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Developing a New Mass Valuation Process for the New South Wales (Australia) Crown Lands Estate

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  • John MacFarlane

Abstract

The NSW Crown Land Estate (CLE) consists of over 500,000 parcels of land, totalling over 300,000 square kilometres in area and valued in excess of $A13b (£7.3b). Of this, a substantial portion is Crown Leases which can relatively easily be valued on a capitalisation basis. This paper will focus on the General Category of land in the CLE, consisting of over 120,000 parcels of land (over 22,000 sq kilometres) and valued in excess of $A10b (£5.6b). As such, this section of the CLE is over 2.5% of the area of the State and represents a considerable portion of the State’s assets. For the General Category of land, a sales comparison approach is the most appropriate valuation methodology. Annual valuations are required for the CLE and a mass valuation approach is necessary. There are a number of issues in designing such a mass valuation process, the main concerns being that the portfolio is quite clustered and the distribution of the sizes and value of land parcels is skewed in the extreme. The development of a 3-year cyclical mass valuation process will be discussed. This process identifies suitable submarkets (strata) and a benchmarking process in each submarket. A simple model is used which takes account of the extreme skew in parcel areas. This permits the valuation of individual parcels of land while the main focus is on the valuation of the portfolio including estimates of the “error” in portfolio valuation.

Suggested Citation

  • John MacFarlane, 2023. "Developing a New Mass Valuation Process for the New South Wales (Australia) Crown Lands Estate," ERES eres2023_209, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_209
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    More about this item

    Keywords

    asset valuation; Mass Appraisal; Quality Assurance; Valuation Model;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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