We have valued hundreds of industrial properties in the UAE and the region, based on the local and international valuation standards.
For example, we have valued a leasehold labor camp comprising of 22 buildings for a free zone development company for the estimated market value of AED 33,000,000/= in Sharjah.
The building’s estimated age is 10 years old, as per the building completion certificate provided. The condition of the property appears to be in average condition. Renovations on paintings, electrical and water system are necessary.
It consists of 22 Blocks and each block has the following accommodation of 29 leasable rooms, 6 common bathrooms and toilets.
The facilities around the vicinity are shops and restaurants. The property has a community view.
The plot size is 1,160,789 square feet, in total as per Land Lease Agreement and 576,323 square feet, approximately being occupied by the 22 buildings.
The gross built up area is 224,257 square feet, approximately as provided by the client and the net leasable area is 122,584 square feet, approximately as per measurements done.
Sources of Information and Documents Relied Upon
Copies of the Documents
Sale Purchase Agreement
Sold Transactions via Reidin/Dubai Land Department Data.
Market listings for sale and rentals through a number of listing portals.
Discussion with various Broker Agencies.
Similar Valuations done by us in the past.
Our own sales and rentals database.
Income Generating Standard Labor Camps
We have applied the Income Approach in determining the Market Value. We have estimated the market value of the property based on the details provided in the Sources of Information and Documents Relied Upon stated above.
Furthermore, we have applied realistic adjustments for the factors such as the quality, age, location, built up area and sales negotiations.
We have taken the following assumptions:
1. The income is generated from the rentals provided by the client and was verified with the Leasing Department of the client.
2. We have taken the expenses as provided. However, we have made the following adjustments:
a. We have taken management fee at 5% of rental value based on the going market rate for a labor accommodation.
b. We have excluded the energy saving project which we considered as a capital expense.
c. We have excluded the depreciation cost which is non-cash expense.
3. We have deducted the renovation cost provided by the client from the final value to arrive at an estimated market value of AED 33,000,000/-.
4. We have assumed the remaining lease period of 14 years based on the provided Land Tenancy Contract which will expire after 25 years.
5. We adjusted the land tenancy contract rental amount since the subject buildings is approximately occupying 49% of the total land area of the plot.
6. We assumed that the rental amount for the land will remain the same with no incremental amount as informed to us by the client.
7. We assumed a Years Purchase (YP) rate of 9.25% considering the following:
a. Low net rentals that are charged for accommodation and that the landlord carries all the expenses (i.e., electricity, water, sewage, security, cleaning, firefighting and landscaping maintenance).
b. The rentals are lower compared to adjacent industrial area which are higher with the tenant also pays for the service and maintenance charges. Hence, a lower YP as the income is more relatively secure.
c. The subject property is strategically located near the airport which makes it relatively attractive and more leasable.
d. We have accounted for all the expenses (with a few adjustments) as given to us by the client which expenses we believe are relatively higher than the surrounding industrial areas. Although we believe the market rent should be higher given that the landlord carries all the expenses (electricity, water and sewage cost more than 40% of the total rental receivables).
The plot of land which has a total area of 1,160,789 sq.ft. on which 22 labor accommodation buildings being valued are erected and does carry other buildings. For the purpose of this valuation, we have and apply the special assumption based on the instructions of the client that the portion of land on which the subject buildings 22 buildings are erected and can be subdivided into a separate land and legal entity, and that the buildings can be sold as a separate block or can be sold individually.