Anthony & Ors v The Valuer-General [1991] QLC 151

... Re: Appeal against determination of Valuer-General - Ipswich City Council. (AV91-172). Marina Anthony and Others V. The Valuer-General DECISION (Hearing at Ipswich) LAND COURT, BRISBANE 1st November, 1991 This appeal is against the determination of the Valuer-General of the unimproved value of Lot 1 on RP 2717, Lot 2 on RP 2733 and Lot 1 on RP 2738, parish of Ipswich, in the sum of $206,000 for the purposes of the Annual Valuation of the Area as at 31st March, 1990. The land is of odd shape with a frontage to Brisbane Street (west of the Mall) of 21.8 metres. Brisbane Street at this point is a one-way two-lane full width bitumen surfaced carriageway with concrete kerbing and channelling. Rear access to the land is available from West Street which is a full width bitumen surfaced cul-de-sac by a strip of land of access width whilst the eastern area of the rear portion extends beyond the alignment of this access strip to the rear boundary of the lot fronting Brisbane Street and adjoining the subject land on the east. This adjoining land has access to the rear via (by easement) the access to the rear of the subject land. The subject land is three doors {by real property description) west from the corner of Brisbane Street and Ellenborough Street and on the northern alignment. The total area of the parcel is 835 square metres. The two blocks east of Ellenborough Street to Bell Street are accepted as comprising the Mall development with Nicholas Street (between) having been turned into a pedestrian way. [1991] QLC 151 -- 1 of 5 -- 2 Mr E.G. Denman, registered valuer, valued the land on behalf of the appellants. Mr B.J. McDonald, registered valuer, valued the land on behalf of the Valuer-General. These valuers were also the valuers in respect of the appeal by Heiner and Others v. The Valuer-General against a valuation of land in Limestone Street {AV91-154). That land, like the subject land, was zoned "Comprehensive Development" and the general evidence in that case applies equally in this case, primarily, as expressed by Mr Denman, that the Mall development has drawn from areas on the fringe of the commercial area. The subject land is situated on the eastern end of an area of Ipswich which is known as "top of the town" - II The top end of town in the Brisbane Street block between Ellenborough Street and Waghorn Street presently has 8 vacant shops at ground floor level, some of which have been vacant for in excess of two years. Whilst there has been a turnover of vacant shops over the last two years or so, I would believe that the number of vacant shops would have increased over that period rather than decreased. The top end of town of course, has had difficult times now for many years due to principally lack of parking, but over more recent times since the opening of the Kern development on Ipswich City Mall, the drain from the top of town and its deterioration in rental occupancy has become quite more noticeable. " Mr Denman described the improvements on the subject property as comprising a 2-storey older brick building with galvanised iron roof and with some basement below. He said that it is divided at ground floor level to five shops with office space above. A suspended awning covers the entire footpath frontage of the property. The building, although old, is said to be in good structural condition. The gross rental derived from the five shops let on the premises is $53,321.76. After allowing for outgoings totalling $15,113.52 and by adopting an investment return of 15 percent, Mr Denman derived a capital value of the property in the sum of $255,000. He valued structures at $107,750 which left a land value of $147,250. He -- 2 of 5 -- 3 accordingly submits that the value of the block should remain at the value assessed at the 1989 Annual Valuation of $146,000. The valuation of Mr McDonald is in the sum of $206,000. He valued the Brisbane Street frontage to a depth of 25 metres @ $10,000 per linear metre of frontage (21.8 metres) from which he made an allowance of 20 percent for shallow depth which yielded a sum of $174,000. From that point he allowed - 12.5% for balance land beyond 25 m depth = $21,800 Plus 5% for rear access = = $196,200 $ 9,810 $206,010 In that exercise it can be seen that the rear land and access adds about $31,000 to the value of the frontage area of about 545 square metres (21.8 x 25). His method of valuing the rear area is contained within his report - II The area beyond the 25 metre line is odd shaped and partly covered by access easements to the two adjoining properties. " His valuation is based on sales. The sale which received the most consideration is a sale of land to the west of the subject land on the same alignment of Brisbane Street and about six doors (by real property description) from West Street. This was the sale from Pohlman Patrick Pty Ltd to Taleega Pty Ltd of land improved with a solid building of 1913 construction and having an area of 526 square metres. The sale land is described as Lot 1 on RP 43941. The sale was effected on 19th January, 1990, for $175,000. It was one of three sales put before the Court by Mr McDonald. The remaining two sales were in East Street, north of Brisbane Street. Mr Denman knew these sales. He had a direct involvement in the sale of Pohlman Patrick Pty Ltd. He spoke about quite a number of sales within the C.B.D. but primarily relied on the method expressed in his report. The sale land (Pohlman Patrick) is within the area known as "top of the town". So also is the subject land but it is closer to the Mall development. The drop-off in values applied by the -- 3 of 5 -- 4 Valuer-General westerly of the Mall is found in the evidence of Mr McDonald. Values for land within the Mall are generally of the order of $40,000 per linear metre of frontage. Land on the corner of Brisbane and Ellenborough Streets is worth, in his opinion, $33,000 per linear metre of frontage. Crossing Ellenborough Street the land on the corner is valued at $12,000 per linear metre and the subject land four doors distant is valued at $10,000 per linear metre. The Pohlman Patrick sale land is valued at $5,400 per linear metre. Mr Denman would argue that if the sale land is worth that value, the subject land should be less. In the analysis of the sale by Mr McDonald, it is found that the sale actually analysed to an unimproved land value of $82,103. The sale was made with a lease-back arrangement in place. On Mr Denman's calculation, the sale showed a return on investment of about 13 percent which, in his opinion, is the order of the return sought generally by investors in Ipswich. The sale land was subsequently sold in vacant possession to a firm of accountants for $205,000. In respect of the subject property, Mr Denman adopted an investment rate of 15 percent. In both cases, the buildings are old and of about 1913 vintage. I am told that the concept behind the name "top of the town" is an endeavour to turn this part of the City into a heritage area. Whether that will or will not enhance the value of land in the area is too early to determine. Nevertheless, the evidence of the resale and figures paid for the land contained in sales 1 and 2 of Mr McDonald's schedule of sales would appear to suggest that confidence in value of the commercial land on the fringe of the City heart has been improving. Certainly there is no evidence of sales of properties to indicate that such land has fallen in value or remained static, notwithstanding the turnover in shop letting. The sales support Mr McDonald's view that higher rental returns and lower investment rates could be expected were the subject land and the sale land -- 4 of 5 -- 5 redeveloped under modern standards of construction and presentation to the public for their highest and best use as commercial sites. In the area of the Mall, Mr McDonald says that investors are prepared to take a return of 9 percent to 1O percent. In summary, whilst the apprehensions of Mr Denman on the effects of the Mall may have support in turnover of tenancies and shop vacancies and is an opinion which may be shared by some of his clients, the hard evidence is that the investors have not followed those opinions. The sales evidence points to a rise in value which would appear to have continued beyond the relevant date. The drop- off in values applied by Mr McDonald, coming westerly from the Mall, is quite marked but not unusual. The sale in this area if applied in full may have supported a slightly higher value for the subject land, it being nearer the Mall, apart from other factors which affect the value of the frontage area. This is about the only criticism I could find in the evidence of Mr McDonald but, in saying that, I might add that it is founded on the evidence put before this Court which is by no means exhaustive and not intended to cover the relativity of the whole of the area of the C.B.D. In the circumstances and bearing in mind my comments contained in the decision of Heiner and Others v. The Valuer-General (AV91-154), I have concluded that the appeal should be dismissed. Accordingly, the appeal is dismissed and the determination of the Valuer-General affirmed. D. M. White Member of the Land Court -- 5 of 5 --