AN BINSE LUACHÁLA
VALUATION TRIBUNAL
AN tACHT LUACHÁLA, 2001
VALUATION ACT, 2001

Leslie Kertesz  APPELLANT
and
Commissioner of Valuation   RESPONDENT

RE:  Property No. 2148942,  Shop at Unit 5, Ashleaf Shopping Centre, Crumlin Cross,  County Dublin    

B E F O R E
Michael P.M. Connellan - Solicitor     Deputy Chairperson
Damian Wallace - QFA, MIPAV, Valuer   Member
Fiona Gallagher - BL   Member

JUDGMENT OF THE VALUATION TRIBUNAL
 ISSUED ON THE 14TH DAY OF NOVEMBER, 2008

By Notice of Appeal dated the 7th day of July, 2008 the appellant appealed against the determination of the Commissioner of Valuation in fixing a valuation of €95,500 on the above described relevant property.

The grounds of Appeal as set out in the Notice of Appeal are:

"The valuation is excessive and bears no relevance to the passing rent or comparative rent in the centre as of the date of valuation."

The appeal proceeded by way of an oral hearing held in the Offices of the Tribunal, Ormond House, Ormond Quay Upper, Dublin 7, on the 10th day of October, 2008.  At the hearing the appellant was represented by Mr. Eoin Conway, Messrs Weir & Conway, Chartered Surveyors & Property Consultants. Mr. Tomás Cassidy, BSc Property Management & Valuation Surveying, a District Valuer in the Valuation Office, appeared on behalf of the respondent. Each representative having taken the oath adopted his précis and valuation, which had previously been received by the Tribunal and exchanged with the other party, as his evidence-in-chief.
                                                                               
Valuation History
The property was valued as part of the South County Dublin revaluation at a valuation of €95,500. The occupier, Mr. Leslie Kertesz, appealed the decision and the valuation certificate was issued unchanged on 5th June, 2008.  Mr. Kertesz then appealed this decision through Messrs Weir & Conway to the Valuation Tribunal. 

The Issue
Quantum.

Location
The subject property is located in the Ashleaf Shopping Centre complex which is situated at the junction of Cromwellsfort Road and Whitehall Road West in the suburb of Crumlin.  It is approximately 6.5km from Dublin City Centre and 4km from the Red Cow Inn intersection of the M50.  Ashleaf Shopping Centre which opened in 2000 has 2 vehicular entrance points to a basement car park and in addition has 2 pedestrian malls accessed from Whitehall Road West and Cromwellsfort Road.  The centre comprises approximately 20 ground floor retail units with the main anchor tenant being Dunnes Stores. 

The Property
The subject property is comprised of a ground floor retail unit with a total area of 132.9 sq. metres and is located in a prime area of the shopping centre across from Dunnes Stores.

Tenancy
The subject property is held on a 25 year lease from 28th March, 2000 with 5 yearly upward only rent reviews.  The current rent is €69,836 pa but the rent review of March, 2005 has not yet been finalised.  The property is let on a full repairing and insuring basis. 

The Appellant’s Evidence
Mr. Eoin Conway referred to his précis of evidence and indicated that the areas have been agreed with the Valuation Office.  He outlined details of his own background confirming that he had acted in an advisory capacity to the developer of the shopping centre at the outset and that he also managed the centre in the early years.  Mr. Conway stated that the original units were let by the developer on full shell basis and the tenants were required to fit them out.  He confirmed that the average rent for the subject unit over the first 5 years of the lease was €67,310 and the lease provided for a rent review on a 5 yearly upward only basis.  Mr. Conway added that the rent review has been going on for a number of years because the arbitrator died in the middle of the process and a new arbitrator is now taking over the file and it should be resolved shortly.  Mr. Conway confirmed that the service charge for the unit is higher in this centre than in other centres in the area as a consequence of keeping the car park open late to facilitate the pub and off licence.  He confirmed that his opinion of value is based on the “open market rental value” of the property concerned as of September, 2005 in the sum of €80,000 per annum.

This is analysed as follows;
Overall            132.92 sq. metres         @ €602 per sq. metre              =          €80,000
ITZA                  78.64 sq. metres         @ €1,017 per sq. metre           =          €80,000

Mr. Conway proceeded to introduce a schedule of comparisons (set out at Appendix 1 attached hereto) and he said that in his opinion the Valuation Office have incorrectly interpreted the rent review settlements that have been reached in the shopping centre and had overvalued them based on that.  With regard to his schedule of comparisons he said that a number of other professional valuers were also involved in the process for other tenants in the centre in terms of agreeing the rent and some of these even went to arbitration.  He added that not only was his client’s property overvalued but the entire centre was overvalued and that the rental information was analysed incorrectly.  Mr. Conway added that in valuation terms there are 22 shop units all having their rental review at the same date in March, 2005 and these are the primary pieces of evidence.  He said that when you average all the rents in terms of Zone A you get an average of around €1,100 per sq. metre and even taking the Valuation Office increase of 2% between March and September, 2005 you do not get anywhere near the figure of €1,200 per sq. metre which they have applied. 

At this point the Chairperson asked whether the valuation was based on rental information from this shopping centre only or from all other shopping centres in the entire South Dublin area and Mr. Cassidy confirmed that it was based on an analysis of the rental values of all shopping centres in the area. He added that the Valuation Office would first of all consider the evidence from the subject shopping centre but that they would then consider other appropriate evidence in the rating area.

Mr. Conway concluded his evidence by saying that in rental terms valuers rely on comparable rental evidence and the best evidence is that which is on your doorstep. He reiterated his assertion that the figure of €1,200 per sq. metre was too high and reaffirmed his request for a valuation of €80,000 on an overall basis of 139.92 sq. metres @ €602 per sq. metre, ITZA  78.64 sq. metres @ €1,017 per sq. metre.

Cross Examination
In cross examination Mr. Cassidy asked Mr. Conway to confirm which 2 units offered the best guidance from a comparative point of view, suggesting that units 4 & 6, being adjacent and of similar size, were the best comparisons.  Mr. Conway replied that it did not matter which unit was taken if you are valuing in terms of Zone A.  He said that because Mr. Cassidy had confirmed that he had valued all the units in the Centre at Zone A @ €1,200 per sq. metre he was accepting that no property was superior or inferior to another and on this basis he could not now rely on the location of the property within the centre as a basis for justifying his valuation. 

Mr. Leslie Kertesz, the occupier, was then called to give evidence and he confirmed that he is a retailer with 24 years experience in 10 different shopping centres around Dublin.  In that time, he said, this is the first time that he has brought an appeal to the Valuation Tribunal.  He confirmed that he started trading in the Ashleaf Centre when it opened in March, 2000 and took another unit after 18 months but he handed back this second unit in 2007 because the centre was not trading well. Mr. Kertesz added that the opening of the Dundrum Shopping Centre has had an adverse effect on all shopping centres in the region and, in relation to turnover he is now trying to achieve the figures that he was reaching 5 years ago. 

Respondent’s Evidence
Mr. Cassidy advised that the subject unit is located in a prime area of the shopping centre across from the anchor tenant, Dunnes Stores, and that upon arrival in the mall it is one of the first units that you will see.  He confirmed that the basis of the valuation of €95,500 is based on a Zone A rent of €1,200 per square metre.  He set out a number of different comparisons, attached at Appendix 2 hereto, and confirmed that they came under two categories. Unit 4 and unit 6 are included because they offer the best comparative in terms of size and location within the shopping centre and are adjoining units.  Mr. Cassidy then offered unit 13 and unit 9 as further comparisons which he said were selected because they were challenged by rating consultants at First Appeal stage and Representations stage and ended up at Zone A at €1,200 per sq. metre.  He confirmed that his view is that the tone of the list is settled at Zone A at €1,200 per sq. metre and he added that this had come about after rating settlements with various different agents including HOK, Bardon & Co. and Brian Bagnall & Associates.

Mr. Cassidy confirmed his valuation of €95,500, broken down as follows:
Retail Zone A   - 46.36 sq. metres        @ €1,200 per sq. metre           =          €55,632
Retail Zone B   - 46.36 sq. metres        @ €600 per sq. metre              =          €27,816
Retail Zone C   - 40.20 sq. metres        @ €300 per sq. metre              =          €12,060
Total                                                                                                    =          €95,508
NAV:   €95,500

Cross Examination
Under cross examination Mr. Cassidy was asked a number of questions by Mr. Conway concerning the location of the unit, details of what rental evidence he had used to arrive at the valuation and also some queries on his comparisons. Mr. Cassidy confirmed that in arriving at the valuation he had considered rental information for both the Ashleaf Centre and Rathfarnham Shopping Centre which he said was quite close by and was similar. He added that he had limited rental information available to him when carrying out the valuation, as the rental reviews had not been finalised, but he had analysed the rental agreement on the Carphone Warehouse unit and also contacted letting agents for the vacant unit to establish the quoting rent. Mr. Cassidy added that he had enough information to arrive at a fair valuation.

Additional Evidence of Respondent
Mr. Pat Kyne, Team Leader, then gave evidence on behalf of the Valuation Office.  He confirmed that he is responsible in the Valuation Office for retail units and he is involved with valuers in setting appropriate levels. He said that the valuers in the Valuation Office met as a group to analyse the rental information and to decide on appropriate values.  He added that in valuation terms it was important to ensure that a neighbourhood centre was not valued more than a district centre, which in turn should not be valued more than a regional centre. He said that a revaluation is effectively a greenfield site situation and they have to use whatever information they have, which may be limited, to arrive at a general level of value. He concluded by stating that in his opinion the tone of the list is now settled with regard to Ashleaf Shopping Centre.

Summary
Mr. Conway said that the valuation was unfair and that the Valuation Office should have availed of more rental evidence in arriving at the valuation and he reiterated the point that Mr. Cassidy could not rely on the location of the unit as a basis for the valuation, given that he did not differentiate on the basis of location when valuing any of the units in the centre.

Findings
The Tribunal has carefully considered all of the oral and written evidence produced by the parties and the arguments adduced at the hearing, and makes the following findings:

1. The statutory basis of valuation is set down in Section 48 of the Valuation Act, 2001 wherein at subsection 3 the net annual value of a property is defined as being “ the rent for which, one year with another, the property might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes and charges (if any) payable by or under any enactment in respect of the property, are borne by the tenant.”
2. The Tribunal finds Mr. Cassidy’s figure of Zone A at €1,200 per square metre to be based on limited evidence of 1 actual rent only and 1 quoted rent for a vacant premises.
3. The Tribunal noted that the location of the unit in these circumstances would appear to be irrelevant given that Mr. Cassidy did not rely on it in his original valuation of the property concerned or of the other units in the centre.
4. The Tribunal prefers the comparisons provided by Mr. Conway on the basis that the rents in most of them were tested out by agreement or went to arbitration, appear to be more reliable and were very close to the valuation date of 30th September, 2005.
5. The Tribunal notes that Mr. Cassidy referred to levels in Rathfarnham Shopping Centre but did not provide any detailed evidence to the Tribunal in relation to these properties either in his précis or in his oral evidence to the Tribunal.
6. Mr. Conway’s comparisons are very representative as they include rental details of almost half of the properties in the centre.

Determination
Having regard to the foregoing the Tribunal determines the valuation to be €85,957 calculated as follows:

Retail Zone A - 46.36 sq. metres   @        €1,080 per sq. metre    = €50,068.80
Retail Zone B - 46.36 sq. metres   @         €540 per sq. metre       = €25,034.40
Retail Zone C - 40.20 sq. metres   @        €270 per sq. metre       = €10854.00
       Total                                                                                             = €85,957.20
Say NAV                                                                                         €85,957

And the Tribunal so determines.