Anthony & Anor v The Valuer-General [1992] QLC 222

Re: Appeal against determination of Valuer-General - Brisbane City Council. AV92-15 Michael John Anthon y and Demetra Anthon y v. The Valuer-General DECISION LAND COURT, BRISBANE. 1st May, 1992 . This appeal is against the determination of the Valuer-General of the unimproved value of Lot 1 on RP 97 48, Parish of North Brisbane in the sum of $150,000 for the purposes of the annual valuation of the area as at 31st March, 1990. The appellants stated a value of $10,000 in the notice of appeal but on the hearing of the matter Mr MJ Anthony said that the land was worth about $50,000 which follows in his opinion the decline in value of property in Fortitude Valley where the land is situated. The Lot is at 190 Brunswick street and one lot removed from the corner of Brunswick and St Pauls Terrace. The land is improved with an old structure with about 5 years of life remaining (Mr Anthony) comprising two shops at ground level and an office above. These premises are let at $150 per week each on short term tenancies. Net returns for the year to 1st June, 1991 [1992] QLC 222 -- 1 of 5 -- - Page 2 - (from the two shops) was $7722.93, which if capitalised at 12½% would yield a market value improved of about $61,776 and at 10% a value of $77,229. Estimates given by Mr Anthony for the year commencing 11th June, 1991 reveal an expected return of $14,667.77 (office and two shops) which if capitalised at the same rate would reflect values improved of $117,342 and $146,667 respectively. The subject land is of rectangular shape with a frontage to Brunswick of about 10 metres and an area of 445 m 2 • The Lot has no rear access. It is zoned "Commercial" in the Town Planning Scheme which if a plot ratio of 4 was permissible on development could provide a gross floor area (GFA) of 1780 m 2 • However, it is agreed that no prudent developer would attempt to put a development of that density on the land. Rather the feeling is that the highest and best use of the land under the zoning is for amalgamation and development with other land. The value determined by the Valuer-General is one which was written by Mr GW Lindberg registered valuer in the employ of the Department of Lands. His valuation reflects an application of a value of $170/m 2 to a GFA of 890m 2 - this being in his opinion a fair reflection of value because of the size of the property and the constraints on development as a single identity. He had no regard to the building on the lot or to rental returns. He gave evidence of two sales which were compared directly with the subject land. Basic to the case of the appellants is a submission that rents and values have declined in the ar ea. As an example Mr Anthony cited one of the sales used by Mr Lindberg in support of his submission. This land containing 1069 m 2 of "Commercial" zoned land is situated on the corner of St Pauls Terrace and Amelia Street. The land is an undeveloped state (former service station) sold for - -- 2 of 5 -- - Page 3 - $500,000 in January, 1988 and $550,000 in March, 1990 Following construction of an office block on the land it was sold for $3,670,000 in February, 1991. Approval to develop was obtained between January, 1988 and March, 1990. Mr Anthony said that tenants were sought at a rent of $220/m2 • He said that about 1200 m2 was tenanted for one year and that the building is now vacant. He mentioned sales in 1990 and 1991 of land at 108 Alfred Street, 120 Brunswick Street and 663 Anne Street which in his opinion support the view that rental demand is virtually non-existent. The cause in his opinion particularly in terms of the location of the subject property is the loss of shopping in the area through the closure of the Myer Centre. He agreed that amalgamation of the subject property with adjoining land was a possibility which would be considered by a purchaser and he thought that the best price that the subject land could fetch in an improved condition is about $140,000 to $150,000. The sale land at 360 St Pauls Terrace has an approved GFA of 1600m 2 • Mr Lindberg relies on the sale which took place on 30th March, 1990. That sale after making allowances for clearing and fencing and costs in obtaining approval reflected on his analysis a land value of $526,000. The value applied to the site for the purpose of the annual valuation of 1990 is $470,000 which equals $293/m 2 of GFA. The second sale which he used for purposes of direct comparison is situated in Peel Street, South Brisbane on the corner of Hope Street and with rear laneway access off Peel Street. In th.is instance two parcels were purchased for redevelopment - one was formerly a service station and the other situated at the rear and with frontage to Peel Street and the laneway. Both areas were zoned ''Commercial" and have since -- 3 of 5 -- ( - Page 4 - been redeveloped. These sales occurred as follows - Ampol - 1335 m 2 - 6th March, 1990 - $685,000 Project Concepts - 486 m 2 - 27th November, 1989 - $268,650 As an amalgamated site the total purchase price was $953,650. The analysis of the sale reflected a land value of $948,650. The value applied to site for the purposes of the annual valuation of 1990 is $882,000 or $289/m 2 of approved GFA being 3050 m 2 • This sale is outside Fortitude Valley. From these sales Mr Lindberg applies a value to the subject land of $170/m2 to a GFA of 890 m2 • The problems in the exercise which he recognises is the diminution or reduction in value for that the highest and best use of the site is for amalgamation. He refers to the sale of Peel Street as an example of an amalgamation. However, there it can be seen that the two sites complemented each other in both adjacency and access. The subject lot has nothing favouring it in that respect. Sale 1 also is of a site with good access. Nevertheless it can be seen in the sums applied by Mr Lindberg to sale 1 that the value applied is below the sale price of the 1988 sale. Two factors thus appear for consideration - if rents are declining value with follow and secondly there is the question of the highest and best use of the subject property and an appropriate GFA which may be considered. If a GFA of 890 m~ is assumed and a value of $250/m 2 applied (in recognising a decline) and the present value of that sum ($222,500) deferred for· five years · (the expected life of the structures) at 12% a sum of $126,253 is obtained ($222,500 x .56743). If the market value of the property improved is worth say $150,000 with tenancies of doubtful quantity yielding for the purpose of the exercise a net return of say $8,000 per annum the present value of that increment for the life of the buildings of five -- 4 of 5 -- - Page 5 - years at 10% is $30,326 ($8,000 x 3.79079). Thirdly with sale 1 (containing 1069 m2) the GFA approved was 1600m2 • In these circumstances the possibility of a developer seeking the maximum GFA for the subject land is extremely remote and I have some doubts as to whether such a purchaser would consider a GFA of 890m2 • Were a GFA of 445 m2 contemplated (ground level structure only) and the sale applied at the same rate per metre of GFA a value of $130,000 would be derived. In considering the whole of the evidence including the relationship between the subject lands and the sale lands I have concluded that the value of the site for the purpose of this valuation may safely be determined in the sum of $120,000. Accordingly, the appeal is allowed, the determination of the Valuer- General is set aside and the unimproved value of the subject land is determined in the sum of One hundred and twenty thousand dollars. (D.M. White) Acting President of the Land Court. -- 5 of 5 --