BUSI 344 - Project 1

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BUSI 344 Project 1
David S. Park
March 31, 2023
Student #: 4004828
UBC Sauder School of Business
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Preliminary Analysis and Market Identification
As stated in the textbook there are 5 steps to identify the correct market
1. Problem Identification
My client for this assignment is a real estate developer, and I am tasked with assisting them in
establishing a sale price for the units in their proposed low-rise strata residential building. The values
given as a result of the data analysis may not necessarily be the values that the developers choose to go
with. The primary objective for my clients is to make as much profit as possible, and so they may
choose a figure higher than what the analysis gave. This would differ if my client was a bank or a
lender, where a value provided by an appraiser is used to analyze the risk involved in providing
mortgage financing to a customer. However, in both cases, the values provided are used as a reference
to assist the client in what they feel is the best financial decisions to make.
The condo sales data includes when the units were sold and how many days the unit has been on the
market, from units being sold day one up to units being in the market for over 300 days. No
information is provided as to if there were any decreases in listing price, or anything to show how the
state of the market might have changed during this time. It could be possible that when the condosales
data was taken, the state of the market is vastly different to what it is today (valuation date). Therefore,
an assumption would have to made that the current market is same or similar to the time the condosales
data was taken, and that all parameters are contained within the data provided.
When looking at the data as a whole, it can be said that the orientation of the unit to be an
insignificant factor in determining the value of these units. In reality, orientation of a unit does have a
factor in property value; such as a unit facing a waterfront view compared to a unit with a view blocked
by another building. However, the data does not provide this additional information nor do we see a
map/street view, and so the orientation of the unit is not important in itself.
one thing to immediately consider is the location of each of the buildings provided in relation to the
"University Gate" building. The propsed location
Limiting Conditions
General
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Extraordinary
Hypothetical
This is done by researching the condosales data to extract a price value for the proposed units.
To reilliterate the background information, This assignment was given by real estate developers with
the main reason being to make a profit. The quality of construction is above average compared to the
surrounding area and is located in an overall average area.
The developers have stated the target market to be high-income professionals looking to downsize or
for an investment. However, this statement must be examined carefully to see if they are truly the
optimal target market.
2. Scope
3. Similarity
4. Data Decisions
5. Optimality
TASK 2
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4. Data Exploration
The descriptive and frequency statistics can be found below. The purpose of this analysis is to
ultimately determine the best method in valuing the new construction project.
When looking at sale price data and histogram, the statistics show a moderately dispersed market with
no specific skew, a STD. DEV of $99,041.76 with a $333,421.54 mean. And a COV of 29.7%.
, with some exceptions above the $500,000 price threshold, but these are rated ABOVE AVERAGE in
location and competitive set quality and makes logical sense.
Database overview
The target market intended for this construction generally are professionals or individuals with a
moderate to high income seeking to investing in a relatively high quality investment. The
condosale_T3 data provided gives some results with BELOW AVERAGE quality, which when further
analyzed are all over 10 years old. The new construction project will be rated as ABOVE AVERAGE
quality, and so these sales with BELOW AVERAGE quality can be seen as having less weight.
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It may be logical to assume that the size of the unit to have a significant influence on the sale price,
however the data provided seems to suggest otherwise.
The sale price and size are analyzed in a scatter plot to give a R2 value of 0.252, a sign of weak
correlation, meaning that just because a unit is larger does not necessarily mean it should be valued
higher and that other factors would need to be considered.
Valuation Analysis
Recommendations and Conclusions

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BUSI 344 Project 1

Preliminary Analysis and Market Identification

Recommendations and Conclusions

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