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FINAL EXAM – AUTUMN SESSION 2023 School of Business Complete your details in this section when instructed by the Exam Supervisor at the start of the exam. You should also complete your details on any answer booklets provided. STUDENT SURNAME: STUDENT FIRST NAME: STUDENT ID: EXAM INSTRUCTIONS Read all the information below and follow any instructions carefully before proceeding. This exam is printed on both sides of the paper – ensure you answer all the questions. UNIT NAME: PROPERTY DEVELOPMENT PROCESS UNIT NUMBER: MKTG3014 NUMBER OF QUESTIONS: 6 VALUE OF QUESTIONS: Question 1 carries 40 marks. The remaining questions 2 – 6 are worth 20 marks each. Marks are indicated on each question. ANSWERING QUESTIONS: Answer Question 1 (compulsory) and three (3) other questions from the remaining five. You must write your answers in the space provided. For Question 1, you can use the Excel template provided in Module 9/10 on vUWS. LECTURER/UNIT COORDINATOR: Dr Za Manaf ( [email protected] ) TIME ALLOWED: 2 hours TOTAL PAGES: 6 pages RESOURCES ALLOWED Only the resources listed below are allowed in this exam. The Excel template provided on vUWS/Module 9/10 can be used in calculations. You can refer to any text/articles/slides/notes but direct copying from them will not be awarded with any marks. Please be mindful that your answers will be checked for Similarity and AI assisted writing index. DO NOT COPY THIS EXAM PAPER This page intentionally left blank. QUESTION 1 – COMPULSORY (40 MARKS) Your client, Ebony, a property developer, has provided information on a proposed commercial development as listed below. She hopes to sell off the completed development to Ivory for $90 million, with an expected net rental value of $8 million per year. Ebony has carried out a quick search on the current capitalization rate of similar properties and found out the rate to be 6%. Work out the total development cost of the proposed development only, excluding the land costs. You can make other assumptions if needed: Gross Area: 8000 sq. meters Rental Value: $1100.00 per sq. meter Vacancy Factor: 10% Non – Recoverable Outgoings Factor: 5.5% Disposal Costs: 4% Marketing and advertising costs: $450,000.00 Site Clearance: $350,000.00 Site Remediation: $3000,000.00 Building Costs: $4300.00 per sq. meter Professional fees on site costs: 6% Professional fees on building costs: 12% Contingency 3% of building cost Letting fees: 10% of net rental value Finance costs: 15.5% pa (nominal) Pre-construction period including getting a development approval: 10 months Construction period: 30 months Letting period: 6 months Incentive period: 3 months Acquisition costs: 9.5% (10 marks) You can use the Excel template provided in Module 9/10 then cut and paste your answer here. Based on the data provided and your answer in (a) and without carrying out another calculation, answer the following: The Reserve Bank of Australia has already announced twelve increases in interest rates since late last year. If you are the developer of the development above, identify two main variables used in the calculation that will have a big impact on the financial feasibility of the development. Briefly, discuss how do you address these concerns? (15 marks) Write your answer here: Let’s assume Ebony and Ivory would like to complete the development above, on a joint-venture term. They would like to engage a local builder to carry out the construction works and at the same time supporting local products by using locally sourced building materials. Considering current market conditions in New South Wales/Australia now, what advice would you give to both? (15 marks) Write your answer here: CHOOSE 3 (THREE) QUESTIONS ONLY FROM THE FOLLOWING: Question 2 (20 marks) Jumping Jack is currently in the process of carrying out a renovation and refurbishment exercise on his three-bedroom, single dwelling property built in the late 50’s and located in a small suburb near Parramatta. He wants to add an attached bathroom to the guest bedroom at the front of the house and tearing down an old store which is part of the main kitchen. He is a good neighbour and would like to inform his plans to Meghan Sparkle who is suffering from chronic asthma. Advice Jumping Jack with regards to addressing the renovation he has in mind from the local council perspective and from Meghan Sparkle’s perspective. (20 marks) Write your answer here: Question 3 (20 marks) 129 and 131 Pennant Street, Parramatta are two blocks of adjacent land roughly 1200 square meters in size. https://goo.gl/maps/76jcG9FbVQeWGrRT8 Next door at 168 Pennant Street is a recently completed four-level block of units offering two- and three-bedroom accommodations known as the Collette Conquest. About 200 meters away north of these blocks of land, another recently approved block of units is still under construction. Western Sydney University North Campus is just 5 minutes’ walk away. If you are the owner of lots 129 and 131 and you are considering applying for a development approval, what are the main challenges facing your development assuming that your development will be approved by the end of the year. (20 marks) Write your answer here: Question 4 (20 marks) Environmental risk was ranked at number one by prominent property developers in Australia while it was ranked at number ten in another country, Malaysia. Briefly discuss 3 main reasons why environmental risk is highly ranked by Australian developers. (10 marks) Write your answer here: The Sydney Opera House (SOH) has been dubbed as a development that has failed over and over since its inception until completion. However, it is a fact that today, SOH is a Green Star rated building and businesses within the building still operate successfully. Briefly comment how a development like SOH can be a failure but successful and sustainable at the same time? (10 marks) Write your answer here: Question 5 (20 marks) It has been reported in the media that there are unique design features implemented at 105, Philip Street, which has been awarded with a 6-star Green Star rated commercial building in Parramatta. https://goo.gl/maps/8wDnnyFjxTBufMJD8 The building has been equipped with rain-water cooling towers, low-flow water fixtures in the toilets throughout the building, rooftop soccer and sports pitch and a combination of natural light and a state-of-the-art lighting design. Relate these features towards the long-term benefits enjoyed by: The owner of the building The occupier of the building (20 marks) Write your answer here: Question 6 (20 marks) Landcom, a property company developing for the NSW government, is developing a site known as Macarthur Garden North (MGN) in Campbeltown. It is located on Gilchrist Drive next door to Western Sydney University and TAFE NSW. https://landcom.com.au/places/macarthur-gardens-north/ They have been approved to develop a mixed development of high-rise residential units, office space and retail outlets. Considering the current demographic of the suburb, discuss who would be considering buying/renting of the following types of accommodation: A three-bedroom unit A studio apartment Affordable rental housing Retail outlet (10 marks) Briefly discuss at least two funding options available to Landcom, to finance this development from start to completion? (10marks) Write your answer here: Submit the whole document into the Turnitin link provided on vUWS. END OF EXAM PAPER AUTUMN 2023 Page 7 of 7