You are a graduate surveyor at the multi-disciplinary practice Real Estate Advisory plc (REA), in the planning and development department. 

REA have been instructed to advise Hamilton Homes as to what they should bid to acquire a site with planning consent for residential development. The site is known as Clay Furrows, the details of which are available in Appendix 1. 

One of the office juniors has carried out an appraisal for this purpose and your boss is concerned that it contains some misapplications and mistakes. Accordingly, your boss has asked you to double check the calculation, which is available in Appendix 2, and to provide an annotated commentary highlighting anything you believe to be an error, why it might be incorrect and to suggest a means of correcting it. 

Your boss is also instructed on a commercial scheme known as Relay Point and has produced a viability valuation for this scheme, which is attached as Appendix 3. Your boss would like you to carry out a sensitivity test to determine the impact of two possible scenarios so that he can provide appropriate advice and recommendations to the client. 

Your boss feels that the surveyors in the department need to improve and enhance their knowledge and understanding of the residual approach and has asked you to provide a briefing paper to highlight the criticisms and limitations of the residual and what can be done to enhance their accuracy. 


Write a report for your boss that: 

1. highlights the errors in the appraisal of the Clay Furrows development; 

2. provides a scenario test of Relay Point with appropriate advice; and 

3. contains a briefing paper that provides the required critique of the residual, setting out the limitations of the method and the means of improving its accuracy. 

Task 1 

Using the scheme details in Appendix 1 and the residual provided in Appendix 2 (an Excel version of which is available on the VLE – see Assignment 2 week), identify the possible errors in the appraisal and provide an appropriately cross-referenced commentary explaining for every mistake identified why it is an error and how it can be corrected. 

(approximate word count: 750 words) 

Task 2 

Using the Relay Point residual in Appendix 3, (an Excel version of which is available on the VLE – see Assignment 2 week) model the two following scenarios and provide advice for your firm’s client as to what might be done to mitigate against any adverse impact these scenarios might have. 

a. Scenario A – a 5% fall in rental value, a 7% increase in build costs and an increased void period of 6 months. 

b. Scenario B – a 0.75% fall in yield and an increase in lending rates of one whole percentage point and a delay after site purchase of 3 months before construction could commence. 

(approximate word count: 750 words) 

Task 3 

As part of your report, provide a Briefing Paper for the surveyors in your department that not only outlines the criticisms and limitations of the Residual Method, but which also highlights what can be done to improve the accuracy of Residual valuations. 

(approximate word count: 1,500 words) 

Reference list and bibliography 

You should include a reference list with a minimum of ten separate relevant and appropriate sources that you have written about and cited within your work.