Village valuations: David Bruce-Clarke of CB Richard Ellis

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The quality of village management is crucial to the village valuation. The attention to the maintenance and capital expenditure fund is an easy indicator of that quality. Is there a plan in place for the ILU upgrade and refurbishment – every 15 years is the minimum. The DMF is absolutely crucial and has to be in line with the resident population. E.g. if average tenure as eight years the DMF should be geared to match. Definitely do not discount the DMF because it is “the linchpin”. It is vital to keep the village full – which requires a strong knowledge of unit pricing (to the market).

Current discount rates are 12-13% from mature, well-managed suburban village. The valuation premium for a portfolio has diminished. Development sites are planning approvals must be in place.