Valuation report

Done by
BIBEK BASNET
KATHMANDU ENGINEERING
COLLEGE
O64BATCH

PREPARED BY BIBEK BASNET(KEC)

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TABLE OF CONTENTS

S.N.

Contents

Page no.

Valuation Certificate

Introduction

Qualifying and Limiting conditions

Valuation Calculation

Synopsis of Valuation

Appendices

Annexes

12

VALUATION CERTIFICATE
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On the request of Mrs.Laxmi Basnet, the property belonging to Mrs. Laxmi Basnet as
a forementioned, was inspected, measured and relevant notes were made during the
inspection visit on 12 chaitra ,2067 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. The property that has
been valuated is located in ward no.15 of Madhyapur municipality in Bhaktapur District. The
plot number of the property is 6251670.The property comprises of a plot of land measuring 8
annas 1 paisa as per the land ownership paper, and the land area was found to be 8 annas 1
paisa on basis of actual measurement done on inspection. The property consists of a three and
half storied building, made on 886 square feet 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.1,68,95,333.60/-. I also, hereby, declare that I have no direct or indirect
interest in the property that has been valuated.

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VALUATION OF THE RESIDENTIAL BUILDING

OF Mrs. Laxmi Basnet
I)INTRODUCTION
(a) Property Inspection
The property belonging to Mrs. Laxmi Basnet was inspected for valuation on 12
chaitra 2067 by a team comprising of civil engineering students. The inspection revealed the
following salient features:
1. Name of Owner: Laxmi Basnet
2. Name of the consultancy: Basnets Engineering Consultancy
3. Contractor: Gopal Basnet
4. Location: gatthaghar, Madhyapur thimi-15, Bhakatpur District
5. Plot no: 6251670
6. Land area:0-8-1-0 as per Land Ownership Paper.
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 doors are
flush door except main front door which is paneled.
8. Total Area of Land: 2823.56 sq.ft.
9. Total Built up Area Building: 886 sq.ft.
10. Ground coverage of building: 31.87%
11. Detail of surrounding land:
North: road
South: open land
East: open land
West: open land
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 Mrs. Laxmi Basnet, who is 41
Years of age and is the daugter of, who is in turn, the son of.
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 three and half-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: 246 wide adjacent to main road.
iii) Services
Water Supply:1.4 dia.pipeline
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Electricity: Connection from Nepal Electricity Authority.

Sewerage: Septic Tank connected to soak pit.
Telephone: Connection from Nepal Telecom.
iv) Building Description
The building is three and half 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 road to the property in the north side. And property is
bounded by a boundary wall on all sides.
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.
(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.
(iv)
Local market survey to determine ongoing commercial rates.
(v) 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 8 anas 1 paisa 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) 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.
(e) 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
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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.
(f) 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.
(g)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.
(h) 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.
(i) 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 Araniko Highway.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 subdivided into small plots and are being sold at ridiculously high prices. Therefore, the property
under discussion can be considered to be on par with average size. In reality, an area of 8 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 its 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 psych ologies
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
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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 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
Laxmi
Basnet

Location
Madhyapur
thimi-15,
Bhakatpur

Plot
no.
6251670

Ropani

Sq.ft.

Type

Current Market
Current
Rates
Market
Ana
sq.ft. Value

0-8-1- 0

2823.56

Single

6,50,000

Ownership

Area

1900 53,64,764

Total(NRs.)

PREPARED BY BIBEK BASNET(KEC)

53,64,764

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(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 ll.The buildings have been described in the section on Technical details given in
Appendix lll.The floor areas have been computed in Appendix VI.
Table 2: Value of Building
Owncr Location

Plot
no.

Floor

Floor
Area(m)

Ownership
Type

Current
Market
Market
Rates
Value
(NRs./sq.m.)

Ground
Floor
First
Laxmi Madhyapur
Floor
6251670
Basnet Thimi-15
Second
Floor
Third
floor
Total(NRs.)

270.053

20000.00

54,01,060.00

270.053

20000.00

54,01,060.00

270.053

20000.00

54,01,060.00

34.975

20000.00

6,99,500.00

Single

1,69,02,680.00

(c) Depreciation of building its a tree hold residential building having plinth area of
2772.75 sq.ft. Constructed 7 years ago on a plot of land measuring 886 sq.ft.The present
rate of construction of similar building is Rs 20000 per sq.m. Of plinth area. Assuming,
Life of the building to be 100 years.
Cost of Building (P) = Rs 1, 69, 02,680.00
Time after building was constructed (n) = 7 years
Depreciated Value = P(1-(rd/100))^n = 1,69,02,680(1-(1/100))^7
= 1,57,54,402.31
= 1,57,54,403
(IV) SYNOPSIS OF VALUATION: The value of the residential property belonging to
Laxmi Basnet can be synopsized as follows:
(a) Value of Land : Rs 53,64,764
(b) Value of Building: Rs 1,57,54,403
Total Market Value: Rs. 2,11,19,167/Furthermore,
Distress Value of Property = 80 % of 2, 11, 19,167
= NRs.1,68,95,333.60/(In words:one core sixty eight Iakhs ninety five thousand three hundred thirty three rupees
and sixty paisa only)
In US $ (current ratel $=NRs.73) = 2,31,442.93/PREPARED BY BIBEK BASNET(KEC)

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APPENDIX I
INTRODUCTORY DETAIL
1. Location: Madhyapur Thimi -15,Bhakatpur District
2. Plot No: 6251670
3. Area of PIot: 0-8-1-0
4. Owner of the property
a. Name: Laxmi Basnet
b. Father:
c. Grand Father
5. Age of the building: 7 years.
6. Current Address of the owner: Madhyapur Thimi-15
7. Detail of surrounding Property:
a) North:track(4m wide)
b) South: open land
c) East: open land
d) West: open land
8. Details of Access Road:
a) Type of road: Bituminous road
b) Width of road:11m.
9. Distance of property from nearest commercial built-up area: less than 1km to Thimi
10. Site Details:
a) Shape: Irregular
b) Topography: Plain
c) Frontage:246 wide.
11. Site services:
a) Water Services: Service Connection by municipality
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

APPENDIX II
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TECHNICAL DETAILS
A. General Description
1) Year of completion: 2004 A.D.
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: 3 and half
9) Height of each Floor: 9
10) Plinth area of Building: 2772.75 sq.ft.
11) Total area of Land: 2823.56 sq.ft.
12) Percentage coverage by Building: 31.87%
B. Structural Elements
1) Type of foundation: Spread Footing
2) Walls
a) External: Handmade Brick 9
b) Internal: Handmade Brick 4
c) Partition: Handmade Brick 4
3) 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 (1 00mm x 75mm)
(ii) Shutters : Panel and Flush
(iii) Fittings: Aluminum handle, Anodized tower bolt, Aluminum al drop
(iv) Finishing : Enamel paint
4) Windows:
(i) Frame: Wooden (100mm x 75mm)
(ii) Shutters: Glazed
(iii) Wire mesh Shutters: Not provided.
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(iv) Grills: Iron Grill

(v) Fittings: Aluminum handle, Anodized tower bolt
(vi) Finishing: Enamel paint
5) Staircase:
(i) Type of Staircase: Dog legged
(ii) Riser Tread:175mm - 240mm
(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: 3
b) No. of Basins: 3
C) No. of Urinals: No
d) No. of Bathrooms: 4
3) Floor Finish: Punning.
4) Wall finish: Punning with cement plaster.
E. Water supply Detail:
1) System: Intermittent (Bhaktapur District Water Supply Corporation)
2) Hot water system: yes
3) Underground sump: No
4) Overhead Tanks:
a) Location: On Roof
b) Capacity: 2-1000 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: yes
4) Others Comments, if any: No
Appendix III
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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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