A REPORT ON VALUATION

OF RESIDENTIAL BUILDING

(MADHU SUDAN DHAKAL)

PREPARED BY: 06-113 Kedar Nath Dahal

06-115 Kumar Mani Dhakal 06-116 Mandeep Pokhrel 06-119 Nawaraj Tripathee

06-128 Ramesh Chandra Ghimire 06-173 Uttam Bhurtel

SUBMITTED TO:

Asst.Prof.Ram Sthapit

Department Of Civil

Engineering

POKHARA UNIVERSITY Nepal Engineering College

Changunarayan, Bhaktapur

Date:01-10-10

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S.N. Contents Page no.

1 Valuation Certificate 2 2 Introduction 3 3 Qualifying and Limiting conditions 5 4 Valuation Calculation 6 5 Synopsis of Valuation 9 6 Appendices 10 7 Annexes 15 8 Documents 22

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VALUATION CERTIFICATE

On the request of Madhu Sudan Dhakal, the property belonging to Madhu Sudan Dhakal as aforementioned, was inspected, measured and relevant notes were made during the inspection visit on 25th September ,2010 in order to asses its distressed value for the purpose of banking transaction and prepare a report incorporating all the observations and details affecting the valuation exercise. This report is based on the facts, figures and documents supplied by the owner and on our detailed assessment of the property vis-a-vis the surrounding property and the prevailing developmental trends. The property that has been valuated is located in ward no.3 of Duwakot VDC in Bhaktapur District. The plot number of the property is 187.The property comprises of a plot of land measuring 6 annas as per the land ownership paper, and the land area was found to be 6 annas on basis of actual measurement done on inspection. The property consists of a single storied building, made on 3 annas of land, which is currently being used for residential purpose. A valuation report of this property has been prepared on the basis of an examination of the relevant land ownership papers, available cadastral map, construction drawings, and physical verification of the site, detailed discussions with relevant persons and on prevailing norms as well as procedures that I have evolved through my various experiences. It is my considered opinion that the distressed valuation of the aforementioned property is NRs. 43,53,177.60 (Rupees Forty three lakhs fifty three thousand one hundred seventy seven rupees and sixty paisa only). I also, hereby, declare that I have no direct or indirect interest in the property that has been valuated (2010).

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VALUATION OF THE RESIDENTIAL BUILDING OF

Mr. Madhu Sudan Dhakal

I)INTRODUCTION (a) Property Inspection

The property belonging to Mr. Madhu Sudan Dhakal ,was inspected for valuation

on 25th September,2010 by a team comprising of six civil engineering students.

The inspection revealed the following salient features:

1. Name of Owner: Madhu Sudan Dhakal

2. Name of the consultancy : Kriti Engineering Consultancy

3. Contractor: Sita Ram Shrestha

4. Location: Duwakot VDC -3(Near Ganesh Mandir),Bhakatpur District

5. Plot no:187

6. Land area:0-6-0-0 as per Land Ownership Paper.

0-6-0-0 as per actual measurement.

7. Building Description: The building is RCC framed structure. All walls 9” thick

brick wall with cement sand mortar. It has RCC roof slab. There is cement

plaster on ceiling, walls, staircases and cement punning is done in toilet floor.

The windows are glazed. The door are flush door except main front door which

is paneled.

8. Total Area of Land: 2053.5 sq.ft.

9. Total Built up Area Building: 883.687 sq.ft.

10. Ground coverage of building:43.03%

11. Detail of surrounding land:

North: Residential Building

South: road.

East: road.

West: track(8’ wide)

12. Approach road details: No approach road necessary.

13. Proximity to main road: Adjacent to main road.

The owner of the property, as has already been mentioned, is Mr. Madhu

Sudan Dhakal , who is 55 years of age and is the son of Bishnu Prasad

Dhakal, who is in turn, the son of Nara Nath Dhakal.

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The location map of the property under discussion is shown in annex I.

The introductory details regarding the property are given in appendix I.

(b) Property Description

The property that was inspected and that has been valuated comprises of an

irregular shaped land on which is a single-storied building has been built. The

details of the property are as follows:

i) Type of Property : Freehold Single Ownership Property

ii) Land Details

Shape: Irregular Topography: Plain Frontage: 77’1” wide adjacent to main road. Depth of Land: 500mm.

iii) Services

Water Supply: ½” dia.pipeline Electricity: Connection from Nepal Electricity Authority. Sewerage: Septic Tank connected to soak pit. Telephone: Connection from Nepal Telecom. iv) Building Description

The building is single storied, framed structure of 9” thick brick wall

having plaster on inside and outside(front and back portion only) walls. It

has a RCC roof slab. There is cement plaster on ceilings, walls,

staircases and cement punning is done in toilet floor. The windows are

glazed with steel grill shutters. The doors are flush door except main

front door which is paneled.

v) Surrounding Description

There is a single storied building adjacent to the property in the north

side. In the eastern and southern side of the property there is a 22 feet

wide bituminous road which connects Changunarayan to Sallaghari.

And property is bounded by a 8 feet track on the western side which is

earthen.

vi) Immediate Environment: The environment is well suited for residential

purpose. There are all sorts of facilities like electricity, telephone, water

supply and roads. The place is clam and serene with less pollution and is

ideal for living.

The detailed drawings of the building including plan and elevation are in

annex II. And the photographs of the building are in annex III.

The details of the site area and the building are given in Appendix II.The

technical details of the buildings are given in Appendix III.

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(c) Property Valuation

The property under the discussion has been valuated on the basis of the

following:

(i) Detailed study of the ownership documents and available cadastral

map. (ii) Detailed examination of the available drawings of the building. (iii) Physical verification of the site by site visit and detailed

measurements of the land and buildings in order to prepare a set of plans to incorporate in the valuation report.

(iv) Discussions with people knowledgeable about property values. (v) Local market survey to determine ongoing commercial rates. (vi) Comparisons with valuations of similar properties and (vii) Valuation methodologies evolved by us over the last decade.

II) QUALIFYING AND LIMITING CONDITIONS a)The plot of the property, according to the land ownership paper, is 6 anas and on actual measurement; the area has been found to be equal to that given in land ownership paper. (b)Since the property is located adjacent to the main road, the value of the property tends to be on the high side. (c)Since, area is easily accessible from commercial areas near Bhakatpur so the price of properties in the locality tends to be on the high side. (d)Since, the frontage (the land length abutting the access road) of the land is 77’1” which is larger compared to the depth of the land, the price of the land will be as high. (e)Since the access road is a 22 feet wide bituminous road, the value of the property is enhanced. (f) According to the present zoning regulations, the height of a building is restricted through plane, which is considered to be 2(a+b) where “a+b” is the distance between two buildings. The mandatory setbacks for the boundary lines are as follows: Front (roadside): 1 meter from the edge of the road Sides : 5’ clear or the property can join the adjoining property provided there are no openings. The building has been approved by Bhaktapur Municipality.The building tenable.

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(g) Generally speaking vacant open lands, because of their developmental potential, fetch better prices than plots that have buildings. Because people have different tastes and preferences, existing building must often tend to depress land prices, the price depression being dependent on how suitable the existing buildings are to the interested buyer in terms of their adaptability to the tastes of the buyer as well as their location in the total property. (h) The land value has been determined using the weightage average method, in which the governmental value has been given 25% weightage and the prevailing market rate as determined by our spot valuation and market survey value is given 75% weightage. (i)The value of the building have been determined on the basis of the cost per unit areas based on the detailed cost estimated of comparable buildings, the cost of which have been computed based on current market values. (j) The property under discussions is a freehold property with no tenancy rights. There is, therefore, no restriction to sell, lease, transfer, the property as long as the owner observes the laws of the lands, the prevailing zoning rules and regulations and does not interfere the natural rights of the neighbors. (k) It must be borne in mind that in spite of all the methods and calculations used to determine the land value, it can only be an indicator of the prevailing prices. The final sale figure, if the property is sold, is very much dependent on the psychologies of the buyer and seller during the final sale negotiations. For e.g. if a seller is desperate to sell, he is most likely to sell at a price lower than what he would have wished and what he would have got if he had wanted for the proper moment. Similarly, if the buyer is desperate to buy or if he likes a particular property he would most likely pay more than he would have if he had waited for the right time.

(III) VALUATION CALCUALTION

(a) Valuation of land

The valuation of land is very dependent on a no. of important factors such as the

location, environment, size, and shape of the property as well as the supply and

demand economics prevailing during the time of evaluations.

In terms of location, the property is located adjacent to the main road linking

Changunarayan VDC to Sallaghari.

The immediate environment, as has already been mentioned, is well suited for

residential purpose with all sorts of facilities like electricity, telephone, water

supply and roads.

As regard to the size of the property, it is fairly big compared to the smallish plots

that seem be on sale in the urban areas and urban figures of Bhaktapur Valley.

Many private open spaces in Bhaktapur Valley is increasingly being sub-divided

into small plots and are being sold at ridiculously high prices. Therefore, the

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property under discussion can be considered to be on par with average size. In

reality, an area of 6 anas is not a large area. In terms of demand, smaller plots

are in greater demand because they are most affordable. It must be mentioned

here that the increasing air pollution as well as the continuing problem of garbage

disposal of the inner areas of the urban centres of Bhaktpur Valley, is driving

potential buyer to buy land in the outskirts and even outside the Bhaktpur Valley.

Generally speaking, people are beginning to find it more attractive to buy large

plots in the outskirts of the well-developed urban areas than to the buy small

plots in the highly urbanized areas. It is in this context that the size of the

property under discussion can considered reasonable because of its location.

Since, the land is irregular and it’s attractiveness is somewhat diminished.

Apart, from the above-mentioned consideration, the property under discussion

must, above all, be valuated within the context of supply and demand economics

prevailing in the country. However, the prices of land ultimately depend on the

psychologies of the buyer and the seller.

It may be worthwhile to mention here that the prices of the lands in the Bhaktapur

Valley are generally exorbitant. The extremely high prices of the lands in the

Bhaktapur Valley can be primary attributed to the tremendous desire to own land

in the valley, simply because Bhaktapur is the capital and power centre of the

country. In fact, the desire to own land in the valley has fuelled an inflationary

trends in the last few decades. This inflationary trend is much more apparent in

the case of small plots, of which have increased drastically compared to the price

increases of large plots simply because small plots are more affordable to the

majority of the buyers. It is within this inflationary context that the land has to be

valued.

It must be borne in mind that, in the last few months, the prices of the lands have

tended to remain fairly static. The inflationary trend in the land prices seems to

have leveled off. The factor contributing to this state of affairs is the depression in

the carpet and garment industries as well as various economics variables. Some

economists have even expressed fears of recession. Whatever maybe the

reasons and whatever maybe the economics scenario, there seems to be a

growing consensus that the prices will not be buoyant as in the past. It is against

this backdrop that the value of the property under discussion has to be

determined.

While all the above-mentioned factors have a bearing on the value of the land,

the actual value in which a particular land is ultimately bought or sold depends

upon the psychologies of the buyer or the seller. The final sale figure is very

depended on who is more desperate the buyer or the seller. Generally speaking

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the sale figures tend to be arbitrarily on the high side. These sales figures can be

referred to as “commercial values”.

Compared to the commercial valuations, the valuations undertaken for the banks

tend to be conservative because of the very nature of bank valuations. The

purpose of bank valuations is to figure the value for which the properties will sell

in distress situations, when the properties have to be sold suddenly to recoup the

losses suffered by the banks due to default on loan payments. When properties

have to be sold suddenly, the prices the properties will fetch will not match

commercial values especially if there are building on the properties and people

residing in the building have to be evicted when the properties are to be

auctioned. Therefore, by their very nature, bank valuations tend to be very

conservative, more so, if building are existing on the site.

With reference to the property under discussion, the value of the land has been

determined by using the weighted average method where 25% weightage has

been given to the value fixed by the government and 75% weightage has been

given to the commercial value of the land fixed on the basis of a market survey,

our spot valuations and comparable valuations. The values that have been

considered in this valuation exercise are as follows:

i) Government Value: Rs 5 Lakhs /Ana

ii) Commercial Value: Rs 7 Lakhs /Ana

By the weighted method, the distress price of the land has been taken to be

Rs.6.5 Lakhs /Ana (refer Appendix IV).

Table 1: Value of Land

Owner Location Plot

no.

Area Ownership

Type

Current Market

Rates

Current

Market

Value Ropani Sq.ft. Ana sq.ft.

Madhu

Sudan

Dhakal

Duwakot3,

Bhakatpur

187 0-6-0-

0

2053.5 Single 6,50,000 1900 39,01,650

Total(NRs.) 39,01,650

(b) Valuation of Building

As has already been mentioned, a single storied main building is located on the property. The building is being used for residential purpose. The site and floor plans are given in Appendix II.The buildings have been described in the section on Technical details given in Appendix III.The floor areas have been computed in Appendix VI.

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Table 2: Value of Building

Owner Location Plot

no.

Floor

Floor

Area

Ownership

Type

Current

Market

Rates

(NRs./sq.ft.)

Current

Market

Value

Madhu

Sudan

Dhakal

Duwakot3,

Bhakatpur

187 Ground

Floor

785.937 Single 1800 14,14,686.6

First

Floor

97.75 1600 1,56,400

Total(NRs.) 15,71,086.6

(c) Depreciation of building

It is a free hold residential building having plinth area of 785.937 sq.ft. constructed 2 years ago on a plot of land measuring 2053.5 sq.ft.The present rate of construction of similar building is Rs 1800 per sq.ft. of plinth area. Assuming, Life of the building to be 100 years. Cost of Building(P) = Rs 15,71,086.6 Time after building was constructed(n)= 2 years Depreciated Value = P((100-rd)/100)2 = 1571086.6((100-1)/100)2

= 1539821.977 ~ 1539822

(IV) SYNOPSIS OF VALUATION The value of the residential property belonging to Madhu Sudan Dhakal can be synopsized as follows:

(a) Value of Land : Rs 39,01,650 (b) Value of Building: Rs 1539822

Total Market Value: Rs. 5441472/- Furthermore, Distress Value of Property = 80 % of 5441472 = NRs.43,53,177.60/- (In words: Forty three lakhs fifty three thousand one hundred seventy seven rupees and sixty paisa only) In US $ (current rate1$=NRs.73) = 59,632.57/-

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APPENDIX I INTRODUCTORY DETAIL

1. Location: Duwakot VDC -3(Near Ganesh Mandir),Bhakatpur District

2. Plot No:187

3. Area of Plot:0-6-0-0

4. Owner of the property

a. Name: Madhu Sudan Dhakal

b. Father: Bishnu Prasad Dhakal

c. Grand Father: Naranath Dhakal

5. Age of the building: 2 years.

6. Current Address of the owner: Duwakot

7. Detail of surrounding Property:

a) North: Residential Building

b) South: Main Road

c) East: Main Road

d) West: Track(8’ wide)

8. Details of Access Road:

a) Type of road: Bituminous road

b) Width of road:22 ft.

9. Distance of property from nearest commercial built-up area: 3km from Suryabinayak

10. Site Details:

a) Shape: Irregular

b) Topography: Plain

c) Frontage:77’1” wide.

d) Depth: 500 mm

11. Site services:

a) Water Services: Service Connection by VDC

b) Electricity: Connection from Nepal Electrical Authority

c) Sewerage: Septic Tank connected to Soak Pit

d) Telephone: Connected From Telecommunication Corporation

e) Constraints: No site constraints

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APPENDIX II

TECHNICAL DETAILS

A. General Description

1) Year of completion: 2065 B.S.

2) Anticipated future life: 100 years

3) Type of structure: Framed Structure

4) Current use of structure: Residential

5) Type of design: Modern

6) Special Architectural Feature: Rectangular

7) Current State of Building: Good

8) No of floors: 2

9) Height of each Floor: 9’

10) Plinth area of Building: 883.687 sq.ft.

11) Total area of Land: 2053.5 sq.ft.

12) Percentage coverage by Building: 43 %

B. Structural Elements

1) Type of foundation: Spread Footing

2) DPC (Type and Thickness): No

3) Walls

a) External: Handmade Brick 9”

b) Internal: Handmade Brick 9”

c) Partition: Handmade Brick 9”

4) Finishing: Inside, Front and Back Plaster

a) Ground floor: Cement Plaster inside the room and washable paint

b) Roof :

(i) Type: Flat

(ii) Finishing: No

c) Doors:

(i) Frame: Wooden (100mm x 75mm)

(ii) Shutters : Panel and Flush

(iii) Fittings: Aluminum handle, Anodized tower bolt, Aluminum al drop

(iv) Finishing : Enamel paint

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5) Windows:

(i) Frame: Wooden (100mm x 75mm)

(ii) Shutters: Glazed

(iii) Wire mesh Shutters: Not provided.

(iv) Grills: Iron Grill

(v) Fittings: Aluminum handle, Anodized tower bolt

(vi) Finishing: Enamel paint

6) Staircase:

(i) Type of Staircase: Dog legged

(ii) Riser –Tread:175mm - 240 mm

(iii) Balusters: Steel

(iv) Hand Rails: Wooden

(v) Finishing of steps: No

C. Electrical installation Details:

1) Type of Wiring: Concealed

2) Type of Fittings: Ordinary Tube Lights and Bulbs with cover, socket

switch.

3) No. of points: 20 numbers.

D. Sanitary installation Details:

1) Quality of fixtures: Good

2) Details of Fixtures

a) No. of water closets: 1

b) No. of Basins: 2

c) No. of Urinals: No

d) No. of Bathrooms: 1

3) Floor Finish: Punning.

4) Wall finish: Punning with cement plaster.

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E. Water supply Detail:

1) System: Intermittent (Bhaktapur District Water Supply Corporation)

2) Hot water system: No

3)Underground sump: No

4)Overhead Tanks:

a) Location: On Roof

b) Capacity: 500 Liters

c) Type: Plastic

F. Other Features:

1) Sewage Disposal System: Septic tank connected with soak pit.

2) Road and Pavements: Bituminous road.

3) Compound wall: No

4) Others Comments, if any: No

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Appendix III

LAND VALUE 1. Maximum registration rates Rs.5 Lakhs per Ana

as fixed by the Government

2. Current Market Rate Rs.7 Lakhs per Ana determined from Market Survey

3. Weightage Average Calculation Minimum registration rate as fixed by the Government

= 25% of Rs.5 Lakhs/ana = Rs. 1.25 Lakhs/ana Current Market rate determined by market survey = 75% of Rs.7 Lakhs/ana = 5.25 Lakhs/ana Therefore, Rate of land by Weighted Average Calculation = Rs 1.25 + 5.25 Lakhs = Rs 6.5 Lakhs per Ana 4. Recommended Land Rate = Rs 6.5 Lakhs per Ana.

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ANNEX I

LOCATION MAP

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ANNEX II

SOUTH ELEVATION

NORTH ELEVATION

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WEST ELEVATION

EAST ELEVATION

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GROUNG FLOOR PLAN (AREA=785.937 SQ.FT.)

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ROOF FLOOR PLAN (AREA=97.75 SQ.FT.)

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SECTION X-X

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ANNEX III

PHOTOGRAPHS OF THE PROPERTY