Using the traditional term and reversion approach, value a freehold reversion interest which has a term net income of $45,000 p.a. for 4 years. Upon reversion, the owner can revise the rent to a full market net rent of $60,000 p.a. The market yield is 7.5%.

a) You have to value the property assuming the yield is not an equivalent yield. (5 marks)

b) You have to value the property assuming the given yield is an equivalent yield. (5 marks)

c) When should you use income capitalisation approach in property valuation? (2 marks)

d) What type of data do you need to collect when using income capitalisation approach?