPMENT.
 The course outline consist of
 the concept and purpose of valuation
 Valuation process,
 Land property concept,
 Concept of value, price and cost,
 Land valuation methods and techniques
 Property development process
 Concept of compensation and compensation principles
Course objectives
 To introduce the basic concept of land and property development.
 To provide the basic concepts of land valuation aspect, valuation
technique and property management
 To explain land property concept, land interest and land aspect in Islam
 To relate land valuation and property management with planning
 To relate to property trade and investment
Lecture 1
 Introduction
 Definitions of valuation
 Concept of valuation
 Purpose of valuation
 Valuation process
Land valuation
 Property is considered to be the largest single investment in one life.
 Property has a big influence on their profitability and value either directly or
indirectly.
 The fast changing on property market and the high cost of a potential property
transaction has made it more important for planner to acquire the knowledge of
land valuation.
 In Malaysia, The Board of Valuers, Appraisers and Estate Agents is the
statutory regulator of the valuation of immovable property and the valuation
profession.
 The Board, founded in 1981, under the purview of the Ministry of Finance,
Malaysia. The setup and operation of this Board is governed by the provision
of Property Valuer, Appraisers and Estate Agents Act 1981.
 Its primary function is to regulate the Property Valuer, Appraisers and Estate
Agents practicing in Malaysia.
 Valuation
value refers to an estimated worth of an asset expressed in monetary terms by an expert, experienced
and judicious valuer, who is not directly or indirectly an interested party in that specific asset which
is being valued for a particular purpose.

Professional Property Valuation required for following needs:

• calculate values by considering market demand, condition of items, future trends and other
factors (e.g. location, size, zoning legislation and the availability of services )
• submit written assessments of property value to statutory body, provide consultancy advice on
valuation matters, evaluate properties for bank loan purpose
• give evidence in legal proceedings and mediate on valuation matters
• provide rental valuations for arbitration purposes
• calculate cost of construction for income tax purpose
• evaluate the property for capital gain & wealth tax purpose
• establishing the value of properties for sale or lease
• insurance compensation
There is a constant need to determine the value of property for the purpose of financing, reporting to
shareholders, cost accounting, mergers or takeovers through to rent reviews, rates assessment,
expropriations, arbitration and litigation.
Introduction to valuation
 Real estate appraisal, property valuation or land valuation is the
practice of developing an opinion of the value of real property, usually
its Market Value.
 No two properties are identical, and all properties differ from each other
in their location - which is one of the most important determinants of
their value.
 So there cannot exist a centralised (one standard) setting for the trading
of property assets, as there exists for trade in corporate stock. The
absence of a market-based pricing mechanism determines the need for
an expert appraisal/valuation of real estate/property.
Definition
 Definition of real estate / property valuation –
 Science of estimating the value of land interest on property for a specific
purposes
 Value in real estate valuation refers to “ market value” – the market value
of land may be roughly describe as the price that an owner willing and
not obliged to sell might reasonably expect to obtain from a willing
purchaser- no compulsion on either the owner or buyer to enter into the
transaction and where both parties are aware of the market
consideration.
(International Valuation Standard - IVS 1 - Market Value Basis of Valuation,
Seventh Edition)
 Market Value is not exact science, but based on several assumptions
and factors.
 Value is subject to seller and buyer's perception and interpretation of
parameters that they decide to take into consideration, while other
people usually refer to their very own perceptions and interpretations
of what those people think is important.
 Valuation report will contain information and analysis of the facts and
data needed for any valuation
Location, location, location
 Local, regional, national, international?
 Considering that Market Price is what people agree to pay for something at a given
moment at a given place, it is important to underline the importance of the time and place
range wherein sellers and buyers meet.
 The Local and Instant Market Value of a specific item is exactly the same as the Local
Market Price.
 And if several people want the same thing while there is not enough for everybody that
wants it, Market Value and Market Price are identical.
 It is wrong to state that things have any stand-alone value, because value depends upon
transactions.
 No transaction means zero value, whatever value estimation or selling price expectation.
 When a lot of popular items in a place is almost sold out, sometimes people are willing
to pay more than the asking price rather than spend time and effort to get it cheaper
elsewhere.
 Is the paid price then Market Value or Market Price? Both.
The property valuation process
Identify property under valuation
(identify tenure/size/physical
characteristic/market

Identify factors
Opinion of value influencing the value
(estimation) (federal/state/local and
social)

Quantification of values Data collection &

(calculation and analysis
valuation techniques)
Purpose of land valuation

 Selling property
 Apply for housing loan and mortgage
 Rental purposes
 Taxation
 Investment and development
 Factors influencing valuation
According to Mohd Harith (1993), property value can be influenced by these factors:
 duration of time and ownership:- this refers to the condition of ownership i.e. duration
of time, category of land use, restriction of interest;
 legal factors:- this refers to all the legal measures issued by the government to control
property development and ownership such as National Land Code (NLC), Town and
Country Planning Act, etc.
 physical attributes-: this refers to the land area, location, shape, finishes and
neighbourhood; and
 economic condition-: this refers to the aspects that can affect the demand and supply
of property for example borrowing rates.
 Three main factors affecting property values are;
 external factors:- location, neighbourhood and accessibility;
 integral factors:- physical conditions of land and building, and legal restraints; and
 economic conditions:- national and local economic outlook.
Factors influencing valuation
 Mohd Hafiz (1994) has put forward ten factors that can influence
residential property value.
 date of transaction;
 location, location, location;
 "Fung Sui" - this is a custom belief;
 position of lot;
 floor finishes;
 Physical condition i.e. deterioration;
 landscape; and
 building extension and renovation.
Azhari et.al (1992) has come out with a more detailed lists.
23 factors are identified, namely;
 date of the last transaction in the  kitchen extension;
area;  number of bathroom;
 land area;  number of toilet;
 nature of transaction;  kitchen cabinet;
 interest in property;  gross floor area, building extension;
 accessibility and neighbourhood  closed extension;
condition;
 opened extension;
 porch area;
 physical improvements; and
 type of flooring
 state of repairs
 type of fencing;
 Landscape
 type of air-well;  Types of neighbourhood, gated,
 type of lot; guarded etc
 number of bedrooms  THE END FOR THIS WEEK
 separate bathroom & toilet for master
bedroom;
NEXT WEEK –LECTURE 2

 UNDERSTANDING LAND PROPERTY CONCEPT

 DEFINITION OF LAND AND OWNERSHIP
 CHARACTERISTICS AND TYPES OF LAND
PROPERTY
This week reading Assignment
 1. Read on valuation, market value, fair value
 2. Find articles and Read on factors influencing property
valuation
 3. Find Articles on valuation process