The valuation approach in relation to the model of privatisation for land development adopted

Abstract

Privatisation of property development has been practiced in Malaysia since the 1980s where it not only involved the Federal Government but also the State Governments and the Local Governments. The government undertakes privatisation of property development for various benefits such as to reduce expenditure, to improve the quality of development and to ensure faster delivery of product. It was observed that valuation of lands involved in the privatisation is significant as the valuation determines the returns to the government and costs to the developer. Inevitably the valuation will determine whether the privatisation should proceed or not. This research investigates the relationship between the model of privatisation adopted (MOP) and the approach to valuation for privatisation of property development projects by a local authority in Kuala Lumpur, Malaysia. The models of privatisation studied are the land swap, land lease, and the joint venture developments. Altogether fifteen privatisation projects were studied. Data gathered from interviews with key personnel from the identified projects were analysed qualitatively. The findings of the research positively report that the model of privatisation not only determines the type of valuation to be carried out whether capital or lease valuation but also influences the parameters for determining the value.