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3 - 13380 First Draft Report Nov 2022
3 - 13380 First Draft Report Nov 2022
3 - 13380 First Draft Report Nov 2022
EXECUTIVE SUMMARY
Instructions
To prepare, for the benefit of the Bank and the Customer, a valuation report on Stand No. 13380,
Chalala-Hillview Area, Lusaka for purposes of collateral/loan security.
Interpretation of Instructions
As the valuation is required to support an application for a credit facility, instructions are that we
inspect the property, buildings and ancillary improvements; assess and provide advice and
comments, on amongst other matters:
the current open market value;
forced sale value;
estimated monthly market rental value;
estimated replacement cost of buildings and improvements for insurance purposes;
title and ownership and annual ground rent (lease charges);
suitability of the property and improvements as security for lending purposes, and whether
there would be difficulties if realization by the Bank became necessary; and
likely changes in the market value of the property.
Items Excluded
Moveable assets, including household furniture and equipment.
Site/Plot Area
Rectangular shaped land parcel, extending to 730 square metres (0.0730 hectare or
approximately 0.1803 of an acre), delineated and described on Diagram No. 1252 of 1997.
No mortgages are registered, and save for the State lease referred to above, and the reversion
vested in The President who holds the land in the country in perpetuity for and on behalf of the
people of Zambia, we are not aware of other interests or onerous restrictions or encumbrances;
statutory or otherwise, likely to have an adverse effect upon the market or other values of the
property.
Services
Mains water and electicity are connected.
Disposal of waste from sanitary fittings is to a septic tank and soak-way.
Access is from an un-named gravel road, to which the property has a frontage.
Condition
Based on the extent of our limited inspection undertaken as described above, and which we
considered adequate for purposes of assessing market and other values, we can state that although
of basic design and with limited fittings, the dwelling house has been constructed to a fairly good
standard. The accommodation is generally well maintained, and is in a fairly good condition,
with no material structural defects or signs of mechanical failure apparent, except for minor
defects and various items of routine repair and maintenance.
Bases of Valuation
As the valuation is required to support an application for a credit facility, bases adopted to arrive
at opinion of values are:-
(i) to assess market or capital value
“Open Market Value”, being the estimated amount for which an asset or liability
should exchange on the date of valuation, between a willing seller and willing buyer, in
an arms-length transaction; after proper marketing and where the parties to the
transaction had each acted knowledgeably, prudently and without compulsion.
(ii) to assess rental value
“Open Market Rental Value” assuming that the property is vacant and available to let,
and that the letting is at arms-length, between a willing landlord and willing tenant;
that no premium is paid and there is no additional bid by a prospective tenant with a
special interest; and that both landlord and tenant had acted knowledgeably, prudently
and without compulsion, taking account of the nature of the property and purposes for
which the tenancy is taken.
fairly standard. The house provides spacious well laid out, secured living and sleeping
accommodation.
Opinion of Values
Subject to assumptions made, opinion of values for the property are:
(i) open market and forced sale values:
Category of Assets Open Market Forced Sale
(i) Land K000,000 K000,000
(ii) Buildings and Improvements K000,000 K000,000
Total Value K000,000 K000,000
(ii) the market rental value would be in the range of K3,500 (Three Thousand and Five
Hundred Kwacha) per calendar month, assessed on the basis of a yearly tenancy; and on
terms normally applicable in lettings of this class of property, and assuming that the
accommodation is vacant and available to let.
(ii) opinion ofestimated reinstatement cost is K000,000(Hundred and Thousand Kwacha).
This assessment is restricted to buildings and improvements, and includes only service
installations which form a permanent part of the site, the figure does not take account of the
market value of the land since it is not normal practice to insure against loss of land.
Damage caused to buildings and ancillary improvements, for instance by fire or storm, is
usually partial, the assumption made of complete destruction is therefore only for purposes
of this valuation
Date of Valuation
As the date of valuation has not been specified, opinion of values is assessed as at 8 thNovember
2022, which is the date of inspection of the property.
Confidentiality
The Report and opinion of values are provided for the sole use of Zambia National
Commercial Bankand for the specific purpose to which it refers. The information is
confidential to the Bank and Mr. Milner Lubasi and their professional advisors in this matter.
No responsibility whatsoever is accepted to other parties, for any loss or financial obligation,
direct or consequential, which might arise from reliance on the document or any part of its
contents.
Disclosure
If, for whatever reason our opinion of values is disclosed to persons other than the Bank and the
property owner, then the bases of valuation adopted, assumptions made as well as exclusion
clauses stated in the Report should also be disclosed in full..
M. S. Kasase
PRINCIPAL CONSULTANT
ANDERSON + ANDERSON VALUATION SURVEYORS
MSK/GM/VAL –5900
10thNovember 2022
Dear Sir,
Re: VALUATION OF STAND No. 13380, CHALALA-HILLVIEW AREA, LUSAKA
We refer to the Bank’s Letter of Instructions dated 3 rd November 2022, requesting us to provide a
valuation report, for purposes of collateral, on Stand No. 13380, Chalala-Rockfied Area, Lusaka;
and for which instructions we are greatly thankful.
We have inspected the property and improvements, undertaken inquiries necessary for purposes of
the valuation, made the assessment and now have pleasure in submitting our Report.
be outside the scope of the instructions, nor have the services been tested. We cannot
therefore give guarantees in these respects.
In accordance with standard practice, we restricted the inspection to a visual survey of the
land and buildings, noting the siting, within the plot, design and construction of each
structure, layout of accommodation, material fittings and finishes, service installations
available and the condition and the state of repair.
We did not inspect parts of the property and buildings which are covered, unexposed or
inaccessible (such as foundation walls and footings; roof timbers; pipe work and electrical
conduits and cables within roof voids, walls and floors), and for purposes of assessing
market and other values, such parts were assumed to be in good structural repair and
condition and free from hazardous materials, rot and infestation. We cannot express an
opinion about or offer advice on the condition of parts we did not inspect and except for
matters mentioned or referred to, this Report should not be taken as making any implied
representation or statement about such parts.
In the above respects only, the valuation is carried out on the assumption that parts not
inspected are in good structural repair and condition, do not contain any deleterious or
hazardous materials and that available services function satisfactorily. No account has been
taken for inherent latent defects, if any.
For ease of identification of location, an extract from Google Earth Map showing the
position of the property boarded in red is provided at Appendix I.
For purposes of payment of this rent, the year end is 31 st December, and for the current year
ending 31st December 2022, ground rent due have been paid in full.
6.8 Services
(i) Mains water and single phase electricity are connected.
(ii) Disposal of waste from sanitary fittings is to a septic tank and soakaway.
(iii) Access is from anun-named gravel road, to which the property has frontage, branching
off Kasama Road.
6.9 Buildings
In addition to the boundary wall, paved parking areas as well as service installations referred
to above, the property is developed with the following:
(1) Dwelling House
(2) Dog Kennel No. 1
(3) Dog Kennel No. 2 (for puppies)
For purposes of identification, a single – line building and accommodation layout plan (not
drawn to scale) and a few pictures, are provided as part of the Report.
dwelling house and ancillary improvements are in a fairly good condition and state of repair,
with no structural defects or signs of mechanical failure apparent, except for minor defects
and items of routine maintenance.
Based on inquiries made, we have assumed that necessary statutory consents and approvals
have been obtained; that the property is developed and occupied in accordance with valid
planning and building regulation approvals, to the full satisfaction of the authorities
concerned; and that there are no Statutory or other development proposals likely to adversely
affect the property or its present use.
However, if reassurance is required, we recommend that further advice be sought to confirm
that:-
(i) the position is correctly stated in our Report;
(ii) the property is not adversely affected by other decisions made or conditions prescribed,
by public authorities; and
(iii) there are no outstanding statutory notices.
With regard to private development, we can mention that there is current private sector
investment, is mainly limited to the development of residential units within the area and at
an individual level, is likely to improve the quality of property and create a high demand;
and we are of the opinion that as a resultmarket and rental values of properties in this part of
the Chalala, including the subject, will shift upwards in real terms at least in the long term.
(4) Assessment by Income Approach is normally used for properties held as long term
investment and often producing (or would produce) regular income by way of rent.
Examples include office developments held by pension funds or shopping centres. The
assessment is based on income inflow (rental stream) over the period of the investment.
Considering the extent of the site, designand condition of buildings; we are of the view that
Approach Nos. 1, 3 and 4 are not in the present instance appropriate methods to be adopted
in the appraisal of the property.The nature of the property, dictates that the assessment be
based ona “Comparative Method”, based on prices and rentalspaid for similar properties
within the area or similar locations.
the movement in the values of the property in comparison to similar properties over short
term period. The nine-point evaluation scale is as follows (1 - unlettable, 2 - very poor, 3 -
poor, 4 - below average, 5 – average, 6 – above, average, 7 – good, 8 - very good and 9 -
excellent).
Factor Rating Scale Comments
The property is well positioned, less than two
hundred metres off Kasama Road and is
expected to benefit from the ongoing
1 Location/Situation 7 regeneration and development of the area as
well as the forecasted increase in commercial
activities and surging population in the
surrounding areas.
We have not been provided with building
survey report on the condition of buildings and
improvements, but based on our inspection, we
can state that the dwelling house originally
2 Building Quality 4 constructed to a good standard of
workmanship, structures, fittings and finishes
have not been maintained; and are now in a
poor state with various defects apparent.
State lease for 99 years from 1 st February 2005.
Our opinion is that the registered title holders
3 Title 9 have a long-term leasehold interest; with an
option to renew for a further term; and
therefore, tenure is secure.
The number of willing purchasers for prime
property is uncertain at present given the
Market Value decline in the overall transactions in the market
4 8 as a result of the COVID-19 pandemic which
Volatility
has exerted downward pressure on prices of
property.
Rental Value We are of the view that rentals will at least
5 7
Volatility remain stable through the course of the loan.
Should the property be marketed for sale, we
would expect a reasonable number of
6 Liquidity 8 prospective purchasers interested in the
property in view of its location, extent of the
site and development potential
routine repairs and maintenance, and settlement of charges for services supplied to the
premises, including electricity.
With regard to the local environment, demand for land is high despite current economic
circumstances, particularly in urban areas, and has been for many years. For property in
areas well sought after by high and mid-income groups, including sites in good areas which
have development potential, there may be little difference between market and forced sale
value. Where there is a marked difference, experience has shown that in most cases,
potential buyers often offer lower than market prices because they are aware that the owner
of the property which is being sold is acting under duress (as is often the case with property
repossessed and advertised by lending institutions), bidders therefore tend to adopt a
vulturous approach, and will offer and negotiate for the lowest price possible.
Another aspect of disposal under forced sale circumstances is litigation, and the lengthy
procedures a mortgagee or receiver in possession may have to follow in selling the property.
These procedures tend to be quite costly, and in the end, the disposal takes far much longer
to conclude than a normal sale.
We therefore suggest that the Bank takes account of this position with regard to the opinion
of forced sale value stated.
Damage caused to buildings and ancillary improvements on a property, for example by fire
or storm, is usually partial, the assumption of complete destruction of existing structures is
therefore hypothetical, and made only for purposes of the valuation.
Accordingly, our opinion of reinstatement cost assumes complete destruction of the dwelling
units and ancillary improvements on site, and includes an allowance for debris removal at a
percentage of the building costs. Our opinion does not include allowances for inflation in
either building costs or labour charges, nor does it take account of costs which might be
incurred in connection with matters relating to environmental issues or complying with
exceptional conditions which may be specified by public authorities.
The assessment does not reflect the market value of the site (land) since it is not standard
practice to insure against loss of land, and land per-se cannot, in the ordinary sense, be
destroyed unless due to substantial contamination or un-planned quarrying; and neither can
it be “replaced” except in instances of land reclamation or the acquisition of an alternative
property or site.
interest, for the agreement of the rent and other letting terms and for the completion of
the letting;
(c) that the state of the market, level of values and other circumstances were, on any
earlier assumed date of entering into an agreement for a lease, the same as on the date
of valuation;
(d) that no account is taken of any additional bid by a prospective tenant with a special
interest;
(e) a stated length of term and stated principal conditions, applying or assumed to apply to
the letting and that the other terms are not exceptionally onerous or beneficial for a
letting of the type and class of the subject property;
(f) that no premium passed and that any rent free period is in respect only of the time
which would have been needed by the incoming tenant to make the subject property fit
for occupation; and
(g) that both parties to the transaction had acted knowledgeably, prudently and without
compulsion.
The principal argument is that an opinion of forced sale value amounts to no more than a
forecast, and is based on many variables, some of which are difficult to quantify with a fair
degree of accuracy. Professional organizations are now encouraging property Valuation
Surveyors and other related property consultants not to undertake such assessments or
provide opinions of forced sale values.
With regard to the local environment, demand for land is high despite current economic
circumstances, particularly in urban areas, and has been for many years. For property in
areas well sought after by high and mid-income groups, including sites in good areas which
have development potential, there may be little difference between market and forced sale
value. Where there is a marked difference, experience has shown that in most cases,
potential buyers often offer lower than market prices because they are aware that the owner
of the property which is being sold is acting under duress (as is often the case with property
repossessed and advertised by lending institutions), bidders therefore tend to adopt a
vulturous approach, and will offer and negotiate for the lowest price possible.
Another aspect of disposal under forced sale circumstances is litigation, and the lengthy
procedures a mortgagee or receiver in possession may have to follow in selling the property.
These procedures tend to be quite costly, and in the end, the disposal takes far much longer
to conclude than a normal sale.
We therefore suggest that the Bank takes account of this position with regard to the opinion
of forced sale value stated.
the opinion that use of the site for residential purposes is the highest and best, and we have
assessed the property on this basis.
Site
Property Location Description Sale Price
(Acres)
Double storey Dwelling House,
Lot No. off Tokyo Way
Block of Single Storey 3No Flats 0.3212 US$400,000
18262M/A Chalala Area
and ancillary improvements
Off Shantumbu Block of Single Storey 4No
0.4280 K4,500,000
Road, Chalala Flatsand Servant’s Quarters
Lot No. Off Kasama Bare land Parcel, Less than 500
0.2965 K300,000
16518/M/C Road, Chalala metres to G-Greens
Kasama Road,
Lot No. Bare land Parcel, fronting onto
off Tokyo Way, 0.2965 K250,000
13072/M/T Kasama Road
Chalala Area
(i) any tax or statutory liability, whether existing or which may arise in connection with
the property;
(ii) arrears of ground rent or similar charges, if any, arising under the terms of the State
lease;
(iii) arrears of property rates or charges due, if any, to the District Council;
(iv) payment of arrears, if any, for services supplied to the property, including electricity;
and
(v) legal or other charges which may be incidental to the sale of the subject or settlement of
matters connected thereto.
(ix) no contamination or potentially contaminative use has ever been carried out on site or
on adjoining properties.
(x) an appropriate and adequate insurance policy has been obtained, and that there are no
acts or omissions on the part of the insured of the premises which would render the
policy void or voidable.
We wish to mention that we are not aware of any variance between information we have
obtained from searches and inquiries made, and facts relating to the property, and further; we
have no reason to believe that information provided by various sources, including the Owner
of property and the Ministry of Lands is inaccurate.However, should we subsequently
become aware that any of these or other assumptions are incorrect, we may choose to revise
our opinions, and if need be, advise the Addresseesaccordingly.
24.0 Publication
Neither the whole nor any part of this Report, or any reference thereto, may be reproduced
or included in any published document, circular, advertisement or statement without the
prior written agreement of the Valuation Surveyor as to the form and context in which it
may appear.
25.0 Certification
I, Musonda Sakeni KASASE, do hereby certify as follows:-
(a) that we have inspected the property and considered relevant factors affecting its market
and othervalues;
(b) that I and Anderson + Anderson Valuation Surveyors have no undisclosed or
contemplated interest in the property valued, either at the present time or in the future;
(c) that I have relevant experience and knowledge required to value this type of property in
this locality; and
(d) that I am a qualified Valuation Surveyor and licensed to practice by the Valuation
Surveyors Registration Board in accordance with the Valuation Surveyors Act, Cap.
207 of the Laws of Zambia.
26.0 Confidentiality
The Report and opinion of values are provided for the stated purpose and for the sole use of
Zambia National Commercial Bank to whom it is addressed. The information and
opinions are confidential to the Bank and Mr. Milner Lubasiand their professional advisers
in this matter. Consequently, Anderson + Anderson Valuation Surveyors and its
employees accept no responsibility whatsoever to any other party, for any loss or financial
obligation, direct or consequential, which might arise from reliance on the Report or any part
of its contents.
We trust the Report will be useful, but should anything further be required or if there are points to
be clarified, please let us know.
Yours faithfully
ANDERSON + ANDERSON VALUATION SURVEYORS
M. S. Kasase
PRINCIPAL CONSULTANT