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VALUERTHE SOUTH AFRICAN
VALUERFe
bru
ary
20
17
, N
O.
12
7
MPRA SEMINAR 2016SOUTHERN BRANCH SPRING SEMINAR MUNICIPAL BALANCING ACT
Register on www.saiv.org.za
NatioNal ExEcutivE MEEtiNgNatioNal aNNual gENEral MEEtiNgaNd NatioNal SEMiNar
17-19 May 2017Presented by the KwaZulu-Natal Branchat Makaranga Garden Lodge, Kloof, KZN
1
THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 127
THE SOUTH AFRICANINSTITUTE OF VALUERS
PRESIDENT ’S
LETTER
V
greetings fellow valuers.
The New Year has commenced and so
has another year in our lives. May 2017
be the year when great things come your way and
when you are blessed in abundance.
What has 2017 brought us thus far - not much? I beg to differ.
We have new leadership in one of the world super-powers; we
have economists who are punting modest economic growth – it may be modest, but it
is moving in the right direction. We have had rain, which may be a little late, but at least
it has arrived.
More significantly for valuers is that 2017 brought us disturbing news in the municipal
valuation environment. This came late last year in a Carte Blanche exposé. Last week
the newspapers reported on a suspension and an arrest relating to fraud and corruption.
This has a direct impact on all of us as professionals in the valuer profession. This issue
talks to something close to all our hearts, and that is ETHICS.
ETHICS can never be overstated and it ranks right up there with PROFESSIONALISM.
Those of you who are RICS members will know the importance which RICS places on
ethics and know that the SAIV too stands for a high standard of ethics.
I am happy to report that neither of the parties involved are members of the SAIV. I have
addressed a letter to the Editor of BusinessLIVE indicating this and distancing the SAIV
from the corrupt and fraudulent activities of these individuals – see page 3.
There is a lot planned this year in your branches as far as workshops and seminars are
concerned. It is important that you as members of this organisation attend these events
in order to gain the knowledge and the requisite experience to be able to represent your
clients professionally and ethically.
On a lighter note, please diarise the National AGM which will be held in KwaZulu-Natal
this year – more to follow on this from the General Secretary’s Office in due course.
In closing, some of you may be aware that our General Secretary spent a considerable part
of her December holiday in bed or on crutches following an ankle ligament reconstruction.
There were some small complications, but Melanie is now well on her way to recovery.
On behalf of all our members, we wish you a speedy recovery, Melanie. In addition, a
special thank you to Anne-Marie Delport for holding the fort during Melanie’s absence
(although, truth be told, Melanie is rarely absent).
Till next time.
Patrick O’Connell
NATIONAL EXECUTIVE OFFICE BEARERS 2016/2017PRESIDENTPatrick O’ConnellVICE PRESIDENTTracey Myers LEGAL AND CONSTITUTIONDerrick Griffiths (portfolio head)Patrick O’Connell, Edwin Schoeman, Adrian VallunMANAGEMENT AND FINANCETrevor Richardson (portfolio head), Mark Bakker,Adrian Vallun, Thys Beukes, Patrick O’Connell Farrel OctoberMARKETING Tracey Myers (portfolio head), General Secretary (website)PROFESSIONAL LIAISON Patrick O’Connell (IAAO, WAVO, CBE and VAs)Tracey Myers (RICS)General Secretary (SACPVP, IVSC, SERVICES SETA and SANRAL)Adrian Vallun (AfRES, REIB and REIZ)Janet Channing Co-opted (SAGI)MEMBERSHIP AND DEMOGRAPHICSPatrick O’Connell (portfolio head)Thys Beukes, Tracy Kuyk, Gerrie Minnaar, Mark BakkerEDUCATIONTracy Kuyk (portfolio head), Edwin Schoeman, Tracey Myers, Thys Beukes
GENERAL SECRETARY’S OFFICE
GENERAL SECRETARYPO Box 35500, Menlo Park, 0102t. 086 100 SAIVf. 086 657 3164e. [email protected]
ACCOUNTSe. [email protected]. [email protected] QUERIESe. [email protected]
SAIV BRANCHESCENTRAL BRANCHt. 053 831 6500 f. 086 657 3023e. [email protected] CAPE BRANCHt. 041 396 1400 f. 086 657 3003e. [email protected] BRANCHt. 081 428 4137 f. 086 657 3031e. [email protected] BRANCHt. 012 348 1752 f. 086 657 3201e. [email protected] BRANCHt. 081 405 8402 f. 086 730 9193e. [email protected]
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THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 127
SA Valuer Editorial Panel:
Thys Beukes (Central Branch)
053 831 6500 / 071 600 5327
Mark Bakker (Eastern Cape Branch)
041 396 1400 / 083 227 3496
Janet Channing (KwaZulu-Natal
Branch)
033 343 2868 / 082 570 5834
Tracey Myers (Northern Branch)
011 721 7141 / 083 408 1755
Dean Ward (Southern Branch)
021 400 9915 / 082 714 9490
Editor and advertising:
Patricia Leitich
The editor welcomes contributions
(by way of letters or articles) that are
appropriate and that address an is-
sue that is topical or of strategic con-
cern to the sector as a whole. These
should be submitted to the editor at
[email protected] for pos-
sible publication. Please, use the SA
Valuer as your platform to promote
dialogue between SAIV members.
The information and data presented
in the SA Valuer are recorded in
good faith, using sources believed
to be reliable.
The views and opinions expressed
in the SA Valuer are not necessarily
those of the SAIV, notwithstanding
the fact the SA Valuer is the official
publication of the SAIV. Neither are
they representative of the opinions
of the editor. Copyright applies to
all material contained in this issue
and reproduction in whatever form
is not permitted without the written
authorisation of the editor.
C O N T EN T SV
Fe b r u a r y 2 0 1 7 , n o . 1 2 7President’s letter
A letter to the Editor of BusinessLIVE, by Patrick O’Connell
Cover story: The MPRA Seminar: 2016The independence and functions of the Valuation Appeal Board as per the stipulations of the MPRA, by Adv Anthonie ViviersCooperative Governance and Traditional Affairs: Experience with regard to the implementation of Local Government: Municipal Property Rates Amendment Act, 29 of 2014 (MPRAA) in terms of section 81 of the MPRAA, by Thandi ZondoVacant land: rates policy definitions and rating (The biggest (8th) sin), by Ben Espach
Southern Branch 2016 Spring SeminarSelf-storage economics and valuation, by At van der LindeWhat can a Valuation Appeal Board expect from a valuer? By Adv Martin Coetzee
The balancing act for local government, by Duane Ashwell
Valuation principles in the hospitality industry, by Lyndon Storer
What is the value of farmland?, by Jannie Wessels
Legal beagle – The valuer as expert, by Derrick Griffiths
Protection of Personal Information (PoPI) Act and the obligations it creates, by Christopher Tucker
John Loos writesSARB MPC leaves Repo Rate unchanged2017 started on a very weak noteInter-provincial repeat home buyer migration trendsMajor regions comparedHouse size segmentsSectional title segmentHouse price inflation vs rental inflationForeigner buying
Unpacking 2017 Budget Speech for your business
SAIV at homeFellow in focus: André ZybrandsGeneral Secretary’s news IVSC launches new global standards for valuation profession In Memoriam: Johan (JC) Fourie Membership stats Diary of upcoming events
Professional Directory
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3
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26
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48
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The South African Institute of Valuers NPO 146-688
General Secretary T 086 100 SAIV (7248), 012 348 2757 | F 086 657 3164 | E [email protected]
Unit 11, Rynlal Building, 320 The Hillside Street, Lynnwood, Pretoria, 0081
PO Box 35500, Menlo Park, 0102 | www.saiv.org.za
BRANCHES
Central: T 053 831 6500, F 086 657 3023, E [email protected] || Eastern Cape: T 041 396 1400, F 086 657 3003, E [email protected]
Kwazulu-Natal: T 081 428 4137, F 086 657 3031, E [email protected] || Northern: T 012 348 1752, F 086 657 3201, E [email protected]
Southern: T 081 405 8402, F 086 730 9193, E [email protected]
20 January 2017 The Editor BusinessLIVE Newsdesk Section Electronic Submission : [email protected] Dear Sirs Re: Article of 18 January 2017: CITY OF JOBURG OFFICIAL ARRESTED FOR FRAUD & CORRUPTION (Penwell Dlamini) The article published online (referred to above) has naturally caused quite a stir in both the Valuer Profession space as well as the Municipal Valuation Environment space. The South African Institute of Valuers (SAIV) would like to place on record that neither of the parties involved in this debacle are Members of the SAIV. In addition to the above, the SAIV view the behaviour of the mentioned individuals as unacceptable Valuer practice and completely in contravention of the Ethics for which we stand in the Valuer Profession. It is imperative for employers of Valuers, be they private or corporate Employers, that the Valuers whom they employ are Registered with the South African Institute of Valuers in addition to their legislative Registration with the South African Council for the Property Valuers Profession (SACPVP), as both organisations stand for Professionalism and Ethics of a high standard. The SACPVP are the Regulatory Body responsible for the Registration and Discipline of the Valuer Professionals whereas the South African Institute of Valuers is a voluntary association with the primary objective to provide its Members with Continued Education and Training services, Seminars & Workshops and guidance on legislative matters affecting the Valuation Profession and the Property Sector as a whole, both to Members and the Government. Yours sincerely PATRICK O’CONNELL President Cc: Mr. Molefe Kubuzie – President: SACPVP – [email protected]
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THE SOUTH AFRICAN
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thE MPra SEMiNar: 2016V
Each year the Municipal Property Rates Act Seminar is presented
by the SAIV in celebration of the annual International Valuation
and Appraisal Week which takes place during the first week
of November.
In 2011 the first International Valuation and Appraisal
Week was celebrated by a number of leading valuation
and appraisal organisations across the world, and raised
the importance that valuers and appraisers make towards
the global economy. Last year’s Valuation and Appraisal
Week continued the same theme, building on the previous
years’ successes.
Secretariat – Janet Han, World Association of Valuation
Organisations Limited
The 2016 Seminar was held at Bytes Conference
Centre in Midrand and was presented by the Northern Branch
of the SAIV.
General Secretary Melanie Vallun opened the seminar by
welcoming the 110 delegates present. She introduced
the theme ‘Adding value’ and spelt out in detail the value
that members of the SAIV receive by being members of
the Institute:
PRoductS
• For R2000 four issues of Rode’s Report (a saving of R2 300)
• A 10% to 35% discount on current premiums on professional
indemnity cover with a cost saving of 11% to 57%
• PDD laser distance meters, with an average cost saving of
R2 600 per unit (21 members saved R54 600)
otheR
• Introduction to 1 MAP
• Four issues of The South African Valuer
• Seminars – non-members pay double
• Valuers’ newsletter – new
• SAIV website for resources, careers, ‘request a valuation’
c o v e r s t o r y
StudeNt MeMbeRS
• Pay only R530 for membership per annum
• If unemployed pay nothing
• Can apply for bursaries
• Can attend seminars at minimal cost
the INStItute RePReSeNtS MeMbeRS (the
VALuAtIoN PRoFeSSIoN) At the SAcPVP ANd
otheR GoVeRNMeNt oRGANISAtIoNS oN MAtteRS
Such AS
• CET policy
• Changes to the rules
• Services Seta
• MPA Qualification
• MPRA Standards
The Institute believes that there should be liaison, consultation
and transparency on all levels of the profession and
between all stakeholders.
Seven presentations were given, three of which have been
featured in previous issues of The South African Valuer.
Adv Anthonie Viviers was the first to address the delegates.
Melanie N Vallun (General Secretary)
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THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 127
It is further very important to note that section 69(1) of the
MPRA, read with sections 55(1) and (2) stipulates that the
chairperson of the board and the municipal valuer must ensure
that the valuation roll is adjusted or added to in accordance
with the decisions taken by the appeal board (if amended or
revoked, this obviously includes all the decisions taken on
appeals/reviews).
If the adjustment in the valuation of the property affects
the amount due for rates payable on that property, section
55(2) (Adjustments or Additions to Valuation Rolls) must
be applied. Section 69(3) stipulates where an addition
has been made to the Valuation Roll as envisaged in
subsection (1), section 55(3) must be applied.
Section 55(3) was, however, deleted by Act 29 of 2014).
The importance of section 55(1), (2) (a) and (b) is that the
municipal manager must calculate, recover and/or repay
rates. If the stipulations of section 69 of the MPRA, read with
section 55(1) and (2) (a) and (b), are not strictly adhered to
by the officials of a municipality, the whole valuation process
and functions of the Valuation Appeal Board will then be an
exercise in futility.
It is astonishing that certain municipalities and or officials still
do not adhere to the above sections of the MPRA.
The non-compliance with the above stipulations is unfortunate
and counter-productive. It not only has the effect that the
municipality is ‘robbed’ of a most needed income, which
in turn adversely affects its ability to provide proper service
delivery to the needy, but also burdens and prejudices the
ratepayer, especially if his/her property was incorrectly valued
and rates are due to him/her by the municipality.
Why review?
The section 52 review function is an important function of the
VAB, as it acts as a safety net, protecting both the municipality
and/or the objector/owner of a property against an incorrect,
excessive over- and/or under-valuation of a property or if
the incorrect category was assigned to a property by the
municipal valuer.
thE iNdEPENdENcE aNd fuNctioNS of thE valuatioN aPPEal Board aS PEr thE StiPulatioNS of thE MPra
INtRoductIoN
The MEC for Local Government established the Valuation
Appeal Board (VAB) in terms of section 56(1) of the Municipal
Property Rates Act (MPRA), as amended by Notice in the
Government Gazette. The VAB is created by means of
legislation and is therefore a creature of statute. This means
that the VAB derives its powers and functions from an Act
of Parliament; the Act and its Regulations in this instance
determine the powers and functions of the Board.
The Tribunal/Board is only empowered to do what the Act
prescribed in its functions and powers/internal procedures (it
can therefore only do what is prescribed or determined by the
specific legislation, inclusive of the regulations). If the VAB,
in the exercising of its functions and powers exceeds the
powers and functions derived from the Act, such actions and/
or decisions taken will be null and void; they can and will be
set aside on review by the High Court.
the FuNctIoNS oF the VAb IN teRMS oF the MPRA
(Act 6 oF 2004)
The functions of the VAB are mainly to hear and decide appeals
against the decisions of a municipal valuer, concerning
objections to matters reflected in, or omitted from the roll and
to review decisions of a municipal valuer submitted to it in
terms of section 52 of the MPRA.
According to this section, if the value is adjusted by more than
10% upwards or downwards, the municipal valuer must give
written reasons to the municipal manager and the municipal
manager must promptly submit to the relevant valuation
appeal board the municipal valuer’s decision, the reasons
for the decision AND ALL RELEVANT DOCUMENTATION
for review.
This documentation should normally, or is supposed to
consist of, a properly completed and signed objection
form, containing ALL the relevant documentation/market
information used by the municipal valuer as well as the
complete submissions made by the objector. This is crucial
as it will put the VAB in a favourable position to ADJUDICATE
the review properly.
The VAB must confirm, amend or revoke the decision of the
municipal valuer and will include the category/extent assigned
by the municipal valuer, if applicable.
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It is therefore of paramount importance that the correct
information and documentation is submitted to the board and
that the board, given the circumstances, be allowed sufficient
time and resources to adjudicate the matter properly.
(See discussion on challenges experienced by the VAB.)
A review application to the High Court is the only alternative
remedy to rectify mistakes and or to alter the decision taken
by the VAB.
NB: JUSTICE MUST NOT ONLY BE DONE BUT ALSO BE
SEEN TO BE DONE
coNduct oF MeMbeRS oF the VAb
Section 62(1) of the MPRA stipulates that a member of an
Appeal Board:
(a) Must (MANDATORY) perform the duties of office in good
faith and without fear, favour or prejudice (similar to judges’/
magistrates’ oath of office).
(b)…
(c)…
(d) May not act in any other way that compromises the
credibility, impartially, INDEPENDENCE or INTEGRITY of
the VAB:–
“The Legislature clearly and in no uncertain terms again
reconfirmed, by the above-mentioned section the importance
of the independence of the VAB”;
(2) A Member of an Appeal Board who contravenes or fails
to comply with the above is guilty of misconduct (AND MAY
ALSO BE SUBJECTED TO DISCIPLINARY ACTION BY HIS/
HER PROFESSIONAL BODY).
INteRNAL PRoceduReS
Section 67 stipulates that: “An Appeal Board may determine
its internal procedures to dispose of appeals and reviews
subject to any procedures that may be prescribed.”
The legislature deemed it fit to empower the boards to
determine their own procedure, and thereby strengthen the
independence of the boards in line with trite legal principles.
The above principles MUST be observed by municipalities
as any interference will be an immediate ground for review
and the setting aside of rulings affected with possible punitive
costs order implications for the municipality concerned.
The Impartiality of the boards as independent quasi-
judicial tribunals MUST be observed and respected, as it
gives credibility to the whole MPRA and valuation process.
Interference in any of the prescribed functions and or
procedures of the board should not be tolerated. How the
boards function and dispose of appeals and reviews must
be respected.
The independence of the VAB/Tribunal was recently
reconfirmed by a decision* of the South Gauteng High Court
per Van Oosten J, who held as follows:
The Board is an independent autonomous
creature of Statute and in the performance of its
functions in the interests of not only the City but
also the rates paying public in general, ought
to do so independently within the Statutory
framework in terms of which it was established.
The inroad into their functioning caused by the
sixth respondent cannot be justified.
I wish to reiterate that the board is duty bound to adjudicate
each and every matter properly as stipulated in section
62 of the MPRA and also in line with the serving members
respective professional bodies’ codes of conduct.
Each and every party is entitled to fair administration process
as stipulated by the Promotion of Administrative Justice
Act (PAJA), decided case law and by the directions of the
Constitutional and other courts.
Interests must be balanced and matters must not be
completed in a hasty fashion just for the sake of finalising
matters. Credibility must be upheld at all costs.
chALLeNGeS FAced by A VALuAtIoN APPeAL boARd
Each review and appeal must be adjudicated on its own
merits. Sometimes it is time-consuming to assess all the
attributes (where adjudicated in the absence of an objection
* Viviers NO V City of Johannesburg Metropolitan Municipality and Others (31753/2016 ZAGPJHC 277(30 September 2016) - Saflii
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THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 127
form - which should be discouraged and not tolerated - extra
care must be taken). It is vital that all relevant information
be disclosed by all the parties. Proper adjudication is
hampered by
• the absence of or incomplete objections forms;
• an incorrect basis of valuation used;
• irrelevant market information which is not comparable to the
subject property under consideration;
• system errors data base of municipality not accessible to
verify information;
• conflicting information on data base;
• lack of clarity as to why supplementary valuation was done;
• absence of merit in objection; clearly a rates issue over
which the VAB has no jurisdiction to adjudicate;
• the fact that the admin procedure re notification of owners
and objectors was not adhered to or was incorrect;
• VAB decisions pertaining to values/categories were not
captured and/or implemented on system, in some instances
many years after the decision was taken by the VAB;
• rates not recovered/repaid (section 55);
• time lapse from objecting to adjudication;
• incorrect implementation dates applied, eg sub-division;
• frivolous appeals;
• appeals incorrectly lodged without objection;
• incorrect information/property details;
• appellant’s failure to attend appeal hearings after notification/
confirmation; therefore difficult to determine number of
appeals to be scheduled to be productive;
• the fact that cases must be adjudicated properly, given a fair
hearing, so sufficient time is needed;
• non-adherence to rules of fair hearing reviewable ;
• incorrect interpretation of the applicable legislation by
officials;
• the fact that the VAB must guard against High Court review
applications, and the related cost implications.
QUOTE FOR THE DAY
“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.”
- Jimmy Dean
Adv Anthonie Viviers obtained the
degrees BJuris, LLB and LLM and was
admitted to practise as an advocate in
South Africa and Lesotho. He lectured
in law and is co-author of the book A
Practical Guide to the Criminal Legal
Practice in SA. He has been appointed
by various government departments
to serve on boards, investigation
committees and as a part-time military
judge. He was also appointed by the
United Nations to the Rwanda Tribunal
as Defence Counsel. Since 2002,
Adv Viviers has served as chairman on
various valuation boards and valuation
appeal boards under the MPRA.
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THE SOUTH AFRICAN
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cooPErativE govErNaNcE aNd traditioNal affairS: Experience with regard to the implementation of local government: Municipal Property rates amendment act, 29 of 2014 (MPraa) in terms of section 81 of the MPraa
INtRoductIoN
Provincial monitoring section 81(1) and (2) of the MPRAA
• The department is legislatively mandated to monitor, support
and report on compliance with the provisions of the MPRAA
and where necessary if municipalities fail to comply with
the provisions of the Act, take appropriate steps to ensure
compliance.
Interventions where non-compliance has been observed
• MPRAA Provincial Workshops are conducted
on a quarterly basis to assess compliance, progress
with the implementation of the Act and discuss issues
emanating thereof.
• Individual engagements to resolve issues emanating from
the implementation of the Act.
• Non-compliance letters are written requesting corrective
measures envisaged to prevent reoccurrence.
coMPLIANce MoNItoRING
Rating: (sections 2-23)
Section 3 of the MPRAA
Adoption and contents of rates policy: a council of a
municipality must adopt a policy consistent with MPRAA on
the levying of rates on rateable property in the municipality.
Section 4 of the MPRAA
Community participation: placing the document on the
municipal official website, advertising last day for comments
and council approves budget-related policies.
Section 5 of the Act
Annual review of rates policy
Section 6 of the Act
By-laws to give effect to the rates policy: a municipality must
adopt and publish by-laws, in terms of section 12 and 13 of the
Municipal Systems Act, to give effect to the implementation
of its rates policy.
Section 8 and 19 of the MPRAA
Different rates on different categories of properties:
different rates to be charged on different categories of
properties as determined by the council. Different rates on
residential properties are impermissible.
Section 9 of the MPRAA
Properties used for multiple purposes: apportionment
according to the use of a property on the general valuation
rolls.
Section 14 of the Act
Promulgation of resolutions on levying of rates
Section 15 of the MPRAA
Exemptions, rebates and reductions: tabling of exemptions,
rebates and reductions by the municipal manager to the
municipal council and resolving on exemptions.
cRItIcAL AReAS oF coMPLIANce MoNItoRed
Section 31 of the MPRAA
Date of valuation: a municipality must determine a date of
valuation that may not be more than 12 months before the
start of the financial year in which the general valuation roll is
to be implemented.
Section 33 of the MPRAA
Designation of municipal valuers: a municipality must,
before the date of valuation, designate a person as municipal
valuer.
Nb: couNcIL ReSoLutIoN IS RequIRed
Section 33(2) of the MPRAA
Procurement of the service providers for the compilation
of the general valuation rolls; monitoring of compliance with
the guidelines for the procurement of the service providers
Section 34 (d) and chapter 3 of MPRAA Regulations
Submission of the general valuation rolls: five months
before the implementation.
Supplementary valuation rolls: three months before the
implementation in terms of the MPRA Regulations read in
conjunction with section 78(5) of the Act as amended.
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THE SOUTH AFRICAN
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Thandi Zondo is responsible for
monitoring the implementation of the
MPRA by municipalities in Gauteng
Province under the Department if
Cooperative Governance and Traditional
Affairs (DGoGTA). This function has been
delegated by the MEC in terms of section
81 of the MPRA. Where municipalities
are experiencing challenges emanating
from the implementation of the Act,
corrective measures are discussed
with the municipalities, resolutions
and recommendations are taken for
implementation. Where non-compliance
has been observed or identified,
appropriate steps are taken to ensure
compliance.
Thandi has eleven years’ experience in
monitoring Gauteng municipalities that
are implementing the MPRAA. She has
furthered her studies with Unisa up to
Master’s level in Public Administration
and Management.
Section 48 of the Act
Contents of the general valuation rolls: a general valuation
roll must list all properties as determined by municipalities in
their areas of jurisdiction.
Section 49 of the Act
Public notice of valuation rolls: the municipal manager
must, within 21 days of receipt of the roll, publish the roll for
public inspection.
Section 51 of the MPRAA
Processing of objections: a municipal valuer must consider
objections promptly, decide objections on facts, and adjust or
add to the general valuation roll.
Section 81 (1A) of the MPRAA
Submission of municipal project plans: submission of
quarterly reports by the municipal managers to the MEC on
the progress with valuation of properties for the compilation
and implementation of general valuation rolls.
Section 82 of the MPRAA
Submission of reports outlining: progress with the
implementation of the next general valuation roll after the
extension of the validity of the general valuation rolls in terms
of section 32(2) of the Act.
coNcLuSIoN
Municipalities are progressively making improvements on
matters of compliance related to the meeting of time frames,
fair and effective administration of the Act.
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THE SOUTH AFRICAN
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VAcANt LANd FoR SALe
You see these properties every day, even in old suburbs.
What drives or stimulates the development of vacant land?
– supply and demand.
vacaNt laNd: ratES Policy dEfiNitioNS aNd ratiNg(The biggest (8th) sin)
Why should there by a category for vacant land? It was always
there. Is it because we do not want land that is not developed,
or to prevent land banking and illegal occupation, or because
it poses a security risk?
RAteS PoLIcy deFINItIoNS
The South African metros have different definitions for vacant
land in their rates policies.
The City of Cape Town holds:
“Vacant Land” means a property without any
buildings or structures that could be used
for residential or other purposes as per the
occupation certificate issued by the City,
as determined by the Director: Valuations.
Properties used as cemeteries as per Sections
5.12.11 and 5.16 will not be treated as vacant
land.
The reference to an occupation certificate does not seem
necessary and it is not clear what must be determined by the
municipal valuer.
According to the Ekuhuleni Metropolitan Municipality
• “Vacant land” means a land where no
immovable improvements have been erected
but excludes farms and small holdings not
used for any purpose.
• Vacant unimproved land on which a dwelling
unit(s) is/are being constructed and which will
be used exclusively for Residential purposes
may receive a rebate as determined by
Council from time to time.
Ekuhuleni Municipality currently gives relief to vacant
unimproved stands. A 75% rebate is granted on residential
property on which a dwelling unit(s) is/are being constructed
and which will be used exclusively for that purpose, subject
to the following conditions :
i. that an approved building plan is supplied;
ii. that a residential dwelling unit(s) be constructed on the
property;
iii. that the 75% rebate be granted for a maximum period of
eighteen (18) months from the date the approved building
plan was supplied;
iv. that the occupation certificate be supplied at the end of the
eighteen (18) month period;
v. that the failure to supply the occupation certificate will
result in a reversal of the 75% rebate already granted; and
vi. that in the event that the said property is sold prior to
the issue of the occupation certificate, the rebate already
granted be reversed.
Ethekwini Municipality maintains
“Vacant land” means land that has not been
developed with any structures. Such land
to assume the categories described under
clause 5.6(a), (c) or (d) once an occupation
or completion certificate has been issued by
the Planning and Development Unit of the
Municipality.
In the City of Joburg the category ‘vacant land’ includes
the following
(i) Land without a zoning, zoning unresolved, deproclaimed
mining land and any undeveloped land/erf within a
proclaimed township or within a land development area.
(ii) Land in this category shall not benefit from any exemption,
reduction or rebate. Property will continue to be rated as
vacant until such time as the Council issues a Certificate of
Occupancy or final inspection.
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(iii) Vacant land owned by individuals for development of
residential property, if developed within the two-year
period will be charged residential tariff backdated to year
one. Owner of the land must apply to the City for the
adjustment of the tariff.
(iii) The tariff applicable to vacant land will take precedence
over the tariff applicable to the property category where
such land is vacant except for (iii) and (iv).
(iv) The rate applicable to vacant land will take precedence
over the rate applicable to the category in which the
property would have fallen had it not been vacant land.
The City of Joburg is the only municipality, that I am aware of,
where categories are based on the zoning and not the actual use.
theRe IS No deFINItIoN oF VAcANt LANd.
Clause 6 of the policy is a “Clarification of categories
of property”.
(i) Is vacant land not all land, irrespective of zoning where no
occupation certificate has been issued?
(ii) The clause deals with property categories and the reference
to rating does not seem correct.
Is the occupancy certificate not issued after the final
inspection? The municipal valuer will always request the
occupancy certificate.
(iii) Sub clause (iii) – shocking drafting - what does it mean?
(iii) Incorrect numbering – (iii) is duplicated.
Are the second (iii) and (iv) necessary?
It should rather read as follows:
Vacant Land means land where
This category includes the following:
(i) Land without a zoning, zoning unresolved, deproclaimed
mining land and any undeveloped land/ erf within a
proclaimed township or within a land development area.
(ii) Land in this category shall not benefit from any exemption,
reduction or rebate. Property will continue to be rated as
vacant until such time as the Council has not issued issues
a Certificate of Occupancy or final inspection.
(iii) Vacant land owned by an individual for development of
residential property, if developed within the two years will
be regarded as charged residential tariff backdated to year
one. The owner of the land must apply to the City for the
adjustment of the tariff.
Note: This should be dealt with as a rebate and not a
change in category and must be moved to the clauses
dealing with rebates.
(iii) The tariff applicable to vacant land will take precedence
over the tariff applicable to the property category where
such land is vacant except for (iii) and (iv).
(iv) The rate applicable to vacant land will take precedence
over the rate applicable to the category in which the
property would have fallen had it not been vacant land.
Mangaung says
“Vacant Land” means land on which no
immovable improvements have been erected
excluding farm properties not used for any
purposes as contemplated in section 8(2)(e) of
the MPRA.
The reference to section 8(2)(e) is good for now, but the
section will be replaced by the new section 8 that will provide
a list of compulsory categories.
Nelson Mandela Bay Municipality maintains
‘vacant land’ refers to property without any
buildings or structures that could be used for
residential or other purpose, as determined by
the Municipal Valuer.
What must or could the Municipal Valuer determine?
The City of Tshwane:
“vacant land” as a property for the levying of
different rates, means any land, other than
farm property and/or smallholding, where no
immovable improvements have been erected,
where immovable improvements according
to the City’s Town Planning Scheme, Land
Use Rights and By-Laws, is interpreted as
permanent structures on a property, that have
been erected in accordance with approved
plans and the issuance of a Certificate of
Occupancy in terms of the City’s Building
Regulations”.
12 FEBRUARY 2017, NO 127VALUERTHE SOUTH AFRICAN
This drafting is clumsy and could be simplified. Refer to
the other examples. Property categories are created to
levy different rates, is it necessary to include these in the
definition? It could read more simply:
“vacant land” as a property for the levying of
different rates, means any land, other than
farm property and/or a smallholding, where no
immovable improvements have been erected,
where immovable improvements according
to the City’s Town Planning Scheme, Land
Use Rights and By-Laws, is interpreted as
permanent structures on a property, that have
been erected in accordance with approved
plans and the issuance of and a Certificate of
Occupancy has been issued in terms of the
City’s Building Regulations.
Buffalo City Metropolitan Municipality’s definition is short:
“Vacant Land” means land not in use and
where no immovable improvements have been
erected.
The category should be linked to an occupancy certificate. If
not, illegal building could benefit.
Rates policies and by-laws are subject to the MPRA and
its Regulations.
The relevant parts of the statute are the MPRA definitions
“agricultural property” means a property that
is used primarily for agricultural purposes but,
without derogating from section 9, excludes
any portion thereof that is used commercially
for the hospitality of guests, and excludes
the use of the property for the purpose of
ecotourism or for the trading in or hunting of
game;
What is the category of a farm property that is used for
grazing or dry lands where there are no buildings - agricultural
or vacant?
“residential property” means a property
included in a valuation roll in terms of section
48(2)(b) in respect of which the primary use
or permitted use is for residential purposes
without derogating from section 9;
When is a property primarily used for residential properties?
Does this definition mean the end of undeveloped residential
land being categorised as “vacant land”?
“permitted use”, in relation to a property,
means the limited purposes for which the
property may be used in terms of -
(a) any restrictions imposed by -
(i) a condition of title;
(ii) a provision of a town planning or
land use scheme; or
(iii) any legislation applicable to any
specific property or properties;
(b) any alleviation of any such restrictions
NB Permitted use does not equal zoning. In terms of the use
zone – we refer to it as the zoning – there are uses that are
allowed on the property. You need to keep an eye on the uses
that are allowed.
What is primary use? First or highest in rank? Dominant –
most important? Is it 51%, 66% or 75%?
If primary use or dominant use is not defined in the rates
policy and there is a category for multiple use, this must be
considered.
The issue with this definition is actually when the property
is vacant.
The permitted use of properties zoned residential 1, 2, 3 & 4
and special for residential is clearly residential.
Properties zoned business, business 1, 2, 3 & 4 and special for
business purposes, to name a few, allow or permit residential
use.
Does it mean that all properties where the zoning allows –
permits – residential use must be categorised as residential?
“.. or permitted use is for residential purposes ..”
Does it mean that if any one of these alternatives is applicable
the property is residential?
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The reference to the permitted use is only applicable when
the property is vacant. - or is it? OR – is it used as a function
word to indicate an alternative?
The permitted use of properties zoned residential 1, 2, 3 & 4
and special for residential is clearly residential.
Properties zoned Business, Business 1, 2, 3 & 4 and special
for business purposes, to name a few, allow or permit
residential use.
Does it mean that all properties where the zoning allows –
permits – residential use must be categorised as residential?
This definition is a time tomb. Who is going to start the clock?
RAtIo ReGuLAtIoN
agricultural property’ means property envisaged in section
8(2)(d)(i), (e) and f(i) of the Act
8(2)(d)(i) farm property used for agricultural purposes
8(2)(e) farm property not used of any purposes
8(2)(f)(i) smallholding used for agricultural purposes
But not vacant land; 99% of farm properties that are not used
for any purpose and are not developed could be regarded
as vacant land in terms of the majority of rates policies.
Farm proprieties that are not used for any purposes are not
vacant land.
RAtING oF VAcANt LANd
This is not rating, but raping! Municipalities why are you
doing it? Vacant land is the primary source of growth of
income from rates. Municipal valuers need to be diligent in
RATING OF VACANT LAND
Ben Espach is a registered professional
valuer and life member of the SAIV. He
has a BSc (UP), NDip Property Valuation
(TSA) and Senior Management Diplima
(UP). Ben is also a Past President of the
SAIV. He is currently a director of Rates
Watch (Pty) Ltd where he is actively
involved in all issues relative to municipal
valuations and rating. He represented the
SAIV throughout the development and
subsequent promulgation and the MPRA.
valuing new buildings ASAP. You should not allow the ink to
dry on occupation certificates. Backdating the value of a new
building for 6 to 12 months is not a joke.
Many tenants insist on paying their share of the rates based
on the actual account and do not accrue for the higher rates.
the WAy FoRWARd
• Rates policies must be compliant
• Handle vacant land with care
• Municipal valuers, please value those new buildings
• Residential definition – stop the clock.
THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 12714
SouthErN BraNch 2016 SPriNg SEMiNar
V
SAIV members were invited to attend the Southern branch’s
Spring Seminar on 21 october 2016 at Welgeleë Wine estate in
Paarl in the heart of the picturesque cape winelands. the full-
day seminar concluded the branch’s ‘boom or bust’ theme. the chair
of the Southern branch, Farrel october, welcomed the delegates
and the speakers. two of the presentations which were given are
reproduced here.
SeLF-StoRAGe deFINed ANd coNtextuALISed
Self-storage properties can be defined as a property type that
offers rental of individual mini storage units on a month-to-
month basis to members of the public. The customer applies
his own lock and has sole access to his storage unit. The
landlord is not liable to take care, custody or control of the
customer’s goods inside the self-storage unit.
Self-storage buildings or, self-storage facilities as they
are often referred to, exist in the form of linear buildings,
converted warehouses or multi-storey buildings. Linear
buildings consist typically of rows of storage units arranged
next to each other as a number of single-storey buildings.
Access to self-storage units is by means of large roll-up
doors. These linear buildings offer direct drive-up access to
the self-storage units. Some facilities offer storage for boats
and vehicles. Self-storage buildings can also be in the form
of multi-storey buildings, or warehouses which have been
converted into multi-storey buildings. The number of floors
in a multi-storey building can range between two floors, ie
a double-storey, or in some cases, up to ten floors or more.
These buildings provide access to the self-storage units
through interior hallways and elevators. In harsh climates,
some facilities offer climate-controlled units. Trollies and
furniture carts are usually provided to customers to move
their goods into their storage units.
Self-storage originated in the United States in the 1950s
where it has grown significantly to become the biggest self-
storage market in the world. The US self-storage market
consisted of 52 151 facilities in 2014; 80% of these facilities
were privately owned (Self Storage Almanac, 2014). Public
Storage, founded in 1972, is the biggest self-storage Real
Estate Investment Trust (REIT) in the US and had 2 443
facilities under management in 2014. They also listed as the
second largest REIT of all property types on the MSCI US
REIT Index in 2015 with a market capitalisation of 35.3 billion
USD (MSCI, 2015).
To give some context on why self-storage has become the
‘darling’ property class for property investors, Bloomberg
(2012) stated that “self-storage companies produced the
SElf-StoragE EcoNoMicS aNd valuatioN
Part 1: Background to self-storage and self-storage economics
THE INTERNAL PASSAGES OF A GRADE-A
SELF-STORAGE FACILITY
best risk-adjusted return among 10 US real estate investment
trust indexes in the past decade, according to the Bloomberg
Riskless Return Ranking. They had the highest total return
and the third-lowest volatility, for a risk-adjusted gain of 10.6
percent”.
Christian Sonne (CBRE) stated in 2012 that “self storage
produced the highest total annual returns over 5, 10 and
15 year averages in an analysis of data from the National
Association of Real Estate Investment Trusts (NAREIT)
between office, industrial, retail, apartment and self storage
property sectors and also had the lowest standard deviation
in terms of total return over these three periods”.
The self-storage market in the UK had approximately 1 022
self-storage facilities in 2015 (Self Storage Association, 2015);
35% were owned by large operators (Self Storage Almanac,
2014), with Big Yellow being the biggest self-storage REIT in
the UK (84 facilities in 2015) (Big Yellow, 2015).
the SeLF-StoRAGe INduStRy eVoLutIoN
The self-storage industry developed from single-storey,
mostly steel buildings in the 1950s to 1980s, to architecturally
designed, purpose-built multi-storey buildings in the 1990s.
Customers prefer linear and drive-up buildings, but the
cost of land, land availability and market proximity force the
construction of multi-storey ‘box’ buildings.
A GRADE-A MULTI-STOREY SELF-STORAGE FACILITY
IN THE CBD OF DURBANVILLE IN THE WESTERN CAPE
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SeLF-StoRAGe ARchItectuRe ANd GRAdING
oF buILdINGS
The USA grading system of self-storage buildings is
considered a good guideline and has also been adapted by
Rode (2011) for the South African market as shown below:
Grade A Grade B Grade C
Institutional grade facility
Quality middle segment facility
Average quality facility
Masonry only construction
Masonry and metal construction
Typically metal construction
5,500 – 11,000m² 2,500 – 5,500m² 2,000 – 10,000m²
Professional design and high-tech security
Exhibits basic design elements and security
Basic in appearance and poor security
Located in primary or secondary retail areas in major metros.Excellent visibility.
Located in secondary commercial and primary industrial locations in first and second tier markets.
Located in secondary commercial, rural and industrial areas.
STORAGE RSA’S MOST RECENT GRADE-A MULTI-
STOREY SELF-STORAGE FACILITY IN THE CBD OF
DURBANVILLE, WESTERN CAPE
The South African self-storage market structure is much
smaller than that in the US, but significant development has
taken place relative to South Africa’s population. The table
below shows the estimated number of self-storage facilities
in South Africa by grade and province:
PROVINCE Grade A Grade B Grade C TOTAL
Gauteng 10 40 158 208
Western Cape 15 25 52 92
KwaZulu-Natal 2 1 14 17
Eastern Cape 2 0 8 10
Other provinces
0 0 28 28
Total 29 66 252 347
Source: Storage RSA, 2016
Source: Storage RSA, 2016The market leaders in South Africa are Rent-a-Store,
Stor-Age, Storage RSA and XtraSpace (in alphabetical order).
the SeLF-StoRAGe INduStRy: PeNetRAtIoN ANd
oVeR-cAPAcIty RISk
The table below compares the number of facilities, square
feet of self-storage space supplied per person and tax payers
as percentage of population for various self-storage markets
across the world.
COUNTRY FACILITIES SQUARE FEET OF STORAGE SPACE SUPPLIED PER PERSON
TAX PAYERS AS A % OF POPULATION
USA 54 000 7.75 42,9
Australia 1 250 1.8 49,9
United Kingdom 1 077 0.59 47.1%
Netherlands 264 0.53 49.9%
South Africa +350 0.25 8.1%
SA adjusted (for relative number of tax payers)
±1,3
From the self-storage space supplied per person metric in
the table above, it would seem that South Africa has a relative
under-supply of self-storage. When adjusting this metric to
consider the number of tax payers, however, and therefore
considering only those who can afford self-storage, South
Africa has more self-storage space per person than both the
UK and the Netherlands. This indicates that there may already
be areas in South Africa where self-storage space is over-
supplied, which makes proper feasibility studies an integral
part of developing a successful self-storage facility.
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Part 2: Self-storage valuation
Why INVeSt IN SeLF-StoRAGe?
key dRIVeRS uNdeRPINNING SeLF-StoRAGe
There are many tenants in a self-storage facility with multiple
reasons for storing. This results in a diversified, defensive
and stable income stream (explaining the Bloomberg/Sonne
observations above). Self-storage provides a slightly more
attractive return compared with other property types, but
this reflects the higher risk of obsolescence (competition
and/or over-supply). Self-storage is yield-enhancing in
a broader property portfolio and provides stable and
attractive escalations/rental growth. It has low bad
debts given that stored goods provide security against
rent payable. Population growth, historic growth in
penetration (±6%) and current low base of penetration
(only 3% of the UK population and 9% of the USA
population stored in the last 12 months) ensures future
growth potential.
key tReNdS IN the SeLF-StoRAGe INduStRy
The rise of the internet as a marketing channel has significantly
increased the complexity of the industry in terms of marketing.
UK research shows that 68% of enquiries now come through
the internet. In the South African market, this figure is 33%-
80%. Specialised skills and significant budget, enhanced by
being part of a portfolio of facilities, which can contribute
to these overhead expenses, are required to compete on
these platforms.
Increased competition (post 2008 when the resilience of the
self-storage industry was proven) has increased the pricing
Self-storage fits into the property class referred to in the
Royal Institution of Chartered Surveyors (RICS) terminology
as Specialised Trading Property. It consists of both a business
and a property, similar to airports, harbours, hotels and
hospitals. Valuation issues arise from some valuers who
argue that these require both a business (rental agency)
valuation and a property valuation. The business component
is, however, relatively small. There are few examples where
the business exists as a completely separate entity. RICS
recommends a “going concern valuation” where all income
and costs are considered and no separation is made between
the property and the business.
There are limited economy-of-scale benefits in self-storage,
as it is a fragmented industry. Entry barriers do, however,
exist in the form of specialised design skills, obtaining prime
locations/rezoning, operations, ICT skills and infrastructure,
marketing and obtaining financing.
chARActeRIStIcS oF the SeLF-StoRAGe MARket
The quality of the self-storage operator is important when
it comes to valuation and creating value in a self-storage
facility. Brand recognition to attract customers, well-trained
staff to differentiate service offering, effective and efficient
administrative systems ensuring good customer service,
management systems to administer the multitude of rental
risk and vacancies, as can be seen by the level of discounting,
concessions and dynamic pricing in the industry, known as
revenue management.
A slow but gradual development all over the world is emerging
in the form of a secondary market, where investors seek to
acquire entire self-storage portfolios. In the USA, Europe and
the UK, most sale transactions are in the form of a number of
facilities in a portfolio, which are acquired as a whole. Even in
South Africa, the first proper sale was a portfolio transaction.
Institutional investors and large developers are now getting
involved. Partnerships and outsourcing of the development
process as well as management of the completed facility are
on the increase. Mixed property REITs in the USA are now
acquiring self-storage portfolios and then outsource the
management to the self-storage REITs or other professional
operators. Most self- storage REITs have partnership
programmes whereby they develop and manage self-storage
facilities on behalf of investors or owners and this is also
happening in South Africa.
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agreements and tenants moving in and out on a weekly basis,
and specialised marketing channels (Google, website, facility
location, etc) are all critical to compete in this specialised
property type.
Typically 75% of tenants are consumers (emigrants,
immigrants, students, recreational sport users, home
renovators and developers, etc). The remaining 25% of
tenants are commercial (electricians, plumbers, lawyers, etc)
storing documents, office furniture or equipment. Access,
visibility and convenience are major distinguishing factors
between facilities. Convenience is determined by proximity
and for this reason developers will consider the 10-15 min
drive time or a 5-7 km radius as the primary catchment
area around their potential developments to determine
their feasibility.
buILdING deSIGN ISSueS
Self-storage facilities must be damp proof, have proper and
large lifts, good circulation, load bearing capacity on upper
floors and complex fire safety designs to ensure building
regulation compliance. Pest control is also critical, as well as
high- tech security comprising of CCTV, electrified fencing,
guards and electronic access control that manages to allow
access only to customers who have paid their accounts.
ReVeNue MANAGeMeNt
Rentals are on a month-to-month basis, and can be changed
by operators on a month’s notice; this leads to dynamic
pricing, which is increasing in popularity. Dynamic pricing is
a pricing strategy whereby rental rates change in real time
as occupancy levels (supply and demand) changes. Most
operators in South Africa however, only increase their rental
rates annually. Sustainable occupancies vary between 80%-
95%. Other products such as boxes, bubble wrap, locks,
insurance, assistance with removals, etc are sold on the
premises. According to RICS, this income is integral to the
property and forms part of a valuation. Van rental is, however,
not included in the valuation income as it is not a fixed asset,
but movable. Self-storage units are let on a monthly basis; an
average rental period of 18 months or more is not uncommon,
depending on the type of market in which the facility
is located.
Viability studies entail concentric circle analysis, based on
a similar approach used for shopping centres. Most tenants
are obtained as a result of drive-bys, because of the good
location and visibility of the facility, with the balance coming
from marketing channels such as the internet, pamphlets,
advertisements, etc.
The standard garage-sized unit is a 6x3 m² unit. Rentals of
such a unit vary from R700 to R3000/month in South Africa,
depending on the location and grade of the facility. Self-
storage is a middle- to high-income product (Rode, 2011).
SuGGeSted VALuAtIoN MethodoLoGy FoR
SeLF-StoRAGe FAcILItIeS
coMPARAbLe SALeS Method
The comparable sales valuation method is applied in the
case of established facilities. In order to assess the degree of
comparability one needs to establish the following:
• quality grading and condition of improvements
• occupancy history, including occupancy at time of sale, to
deduct sustainable occupancy rate
• size of facility (rentable area) and unit mix
• rental history (per rentable square metre), including income
from other sources
• ratio of expenses to income and a breakdown of expenses
• tenant mix
• extent of unused bulk.
The dilemma is, however, that almost no sales evidence is
available and the market is heterogeneous (ie inefficient)
(Rode, 2011).
INcoMe cAPItALISAtIoN Method
The income capitalisation method is “the preferred method
where Year 1’s income is fairly accurately predictable, and is
thereafter expected to grow at a fairly constant rate” (Sonne,
2012; Rode, 2011). If however, competition is expected or a
newly constructed facility must be valued, or the development
is phased, the discounted cash flow (DCF) method is more
applicable.
tyPIcAL SeLF-StoRAGe exPeNSe RAtIoS
The current practice for valuation is to take the total expenses
to be equal to the direct expenses plus a management fee.
Direct expenses are defined as all expenses on a property
level. This includes expenses such as property rates, repairs
and maintenance, property insurance, facility manager’s and
security guards’ salaries. Expenses which are excluded are
expenses such as overhead marketing, ICT infrastructure
and senior management, which are defined as portfolio
management expenses. Direct expenses are in the order of
30% of effective gross income.
Effective gross income (EGI) consists of rental income and
other income, less vacancy and collection loss. Rental income
is received from renting out self-storage units, where other
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income consists of late fees, selling unit contents, insurance,
administrative fees and retail sales such as packaging
materials from the self-storage facility’s on-site shop.
The management fee, reflecting portfolio management
costs that can be directly allocated to a property, is usually
estimated to vary between 4% and 7% of EGI. The total
expense ratio would typically equal 30% + 7% = 37%.
Thereafter, a standard one-size-fits-all capitalisation rate of
10% is typically applied to the net income, after vacancy and
without VAT, to arrive at the market value.
Loots (2014), however, suggested the following practice
(expense percentages added by the author of this article):
1. When valuing a single self-storage facility:
a. use only direct expenses (eg 30%) without
including a management fee, and apply a
corresponding direct capitalisation rate;
b. differentiate between the grade of a self-
storage facility and use a corresponding direct
capitalisation rate (see the section on the
capitalisation rate further below).
2. When valuing a portfolio of self-storage facilities:
a. include portfolio management expenses, but
use actual overhead expenses (eg overhead
marketing, central ICT infrastructure and senior
management salaries) instead of a theoretical
management fee;
b. total expenses then equate to direct expenses
(30%) + portfolio management expenses (varying
from 10% to 16%) and typically average around
43%;
c. use a portfolio cap rate by deducting some basis
points from the direct capitalisation rate, due
to the premium usually paid for a self-storage
portfolio of facilities (eg 9.25% - 0.75% = 8,5%);
the US self-storage consulting firm, MJ Partners,
reports that a 50-75 basis point decrease for the
portfolio cap rate is observed in the US market.
The author of this article recently submitted a thesis in
completion of a MSc degree in Property Studies at the
University of Cape Town. The thesis focused on self-storage
expense ratios. (Please note that the thesis is currently under
examination and therefore the results below are preliminary.)
The research showed that direct expenses are fairly fixed,
portfolio management expenses decrease slightly with an
increasing number of facilities in a portfolio. The following
TOTAL EXPENSE RATIO
(as % of gross effective revenue)
DIRECT EXPENSE RATIO
(as % of gross effective revenue)
PORTFOLIO MANAGEMENT
EXPENSE RATIO(as % of gross
effective revenue)
Low Average High Low Average High Low Average High
37% 43% 52% 23% 29% 34% 10% 13% 16%
Source: MSc Prop research – At van der Linde
cAPItALISAtIoN RAteS FoR SeLF-StoRAGe
FAcILItIeS ANd PoRtFoLIoS
In 2011, Rode proposed that the following premiums be
added to the industrial prime leaseback capitalisation rate
published in the quarterly Rode’s Report to arrive at an
applicable capitalisation rate for a self-storage facility relative
to the grade of the facility. The grade of the facility could be
determined by using the above-mentioned grading system.
Grade A Grade B Grade C
Premium to Rode’s industrial prime lease back cap rate (IPLBCR)
0.75 % – 1% 2% 3%
Self-storage Cap rate estimate (IPLBCR=8.9 %
9.5% - 10.5% 10.5% - 11.5% 11.5% - 12.5%
Source: Rode, 2011
tReNd oF cAP RAte coMPReSSIoN IN uS coMING
to South AFRIcA?
Recently the trend of compression in the self-storage
capitalisation rate observed in the US over the past decade
seems to be emerging in South Africa. This implies that
self-storage capitalisation rates are compressing below the
industrial capitalisation rate. A South African self-storage
portfolio consisting of only grade A facilities has held
discussions with a US self-storage fund to sell the portfolio
at a cap rate of 7.5%.
The figure below illustrates the trend of compression in the
US self-storage cap rate and is based on data compiled
by the US-based self-storage research firm, Marcus and
Millichap. It shows that self-storage capitalisation rates in
the US have seen the biggest drop in the capitalisation rate
since the last cyclical low, with a 30-basis point decrease. In
expense guideline was proposed for South African self-
storage portfolios.
Considering the relative level of self-storage capitalisation
rates in the US, and applying this knowledge to the South
African market, it does challenge the current practice of using
a one-size-fits-all capitalisation rate of 10% irrespective of
the grade of the facility, or single asset vs portfolio nature of a
transaction. The May 2016 issue of the SAPOA Capitalisation
and Discount Rate Report is shown below.
If one considers the prime grade of retail, office and industrial
property to be represented by the 5th percentile in the
above SAPOA research, then one could compare these 5th
percentile cap rates to grade-A self-storage cap rates.
The average capitalisation rate, according to the SAPOA
research above for a 5th percentile retail property is 6.5%,
5th percentile offices average 7.8% and such industrial
properties 8.5%. In the context of self-storage cap rates in
the US relative to retail, office and industrial, one would then
expect grade-A South African self-storage capitalisation rates
to be typically lower than the 5th percentile industrial cap rate
of 8.5%, lower than office at 7.8%, and also lower than retail
at 6.5%. There is therefore currently quite a difference in the
relative capitalisation rate for self-storage in South Africa
compared with the relative US self-storage cap rate. A 10%
cap rate for self-storage in South Africa does seem out of
line with the market and seems to undervalue self-storage in
this context.
Perhaps the trend of self-storage cap rate compression will
manifest in South Africa as soon as South African investors
and institutional funds realise the high return and stable
nature of this property class and also become familiar with
the similar performance of the South African self-storage
portfolios compared with those internationally. Another
scenario could be that South African self-storage portfolios
will be acquired by international investors who are aware of
the current undervaluation by local investors.
Part 3: Municipal valuation of self-storage and property tax
(SLAuGhteRING the GooSe FoR ItS GoLdeN eGGS…)
The current practice of municipal valuation in South Africa,
whereby, for example, the City of Tshwane, charges a property
tax rate of 3.4% of the municipal valuation (valued by the
municipal valuer at market value) is of grave concern. The City
of Johannesburg charges a property tax rate of 2.77% on an
equivalent basis. The City of Cape Town currently charges 1.28%.
From data in the SAPOA/IPD South African Property Index of
December 2012, the weighted average of the South African
property tax rate was equal to 1% of market value. Considering
the current tax rates in the paragraph above, the property tax rate
seems to have been creeping up slowly but surely. Furthermore,
in the above-mentioned MSc research, international property
tax rates were found to be equal to 1% of market value, which
this same period, the apartment capitalisation rate rose by 10
basis points, the retail cap rate dropped by 10 basis points
and the industrial cap rate rose by 30 basis points. Important
to notice is that in 2003, the self-storage capitalisation rate
in the US was significantly higher than apartments, equal to
retail and slightly lower than office and industrial. By 2013
and 2014, however, self-storage cap rates had compressed
relative to the other property types to the extent that they are
now only higher than apartment cap rates, but lower than
retail, offices and industrial property cap rates – refer to the
green line inserted by the author to indicate 2003 levels, the
red 2013 and the yellow 2014 levels, respectively.
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Gross margin of a typical self-storage facility (% of market value)
14%
Less: Shareholder required income return (10%)
Margin left to run business with BEFORE property tax 4%
Less: property tax rate - City of Tshwane 3,36%
Margin left to run business with AFTER property tax 0,64%
Add: Result of current property tax on self-storage feasibility
Unfeasible/closed down
TOTAL Tax revenue after self-storage in future none
Tax revenue available for many years to come if at sustainable rate
1%
The following is recommended to policy makers in respect of
property rates in South Africa:
1. Property tax rates need to be decreased to 1% of market
value as soon as possible.
2. If not, municipal valuers should advise policy makers that
an increase in municipal valuations will close down their
revenue source and that tax rates should decrease if
municipal valuations increase. Some self-storage operators
have already decided to avoid further development in
Gauteng as a result of the restraining property tax rate.
PRoPeRty tAx coNSIdeRAtIoN SPecIFIc to
SeLF-StoRAGe
It takes from three to five years to reach full occupancy in a
self-storage facility after completion of construction (ie losses
are made in years one to three). Therefore, a realistic market
value is achieved only in years three to five. By taxing a self-
storage facility in years one to three the current practice of
over-taxing is amplified and will certainly restrain development
and therefore tax revenue.
At van der Linde is Property
Development, Marketing and ICT
Manager of Storage RSA - a self-storage
portfolio with six grade-A self-storage
facilities in prime locations in the Cape
Metro and Gauteng. At practised as a
consulting civil engineer after moving
to the property industry in 2013. He is
currently completing his Master’s thesis in
Property Studies at UCT on self-storage
expense ratios.
At van der Linde: [email protected]
was based on financial statements of international publically
listed self-storage REITs. Both these sources indicate that
a sustainable property tax rate is 1%. The current property
tax rates in South Africa therefore exceed this guideline by a
crippling margin.
The table below gives a perspective on what the outcome on tax
revenue received from self-storage facilities could be, as a result
of the current level of property tax rates in South Africa:
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What caN a valuatioN aPPEal Board ExPEct froM a valuEr?
Good afternoon to every one of you. It is a privilege to see so
many known faces, albeit under different circumstances this
time. I find myself on the other side today in that today you
will have the once-off opportunity to judge me on what I say!
When Tracy asked me if I would be willing to deliver a
45-minute presentation, I was honoured. However, what the
heck would I be talking about. No one at this stage of the
afternoon is going to stay awake and focused when they
must listen to a theoretical and rhetorical lecture on valuation
or legal principles or requirements.
It is for that reason that I decided, let’s keep it informal and
practical and let me draw on my experiences over several
years as a lawyer and, most importantly, as chairperson of a
valuation board and later valuation appeal board.
I would therefore like to focus, not on book or document
knowledge, but rather on the all-important university-of-life
experiences.
Thus, the topic for our discussion presented itself: namely
let’s talk about what a valuation appeal board can expect of a
valuer appearing before the board.
Turning to the subject matter, it is first and foremost
emphasised that it is based upon the legitimate expectations
that all valuers are
• familiar with the provisions of all relevant and applicable
legislation, study material, guidelines, the contents of
the Valuers’ Manual and their rights, responsibilities and
obligations intrinsic to their profession; and
• experts, albeit some require more experience and others
might have a lot of experience.
Bearing this in mind, I will now deal with what a board can
expect of a valuer taking part in valuation hearings. Let me
also make it quite clear that this applies to all valuers, those
serving as municipal and assistant municipal valuers, and
those representing public appellants. In other words, it should
be very clear that a board can expect the same of each valuer,
notwithstanding who he or she represents.
1. be oN tIMe
• Only the chairperson has the prerogative to be late for a
hearing, especially when he battles with the traffic.
• A valuer has no excuse.
• It is bad manners to be waited for, and it affects a board in
a negative way.
• I might be from the old school, but punctuality shows
respect and dedication.
• To be on time immediately shows that you are ready for
what lies ahead and that you are ready and willing to begin.
2. be PRePARed
• Prepare, prepare and when you are finished, prepare your
cases again.
• There is nothing worse than anyone, including a valuer, who
clearly is not prepared to present his/her case.
• Being unprepared normally shows within seconds after a
valuer opens his or her mouth.
• Rather than trying to embark on a route where angels fear to
tread, ask for your matter to be postponed or rescheduled
so that you can go to prepare it.
• It is virtually impossible to salvage a matter when you are
unprepared, and the board’s decision will probably go
against you.
• You would not go to write an examination that you have not
prepared for. Just like the examiner, the board will not do
your work for you.
3. kNoW youR cASeS
• Closely connected to the previous expectation is the
requirement that you know your case.
• Know the property, the area, the comparable sales, factors
that may have an influence and, most importantly, know or
at least anticipate the other side’s contentions.
4. kNoW the LAW
• It is not a requirement that you should be a legal expert
or be able to resolve legal issues, but you must know the
guidelines and conditions embodied in legislation and how
they are applied.
• You are not required to create law, but you will be asked to
express your opinion on a legal point that is raised during
the hearing. It is not sufficient, with a shrug of the shoulder
and a distant look on your face, to look at the chairperson
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and state with conviction: “no comment”. An inference may
be drawn that you do not know the law.
• It is also highly recommended that you keep yourself
acquainted with not only court rulings on matters involving
valuations, but also take note of rulings made by boards on
certain matters.
5. kNoW the VALuAtIoN PRINcIPLeS
• This expectation is the basis of your presentation.
• If you know and apply the principles based upon the proven
circumstances, it will be very difficult to rule against you.
• Remember that valuation principles have evolved over
decades and are the norms that must be applied.
• Do not try to invent new principles or stretch the established
principles beyond recognition to prove your case. There is
no board that would be prepared to confirm a valuation
based upon modified valuation principles – they know that
they will be blasted in a court of review.
6. be AtteNtIVe
• Every board member with good eyesight will immediately
see when you are not paying attention to what is being said.
• Not being attentive to what the other side or a board member
may say, comment or state, may will come back to bite you.
• It is not good manners when asked to respond to a statement,
to ask the board to repeat it to you. It might be indicative of
displaying little interest in what is being discussed.
7. cuRtAIL youR PASSIoN, but do Not be PASSIVe
oR SubMISSIVe
• If someone says something that you do not agree with, do
not jerk your head vehemently from side to side, or roll your
eyes, or sigh audibly, or throw back your chair, slam your
fists on the table, throw your arms in the air, look at the
ceiling, stand up to pour yourself a coffee, or throw pens or
staplers about.
• Do not wear your heart upon your sleeve.
• Listen attentively to what is being said, take notes and await
your opportunity either to cross-examine on that point, or to
put an argument forward.
• But please also do not be passive and simply roll over. If you
agree with an argument then say so; if you disagree do not
remain quiet and keep your fingers crossed that the board
will deal with it. They may not.
8. oPeN youR Mouth ANd eARS
• One of the fundamentals of a hearing is having the
opportunity to state your case. Please do that in an audible
manner.
• Speak clearly and in a measured manner.
• Make sure that what you wish to convey is heard by
everyone present. If you mumble, swallow your words, do
speed talking or talk to the birds, the people that matter will
not hear you.
• Speak with confidence and authority: after all you are
an expert in your field and you are well prepared and
knowledgeable about your case.
• Never assume that the board members know everything; it
is your task to paint as clear a picture as possible of what
you have valued and how you reached your determination.
• Do not let statements or comments hang in the air or make
part statements. The board will not complete them for you.
• When you speak, maintain eye contact. This will ensure that
what you say receives attention.
• On this point, always remember to speak to the board, not
to your colleague, the board secretary, the appellant or your
counterpart, but to the board members. You do not have
to convince any of the former of your reasoning, only the
board members. No board member likes to feel side-lined
or to be relegated to a spectator. Make the board the focus
point of your address.
• When you have finished speaking, then close your mouth
and open your ears. The other side will try their level best
to dispel what you have said or make comments, etc about
what you have conveyed.
• If you do not listen, you will not be able to respond. In that
case the last spoken word will be recorded in the minds of
the board members.
9. be ReSPoNSIVe
• If something is said that you disagree with, state your point
of view when you have an opportunity to respond. (If you do
not get an opportunity, ask for it.)
• If you do not respond, a wrong inference may be drawn that
you admit to the truth of what was said.
• Also, do not assume that the board members have picked up
an incorrect inference and will respond to it. The members
are not the valuer and can only deal with the facts presented
to them. Never ever be content to assume certain facts.
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10. StIck to the FActS
• Stick to the facts. Do not digress or bombard the board with
irrelevant statements or comments.
• Do not discuss side-issues or go on a passionate diatribe
about something that has no relevance to the case. The
board will most certainly ask you to come back to what is
before them.
• It is not the length of your submission or the number of
words that will determine the outcome of your case; it will
be the proven facts.
11. ASk queStIoNS
• Ask relevant questions - relevant to the case and relevant to
what has been said; but do not ask the same question over
and over again.
• If you do not get a clear answer, or get an evasive one, or if
your question is simply not answered, record this and move
on to the next question.
• Ask questions to clarify or explain issues. Do not get
personal or critical.
12. do Not be AFRAId to hAVe A dIFFeReNt oPINIoN
• You are entitled to have an opinion and do not be afraid to
voice it.
• Also, do not be afraid that the other side will laugh at your
opinion. The board will know best what to make of your
opinion.
• It is better to have a wrong opinion, than to have no opinion
at all.
• Forming an opinion shows that you think about the
matter and that you have confidence in what you do by
expressing it.
13. do Not ALLoW youRSeLF to be buLLIed
• It is a known tactic that some valuers and lawyers make an
entrance and kick off with a full-frontal attack against the
valuer, the administration, the system and about the time
that they have wasted waiting to be heard.
• Their sole objective is to unsettle everyone present in the
hearing room, make them cower in their seats, protecting
their heads and out of fear immediately admit to their
valuation proposal.
• No, these persons are as human as the rest of us and there
is absolutely nothing to be afraid of.
• Any chairperson should protect you and pull in the reigns of
the bucking horse.
• My advice is to look that person squarely in the eye and say
to yourself, round one to the good guys, this chap knows
that he does not have a case and he has no other choice
than to revert to intimidation tactics.
• Do not be detracted from your submission through his/her
continued interruptions. If the board does not stop him (and
it should) then simply ask him to allow you to finish your
testimony and say that you are sure that the board will give
him/her an opportunity to respond.
• You can also stop your submission and if the board then
asks you what is wrong, tell them that you cannot continue
unless the other party stops interrupting you. The board
should then get the message.
14. AdMIttING to A MIStAke oR oVeRSIGht IS Not
A SIGN oF WeAkNeSS oR INcoMPeteNce
• This is difficult for every human being – to recognise and
admit to a mistake. Our knee-jerk reaction is normally to
try to justify, deny or down-play the mistake or to rack our
brains on how to talk it away or quickly and hopelessly
convert it into something else.
• A mistake is a mistake and will remain a mistake until it is
not made again.
• Mistakes happen every day in all walks of life and also in
that of a valuer. The best and only way in which to deal with
a mistake is to admit it, concede the point and move on.
• It might be even worse when you do not realise your mistake,
but your attention is drawn to it. Do not overreact, take it
on the chin with your head held high, say “my mistake”,
concede the point and move on.
• More important, however, is how you deal with a mistake.
You learn from it, and you try to do your level best not to
repeat it.
15. be AbLe to SuMMARISe
• Especially during more complex hearings, it is always good
to summarise your submission and deal with the other
side’s submission as well.
• Not only does it show that you can deal with all the issues,
but it is helpful to the board as well.
• If you need time to prepare your heads of argument, ask for
a postponement so that you can do so.
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16. SMILe, No MAtteR WhAt
• I can guarantee you, notwithstanding how experienced
a valuer you are, that you will at times find yourself in a
position where a board will find against you.
• This is not the end of the world and it is not necessary to get
into a state of despair, or throw your toys out of the cot, or
insist that the board re-hear your arguments.
• Once a ruling has been made, it has been done. The board
will quickly tell you that it is functus officio.
• Accept the ruling graciously, in a dignified manner and with
a smile.
• Go back to your office/client, discuss the decision and if
you are convinced that the board has erred in coming to its
decision, institute review proceedings.
• As with courts of law, administrative tribunals can make
mistakes. For this very reason provision is made for
other more senior and experienced institutions to review
decisions. This can go as far as the Appellate Division of
the High Court.
17. Get to kNoW the MeMbeRS oF the VAb
• By saying this I in no way imply that you should socialise
with them or take them for the occasional drink or dinner.
• What I mean is learn what their likes and dislikes are as far
as presenting evidence or procedures are concerned. If they
like to have visual evidence of the subject and comparable
properties, make sure that you have this; if they do not
like long and laborious discussions regarding previous
valuations of the property, then avoid these.
• Valuers form an integral part of the proceedings when
appeals are being dealt with. Make sure that you work with
the process and procedures, and not against them.
18. LISteN ANd LeARN
• Finally, listen, learn, remember and apply.
• Listen to what is being said at appeal proceedings.
• Learn from all your experiences, both good and bad.
• Remember what you have learned; and
• apply what you have learned at your next hearing.
I trust that the aforementioned will give you some insight of
what is expected of you. Please take it seriously, for I can
guarantee that the role of a board, and especially that of the
chairperson, will change drastically sooner than you may
Martin Coetzee, BIuris LLB, is an advocate
of the High Court of South Africa. After
almost 28 years as, amongst others,
a parliamentary legal draftsman for the
National Department of Justice and CEO of
the Truth and Reconciliation Commission,
he started his own independent legal
consulting business.
He is an independent and seasoned legal consultant with excellent
written, verbal, communication and interpersonal skills. He is also
an experienced negotiator able to deal with complex problems and
pressure.
His areas of specialisation are administrative and mining law, property
law, legal and contractual drafting and interpretation, legal advice and
opinions, policy formulation and disciplinary procedures. For the last
14 years, he has also acted as Chairperson of the Cape Town and
Saldanha Bay Valuation Appeal Boards. His senior managerial skills and
a thorough knowledge of management of people in a diverse society
add to the expertise he has to offer.
His objective is to provide professional legal assistance with a personal
touch based on the belief that quality, speedy and effective service
delivery is paramount. He strives to be proactive to the changing needs
and demands of those he deals with and to serve them accordingly.
expect. Whereas in the past boards adopted an inquisitorial
or investigative role, they will become more passive and may
just ask a few questions to get clarification and will no longer
be accused of doing a valuer’s work for him/her. At the end of
the day, a decision will be made based solely upon the facts
and arguments before the board.
If a ruling goes against a valuer, you must be able to say that
you have done what you could with what you had. If you
realise that you should perhaps have done more, it will be
too late.
The important role of a valuer will only increase in the
processes of a VAB. I am prepared to stick my neck out and
state that, because of the financial applications of municipal
valuations, the entire valuation process and procedures will
become more important and be attacked. You have a big and
responsible task ahead of you and never ever underestimate
your role.
I thank you for the opportunity and privilege to address you,
and I look forward to when we next meet at a VAB hearing.
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thE BalaNciNg act for local govErNMENt
V
WhAt IS the LeGISLAtIVe FRAMeWoRk?
We need to consider both the Local Government: Municipal
Finance Management Act, 56 of 2000 and the Local
Government: Systems Act, 32 of 2000. Every municipality
has a credit control section to ensure collection of payment
for rates and services supplied by the municipality. This is
provided for in the Systems Act Section 95(e): “...ensure that
persons liable for payments receive regular and accurate
accounts that indicate the basis for calculating the amounts
due.” The key words are ‘regular’ and ‘accurate accounts.’
Every municipality designates a municipal valuer whose
mandate is to determine the market value of all properties
within the jurisdiction of the municipality (section 33).
The MPRA provides for differential rating so that different
categories of property attract different tariffs. The municipal
valuer’s scope is to determine the market value, the category
and usage of each and every property within the property
register. The reason for this is so the municipality may ascribe
the correct market value and the appropriate category tariff to
each property. Very like our identity documents as citizens of
the country, each property has a unique identifier. This is the
Surveyor General’s code, a 21 or 26 digit code which enables
the property to be spatially located.
The SGCODE column should have either the SG21CODE for
normal properties or SG26CODE for sectional title properties
which consists of:
SG21CODE – Township-Erf-Portion
(N0FT00960000086500000)
SG26CODE – Township-Erf-Portion-ST Unit
(N0FT0096000008650000000001)
So each property has a 21-digit number, a category, a usage
and finally a value.
Balancing is a term used in the local government revenue space.
What does it mean and why is it so important? Governance
requires accurate and complete billing. If data sets are out of
sync then revenue will be missed.
deFINItIoN: coNcAteNAte
The CONCATENATE function joins two or more text strings
into one. If the systems within the municipalities do not
carry the SG code this code is concatenated. The result is
that each record in the financial system carries the unique
identifier which enables the user to spatially identify the
property record.
hoW IS bALANcING AchIeVed?
The process is broken down into steps:
STEP 1: Ensure that each property on the financial system
has an SG number/spatial locator. This is accomplished
by assembling the township/area, ERF and portion and
concatenating the 21-digit number which enables us to locate
each property on a map.
There are two adjacent residential properties with SG codes: each
has a unique identifier, a market value, a water meter, an electricity
meter and a refuse charge. The municipality raises a debt against
each property. Each registered owner is liable for the payment for
the property. The record may be identified spatially and located.
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STEP 2: Check for duplicates. All duplicate numbers must be
removed.
STEP 3: Prepare discrepancy reports on market value,
category and extent. All discrepancies are noted and flagged
for mapping. These must be translated into work flows and
escalated if the required action is not implemented.
hoW oFteN ShouLd bALANcING be AchIeVed?
The MPRA was amended in 2015 to provide for ‘real time’
updating of the valuation rolls through supplementary
valuations. The registered owner is liable for the payment of
rates from the first day of the month following the posting of
the supplementary or review notice. In addition there are the
requirements for the Municipal Standard Chart of Accounts,
mSCOA.
WhAt ARe the RISkS IF bALANcING IS Not
AchIeVed?
As humans we are capable of mistakes, whether intentional
or not. Some of these are material and have an impact on
municipal revenues. For example, a new account may
be inadvertently linked to the wrong property. Inaccurate
updating may capture the registered owner as a tenant. Small
fees are exchanged for small favours.
WhAt doeS mScoA RequIRe?
To enable mSCOA compliancy all systems used by the
municipality must provide seamless transaction through an
Application Programming Interface or API. This excludes
human intervention and provides all updates automatically.
All valuation roll information is closed and uploaded to billing
without any spread sheets, files, flash drives or CDs being
exchanged.
WhAt ARe the mScoA RequIReMeNtS FoR A
VALuAtIoN RoLL MANAGeMeNt SySteM (VRMS)?
A VRMS must have the ability to export a financial file,
convert the property stand and suburb identifiers to the
21-digit unique key, compare the financial file with the latest
consolidated roll, report any discrepancies and import new
properties/sub-divisions and consolidations directly from
the Deeds Office for valuation purposes. All imports and
exports between the VRMS and any other system or register
within the municipality must be executed using Application
Programmatic Interfaces, APIs.
Please contact MetGovis for a demonstration of their MetVal
Valuation Roll Management System which enables mSCOA
compliancy. MetVal is the industry leader in compliancy with
the MPRA and Auditor General requirements for municipal
valuation and rating.
By Duane Ashwell, who has a certified
accreditation in CompTIA Linux+, a
National Diploma in IT and is currently
pursuing a Bachelor of Computer
Science degree. He has operated
within the local government sector
for the past eight years and has vast
experience in the set-up, deployment
and administering of large-scale IT infrastructure, networking and
day-to-day operations management.
Duane joined MetGovis as a MetVal Technical Consultant in 2013,
and has expanded his skills set to include in-depth data analysis,
database establishment, data integrity audits and cleansing, and
data balancing and reconciliation. His expertise also allows him to
provide extensive insight into any data deficiencies and advice on
legislative compliant solutions.
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valuatioN PriNciPlES iN thE hoSPitality iNduStry
V
‘The valuation of hotels and motels for assesment purposes’ by Stephen Rushmore CRE, MAI, CHA and Karen E. Rubin
The Appraisal Journal – 1984
deFINItIoNS
Hospitality accommodations are establishments using a
building or a part of building especially provided/reserved,
where any person can stay, obtain food, service and use other
facilities against payment.
They are commercial establishments providing lodging, meals,
and other guest services.
In general, to be called hospitality accommodation, an
establishment must have a minimum number of letting
bedrooms (norm is six), at least three of which must have
attached (en suite) private bathroom facilities. Although
hospitality accommodation is classified into ‘Star’ categories
(1-Star to 5-Star), there is no standard method of assigning
these ratings, and compliance with customary requirements
is voluntary.
INtRoductIoN
Parties involved in hospitality accommodation are
1. Owners
• ‘natural’ owners of hospitality property: pension funds,
banks and insurance companies, families, foundations,
government
• ‘other’ owners: REITs, funds, etc.
2. Property
• site;
• public space: arrival, lobby, food and beverage outlet,
function and conferencing space, recreation facilities,
parking, signage;
• guest rooms: king and double-double rooms, suites;
• administration and back-of-house: administration offices,
food preparation and storage, receiving, waste and general
storage area, employee areas, laundry and housekeeping,
engineering and mechanical areas.
3. Operator
The professional hospitality accommodation operator enters
into a management contract with the property owner/investor.
Responsibilities: The operator assumes complete
responsibility for managing the hospitality accommodation.
The operator is paid a fee based on performance and
according to a prescribed formula.
Operator - benefits to owner/investor
Professional management allows an inexperienced investor
to participate in the benefit of hospitality accommodation
ownership without being involved in the day-to-day operation.
Some established hospitality accommodation operators do
not offer franchises so this is the only option for the owner to
benefit from a potential profitable affiliation.
Most lenders are willing to make loans on the hospitality
accommodations that are managed by reputable
management companies.
AbStRAct
The valuation of hotels and motels is a highly specialized form of real estate appraisal, requiring not only a thorough
understanding of the many principles and procudures of general appraising, but also an in-depth knowledge of
hotel operations. Appraisers soon learn that lodging facilities are more than land, bricks, and mortar; they are retail-
oriented, labor-intensive businesses necessitating a high level of managerial expertise. In addition hotelries require
a significant investment in personal property (furniture, fixtures, and equipment) that has a relatively short useful
life and is subject to rapid depreciation and obsolescence. All these unusual characteristics must be handled in a
proper manner during the hotel valuation process in order to derive a supportable estimate of market value.
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cLASSIFIcAtIoN/GRAdING
Based on location: city centre, motels, suburban, airport
hotels, resort hotels suburban hotels, resort hotels, floating
motels, boatels, rotels, guest houses, b&bs, etc.
Based on size of property: micro (< 10 rooms), small (< 100
rooms), medium size (100 to 300 rooms), large (>300 rooms),
mega (>1 000 rooms).
Based on service level: economy/budget, mid-market, luxury.
Based on length of stay: transient hotels, residential hotels,
semi-residential hotels, overnight accommodation.
Based on theme: heritage hotels, ecotels, boutique hotels,
design hotels, spas, estates.
Based on target market: commercial hotels, convention
hotels, resort hotels, suite hotels, casino hotels, business/
corporate patrons, tourists.
teRMINoLoGy
Key: Guest room / room / unit
Room night: Unit occupied for one night by one person or more
Room night sales: Number of room nights sold
EDBUs: Equivalent double-bedded unit
Occupancy: Total number of room nights captured, divided
by the total number of room night sales expressed as a
percentage, eg: number of rooms sold/number of rooms
available - 30/50 = 60%.
Rack rate: ‘the big misnomer’ - a rack rate is a term used in
the travel industry to describe the often inflated prices that
a person would pay at the accommodation if he/she deals
directly with the business when booking a room. This is the
Why do we value hospitality accommodation?
For transaction advice, secured lending, property taxation,
company accounts, internal purposes, company taxation,
mergers and acquisitions, insurance, and for many other
reasons.
1. STRAIGHTFORWARD / ELEMENTARILY
Income capitalisation / EBITDA multiplier
Uses: Quick result, method widely understood.
Limitations: it is based on one year only; no reflection of
revenue fluctuation; not always reliable - a small change in
capitalisation rate produces a large change in value.
The Appraisal Journal – 1984
price charged for a room before any discount has been taken
into account, or the published rate for a room sometimes set
artificially high and used to calculate a variety of discounts.
Net rooms revenue: total rooms revenue less allowances
(revenue foregone as a result of hotel promotions or
complimentary services).
ADR or ARR: average daily rate or average room rate
is the total room revenue over a given time period, eg:
R10 000 000/20 000 = R500 per room.
RevPAR (revenue per available room): ADR x average
occupancy or total net room over total available rooms over
a given period; average daily rate x occupancy 76% x R500
= R380 per room.
F & B: Food and beverage department
FF & E: Furniture, fittings and equipment
POMEC: Property operations and maintenance and
energy costs
EBITDA: Earnings before interest, tax, depreciation and
amortisation or net profit.
VALuAtIoN MethodS
APPROACHES TO VALUE
In appraising real estate for market value, the
professional appraiser has three approaches
from which to select: the cost approach, the
sales comparison approach, and the income
capitalization approach. While all three
valuation procedures are normally given
consideration, the inherent strengths of each
approach and the nature of the subject property
must be evaluated in order to determine
which will provide supportable estimates of
market value.
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Example
2. EXPERT / SOPHISTICATED
Net present value of future cash flows (DCF approach)
Assumptions: assume a ten-year holding period; estimate the
trading potential for each year; assume the sale of the property at
the end of the ten-year period.
Reasons: provides clearer overview of the property’s trading
potential; reflects a value based on future and not present
or past; takes into account operations and management
characteristics; takes into account market-wide changes
such as a global sport event, conferences, etc.
When using the DCF, the valuer must:
• understand in depth the market and the trading potential of the
asset in the market;
• understand in depth the hospitality accommodation’s specific
operation and management;
• be sufficiently experienced in the hospitality sector to estimate
all cash flows that are the basis of the valuation.
FuN
100 000 rule or Coke-can multiplier
Take the price of a tin of Coke from the mini-bar and multiply by
100 000
O&O, V&A Waterfront
R20.00 (200ml)
R32.00 (330ml)
131 keys x R3 200 000.00
Value = R419 200 000.00
Limitations: price of tin in mini-bar does not fluctuate in
the same way as cash flow; this method does not take
into account any performance results for the hotel. If hotel
is making or losing money, room price remains the same.
DO NOT TAKE THIS SERIOUSLY!!
WHEN VALUATIONS ARE DONE ON SPECIALISED
PROPERTIES SUCH AS HOSPITALITY ACCOMMODATION
• The profits method (income cap or DCF) of valuation is normally
used to derive the value of hospitality accommodation.
• With the profits method, a portion of the net income generated
by the business is attributed to rental.
• The starting point is to determine the market income
of the property as a hotel/lodge. This is done by using
market-related tariffs, forecasting occupancy for the
coming year and adding additional income (conference/
pub/restaurant) to this accommodation income.
Is the answer within market norms compared with national
statistics and other hospitality facilities in the vicinity. If not, why
is it higher or lower?
• The accommodation income is often based on past performance
of an establishment and audited trading figures.
• Because this is often a cash business, the financials do not
always reflect the true potential of the establishment.
• Once an estimated annual turnover is derived for the property,
cost of sales must be deducted.
• From this the gross annual income is determined. This is where
the ‘room rate’ can be determined (divide GAI/number of rooms)
– this will afford a ‘double check’ for rates of similar operations
researched.
• Operational income must be subtracted from the gross annual
income.
• The net income is then split between entrepreneurial
profit and rental (20 – 40%, depending on complexity of
the business).
• Challenge: Split business from property
Value the horse not the jockey (going concern ≠
market value).
Value of the property is derived by taking into
account all fixed improvements, excluding all
movable assets that contribute to the existence of
such a facility. Value excludes all FF & E, goodwill,
etc.
Various methods in the valuers profession are
currently being used to arrive at ‘net rental‘. Net
rental can also be referred to as a hypothetical
rental (rate per square metre). These properties
are generally owner-occupied or occupied by a
hotel group.
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VALuAtIoN INPutS - hoSPItALIty AccoModAtIoN
COMMENTS ON THE MAIN VALUATION INPUTS
Our valuation approach has been guided by the international
guidelines set down by the Royal Institute of Chartered Surveyors
(RICS) “statements of asset valuation practice” (The Red Book)
for hotels, which applies to other hospitality properties such as
game lodges as well. The basic principles behind the approach
are as follows:
1) Valuations are intended to show the price at which the interest
being valued could be expected to change hands under
prevailing market conditions.
2) Hotels should normally be valued at market value for their
existing use as a “going concern” because they are typically
bought and sold as fully equipped operational business
entities. This approach requires the valuer to value the property
interest for its existing use as a fully operational / equipped
entity. The value will therefore reflect the value of the freehold
land, buildings, plant and equipment, fittings, inherent goodwill,
management and licences.
3) All valuations should include locational and operational goodwill,
either of which may be positive or negative and may include
an element of personal goodwill, depending on the particular
circumstances.
4) Hotels should be valued by reference to their recent / current
performance and trading potential. This is achieved by the
income capitalisation approach, which seeks to assess
value by reference to projected net cash flows. It requires the
application of a capitalisation factor, which may either be a
multiple of maintainable earnings (Profit Earnings Multiplier) or
a discount rate.
We have applied the income capitalisation method as we are only
valuing the land and buildings. This method involves converting
the expected income for the first year into an indication of value
by dividing the net income estimate by an appropriate income/
capitalisation rate. Existing rental or income can be used provided
that it is market related and that escalation is also in line with
market conditions.
Further, the courts are of the view that where there is insufficient
comparable sales data, a hotel should be valued by virtue of
its capacity to produce rent (Pietermaritzburg Corporation v SA
Breweries Ltd 1911 AD 501 at 511).
When applying this method to hotels, other factors such as
the occupancy rate and income from other sources such as
conferencing facilities and wedding chapels etc, should also be
taken into account.
The operator of a hotel is often not the owner of the building. The
total enterprise will then have two values, the value of the land and
buildings, and the value of the operation which would have a lease
over the buildings. The value of the operating business would be
based on the profits it makes after paying rent, while the value
of the land and buildings is based on the ability of the business
enterprise to pay a market related rental for the premises. The
rental is normally determined as a percentage of the business’s
turnover, or profit.
ANALYSIS OF FINANCIAL STATEMENTS AND CALCULATION
OF VALUATION INPUTS
Financial statements
We have been provided with the management accounts as well
as the budget for the next two years. The financial year runs from
1 March to 28 February. Based on the actual figures in 2013/
2014 financial year a revenue of R1 672 327 was recorded, for
2014:2015 R1 750 262 and for 20154:20165 R2 081 947. The
projected figure based on occupancy levels for the current four
months of the financial year and remaining eight months is around
R2.45 million. Below we have calculated an acceptable turnover
based on actual occupancy levels and achieved average daily
room rate.
Capitalisation rate and occupancy rate
The capitalisation rate is normally derived from the market, but the
hotel industry is unique and there are a number of factors which
affect the overall profitability and risk involved in the industry. A key
indicator is the occupancy rate. According to the owner/operator,
the average annual occupancy rate has been 89% over the years.
This appears slightly higher than other operators in the area, but
acceptable given the target market for business persons in the
Durban South industrial basin as opposed to holiday makers.
In determining the capitalisation rate for the subject property, we
have considered the current economic climate and the fact that
the hospitality industry has been through a difficult patch. The
guest house is, however, well located in a popular tourism node,
with good demand. Based on the above considerations, we have
applied a capitalisation rate of 10.5% to the subject property,
which is also in line with other business properties included in our
sales below.
Room rates and gross rental
We have used the affordable rental income for our income
YEAR 2013-2014 2014-2015 2015-2016 2016-2017 (Projected)
2017-2018 (Projected)
REVENUE R1 672 327 R1 750 262 R2 081 947 R2 451 932 R4 069 755
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Example from the information above:
capitalisation calculation. According to our research, hotel
operators typically pay between 15% and 20% of turnover
towards rental of the premises, provided that the hotel is running at
an occupancy of at least 50% (which is the threshold below which
they are not financially viable for the larger urban operations).
The rental is determined on this basis also assuming that the lease
will typically be a triple-net lease where the lessee is responsible
for all property-related expenses. The higher level towards 20%
will be for modern hotel facilities located in a prime position, as
opposed to the lower end of 15% which indicates older facilities
and a more remote locality. The improvements on the subject
property are in very good condition, and fairly well located
especially for the target market. Therefore, in our view, we believe
a rental of say 18.5% of turnover is considered appropriate.
The actual average room rate is R680. Based on a survey
undertaken by Pricewaterhouse Coopers, the average room rate
for guest houses in South Africa is R700. We are therefore of the
view that the current room rate is achievable.
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PItFALLS
Beware of assumptions (eg occupancy rate/costs of sales,
outgoings, etc) - rather make sure to do thorough research.
And beware of areas used for determination of rentals (eg
Bedouin/Marque tents - these are movable and would, if
taken into account, provide for an over-estimate of value),
and off-site income streams (eg shuttle-service income or
vending-machine income); the inclusion of these items will
also lead to overstated values.
Presented by Lyndon Storer MSA B
Agric (UFS) NDREE (Unisa) Nedbank
Regional Valuer at the SAIV KZN
Workshop on 15 September 2016
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What iS thE valuE of farMlaNd?
V
Sources have it that both Mark twain and one Will Rogers (American
actor) said to the uS congress many, many years ago: “buy land,
they don’t make the stuff anymore!”, or something to that effect.
The discussion was about farmland then, and it is very much
the discussion today. How valuable is farmland really? Is it
the best thing since ‘God separated land from water’?
Well, this may get you thinking.
In 2011 an academic from Canada, Marvin J Painter,
delivered a paper in New Zealand at a conference on
farmland value under the title ‘Is farmland better than gold?’
– he was referring to bullion.
His finding is not that overwhelmingly clear, but he indeed
shows beyond reasonable doubt that farmland can
sometimes hold its own in the international investment
market – and can even stand up against gold during specific
economic trends.
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In April 2015 an outfit called the Iowa Farm & Land Chapter
2 Realtors Land Institute said its survey of local (Iowa)
farmland brokers put the average price of the highest-
quality farmland (in Iowa in the US) at US$11 600 per acre
or US$28 663 per hectare (that, at a year-ago South African
Rand equals R315 000 per hectare) – outright ridiculous.
But it’s not economically sound to do comparisons like this
– it plays games with your mind.
A farmer in Iowa with an average farm of just 135ha (333
acres) had an asset worth R42 000 000 (US$3 800 000) a
year ago. So the next time you travel to the USA to visit
your family or offspring in the north-central parts of that
country on your way to Minneapolis, and you happen to
pass through Waterloo or Story City, you should show the
guys in the proverbial khaki pants and two-tone shirts some
respect – they aren’t what and who you think they are!
In the USA farmland has solidly beaten the stock market
since the late 1990s. So there are many millionaire farmers
around Iowa – like on the South African Highveld, and
Lowveld, and KwaZulu-Natal, and some parts of the
Free State.
NOTE: Iowa, like Wisconsin, Illinois and Minnesota, are
some of the coldest states in the USA. This translates into
one true thing; they have heavy snowfall in winter. This
happens to be a welcome phenomenon that guarantees an
auspicious planting season. Farmers in the north-central
states of the USA don’t have to wait for early summer
rain. When the snow melts and the temperatures are at
acceptable levels the farmers can plant their corn (‘mealies’)
and other cash crops as if there is no tomorrow. We don’t
know such luxury in South Africa – we have to wait for good
rain, which sometimes never arrives.
Now, don’t accuse farmers of manipulating farmland values.
I carried out some research in the Karoo some years ago
and found that many investors purchasing farmland don’t
really want to farm. They just want to hold tangible assets
and are more than prepared to leave the expertise of farming
to a farmer – the real thing. The farmer in this instance is the
person who understands the fickleness and temperamental
behaviour of farmland better than the performance of a
fully-let skyscraper in Sandton (the most expensive 100ha
in Africa). A farmer is experienced, a highly skilled expert,
and knows just about everything about the type of farming
that he has mastered, and he is also a lay agri-economist
who knows the business of crops and livestock.
Says Old Mutual in a survey report: “Many investors are
now turning to tangible assets. Over the past decade, the
combination of population growth, rising incomes and
urbanisation has driven up food and agricultural prices
globally – and in Africa. Food security has become an
important issue since the food price shocks in 2007 and
2008. A sustainable solution to this is to be found in policies
that encourage investment in farmland.”
(http://ww2.oldmutual.co.za/ old-mutual-investment-group/
insights/)
So, if you believe, like most smart people do, in following
smart money, farmland must be something smart to consider.
If, on the other hand, you’re not convinced, I’ll be the last to
blame you for being a little apprehensive or reserved. In fact,
I can think of several reasons why investors should think
carefully before ploughing their money into soil.
For one, you have to perfect your timing. Timing is
especially critical if you want to avoid devastating droughts,
or better still, if you want to score big on mega-harvests and
enjoy the good times to the full. But, you also have to be
absolutely clear on your personal level of involvement. To
be in love with farmland doesn’t mean you are naturally and
abundantly endowed with farming talent. Lastly, you should
also consider your relevant expertise. There seems to be,
more and more, a substantial difference between a farmland
investor and a farmland operative.
Farmland bulls (the investment kind) would reply that
farmland is an asset with inhibited supply in a world with
increasing demand for quality and quantity of food, which
makes it a buy, or at least a hold (based on the quote right
at the top). Similar sentiments are being recorded in the UK.
Oscar Quine, a London journalist writes: “Yet not everyone
is happy with the new economic landscape of the British
countryside [that is, more lifestyle farming and less farming].
In the first quarter of this year (2015), just 44% of the
farmland that changed hands was bought by farmers – down
from 60% in 2011. Echoing the urban housing crisis, young
people are being priced out of farming. A host of initiatives
have been set up to remedy this and to try to correct the
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ageing stock of British farmers. Lifestyle farmers, it turns
out, have made only a small contribution to this seismic shift.
The main, insurmountable problem is a lack of supply. Unlike
the national housing stock, more cannot be built [“they don’t
make it anymore”]. Farmland is not just a finite resource,
it is a diminishing one. Last year, says the estate agency
Savills, 131 000 acres of farmland was traded, a record
low since their records began in 1995” (The Independent,
14 November 2015).
Even though farmland prices may move sideways from
time to time (as they do), they will over the long run face
the strong certainty of demand outstripping supply. The
demand for food and the shrinking availability of farmland
stock, interpreted against the potential capital appreciation
and also the income it generates over time, gives you a
good formula for reaping serious benefits.
So, what is the value of a piece of farmland? Sometimes I’m
not sure myself.
Often I value farmland where the owner expects a ridiculous
value to emerge from the investigation – I mean, really
absurd! But I’m always slow to ridicule him, because I
understand where it comes from – I almost have a deep
veneration for the old farmer who shares his deepest
emotions with me by trying to translate those very emotions
into value. I understand that he expects ‘compensation’ for
the intangible, the imperceptible and the immaterial.
Mostly farmland value is determined by the value of the farms
by which it is surrounded, and its inherent ability to produce
an income. Yes, the improvements, the infrastructure, the
quality of the soil, the availability and quality of water, the
quality of grazing or of arable areas and so many other
factors that play a direct role in determining the value are
also important. But one farm of a similar, comparable, equal
farm in the same neighbourhood can’t be double the value
of that farm.
However, the one thing I can’t put a value on is the
enormous emotional value a farmer and his family get out
of working the land. This type of return can’t be calculated
on a spreadsheet or with the application of fancy formulae.
This unfortunately plays an important role in the retirement
arithmetic for many farm owners. The problem is that they
can never ever get compensated for emotion, for history,
for sentiment, for legend, for myth, for the lore that goes
with the land. And mostly, the next guy is not (never-ever)
prepared to pay for these either.
When an investor understands the real commercial value
and puts money on the table, then the retiring farmer is
usually, after having received some education on the real
value, reasonably content to cut the ties and allow the land
to bring joy and fortune to another human being.
Jannie Wessels resigned from office
as a minister of religion in 1989 and
ventured into property. He qualified as
an estate agent and spent time with
various estate agencies, then went back
to university in 2010 to commence his
career as property valuer and completed
his Masters in Land and Property
Development Management in 2012.
He is now a professional associated
valuer and is principal manager of
Seeff Commercial in Sandton.
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lEgal BEaglE The valuer as expert
V
Judges are not qualified valuers and therefore require expert
guidance to enable the court to make informed decisions.
Valuers are often called upon to testify in courts or before
tribunals, eg valuation appeal boards. Valuers should therefore
know what an ‘expert’ is and what will be expected of him/her
when acting as an expert.
The general definition of ‘expert’ is: “A person with special
knowledge, skill or training”.1
In defining a valuer’s occupation, Louis Ellenberger2 related the
functions of a valuer to that of an ‘appraiser’ as defined in the
Hire-Purchase Amendment Act 73 of 1972, meaning a person
who, by virtue of his experience, knowledge or skill, as well as
his ability and reputation, is competent to determine the value
of goods (read ‘immovable property’) … Raubenheimer3 with
reference to the General Appraisal Manual, The California State
Board of Equalization, defines a valuation as an expert opinion,
‘supported by logical analysis of factual data’.
Valuations are sometimes complicated, making it difficult to fix
a market value by reference to concrete examples. Therefore,
in fixing a market value to the best of his ability, a valuer has to
take into consideration every circumstance likely to influence
the mind of a purchaser. This requires from the valuer the
application of skill and experience.4
Courts rely on the opinion of experts to determine market
value. Formal qualification is not essential. The courts will allow
anyone with the adequate property knowledge and experience
to testify on market value, eg estate agents. Expertise in
property related matters is therefore not the exclusive domain
of valuers. And just as important is the fact that not all qualified
valuers are ‘experts’.
1 Oxford Advanced Learner’s Dictionary, Oxford University Press, 2010
2 Ellenberger, E.L., 1983, The Valuer, Butterworths, Durban (Also The Valuers Manual, LexisNexis, Durban)
3 Raubenheimer, J, 1988, Waardasiereg, Butterworths, Pietermaritzburg, p.3.
4 Pietermaritzburg Corporation vs South African Breweries Ltd, 1911, AD 501 on 516
5 Schwikkard, P.J., Van der Merwe, S.E., 2016, Principles of Evidence, Juta. 102.
6 Oxford Advanced Learner’s Dictionary, Oxford University Press, 2010
7 State v Gouws, 1967 (4) SA 527 (EC) 528D
8 Reference IVS Vol. 1 June 1994, IVS-10
The test is whether:5
a) the witness not only has specialist knowledge, training, skill
or experience, but furthermore, on account of the attributes
or qualities, can assist the court in deciding the issues;
b) the witness is indeed an expert for the purpose for which he
is called upon to express an opinion; and
c) the witness does not or will not express an opinion on
hypothetical facts, that is, facts which have no bearing on
the case or which cannot be reconciled with all the other
evidence in the case.
Opinion6 is defined as … “feelings or thoughts about something
rather than a fact”. As stated above, courts require inputs
(opinions) from experts to assist them with their decisions/
judgments. But for expert opinions to be useful they need to
be backed by facts.
The prime function of an expert seems to me to
be to guide the court to a correct decision on
questions found within his specialised field. His
own decision should not, however, displace that
of the tribunal which has to determine the issue
to be tried.7
Courts rely on the facts and evidence placed before them by
valuers but they are not bound by these testimonies. They act
as a ‘super-valuer’. It is up to them to decide how much of
an expert’s opinion is of use to allow them to derive a logical
conclusion.
An expert’s opinion can only be acceptable and provide
guidance to the court if the valuer’s evidence complies with
certain requirements, inter alia:8
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a. the display of sufficient skill and experience in the specialist
field he professes to be an expert;
b. the display of independence, honesty and objectivity;
it is self-evident that an expert must be honest and
objective; information and substantiation must be set out
comprehensively in a manner that is not misleading;
c. the submission of a report that provides sufficient information
to permit those that read the report to identify clearly the fully
described property as inspected, and to fully understand
the purpose and basis of the valuation, the data, reasoning,
analyses and conclusions set out in the report.
On the issue of objectivity: “an expert witness should remain
objective despite the fact that he is – in terms of our adversarial
system – called by a party to testify in support of the latter’s
case”.9 The valuer is of no assistance to the court if he/she
is not neutral. The opinion of a valuer who is partisan and
champions the case of his/her client will at best most probably
be ignored. At worst he/she may be labelled an unreliable
witness, a serious career limiting move (CLM).
Compliance with the following is called for:10
1. Expert evidence presented to the court should be, and
should be seen to be, the independent product of the
expert uninfluenced as to form or content by the exigencies
of litigation.
2. An expert witness should provide independent assistance
to the court by way of objective, unbiased opinion in relation
to matters within his expertise… An expert witness should
never assume the role of an advocate.
3. An expert witness should state the facts or assumptions
upon which his opinion is based. He should not omit
to consider material facts which could detract from his
concluded opinion.
4. An expert witness should make it clear when a particular
question or issue falls outside his expertise.
5. If an expert opinion is not properly researched because he
considers that insufficient data is available, then this must be
stated with an indication that the opinion is no more than a
provisional one. In a case where an expert witness who has
prepared a report could not assert that the report contained
the truth, the whole truth and nothing but the truth without
some qualification, that qualification should be stated in
the report.”
The function of an expert was summarised by Davis J in
Schneider NO & Other v AA & Another11 as following:
In short, an expert comes to court to give
the court the benefit of his or her expertise.
Agreed, an expert is called by a particular party,
presumably because the conclusion of the
expert, using his or her expertise, is in favour of
the line of argument of the particular party. But
that does not absolve the expert from providing
the court with as objective and unbiased an
opinion, based on his or her expertise, as
possible. An expert is not a hired gun who
dispenses his or her expertise for the purposes
of a particular case. An expert does not assume
the role of an advocate, nor gives evidence
which goes beyond the logic which is dictated
by the scientific knowledge which that expert
claims to possess.
Addleson J aptly defines the function of an expert
as following:12
In essence the function of an expert is to assist
the Court to reach a conclusion on matters
on which the Court itself does not have the
necessary knowledge to decide. It is not the
opinion of the witness which is decisive but
his ability to satisfy the Court that, because
of his special skill, training or experience, the
reasons for the opinion which he expresses are
acceptable … However eminent an expert may
be in a general field, he does not constitute an
expert in a particular sphere unless by special
study or experience he is qualified to express
an opinion on that topic. The dangers of holding
otherwise – of being overawed by a recital of
degrees and diplomas – are obvious; the Court
has then no way of being satisfied that it is
not being blinded by pure ‘theory’ untested by
knowledge or practice. The expert must either
9 Schwikkard, P.J., Van der Merwe, S.E., 2016, Principles of Evidence, Juta. 106
10 National Justive Compania Naviera S.A. v Prudential Assurance Co Ltd (1993(2) Lloyds Reports 68 81 as reported in Nicholson Charleane v Road Accident Fund,
South Gauteng High Court, Johannesburg, Case No 07/11453.
11 2010(5) SA 203 (WCC) at 211J – 212B
12 Menday v Protea Assurance Co Ltd, 1976 (1) SA 565 € 569
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himself have knowledge or experience in the
special field on which he testifies (whatever
general knowledge he may also have in pure
theory) or he must rely on the knowledge or
experience of others who themselves are
shown to be acceptable experts in that field.”
Not only your reputation, but your livelihood may be on line
should you not heed these guidelines.
By making yourself available as an expert, you are setting
yourself up for an ordeal that may be frightening or fascinating,
devastating or rewarding, depending on your expertise,
preparation and personal and professional presence. The
moment you step into the witness ‘box’, you subject yourself
and your valuation to the meticulous and exacting scrutiny of
the opposing counsel and the court. During cross-examination,
opposing counsel will challenge your testimony and attempt
to undermine your credentials, professional reputation,
qualification and objectivity. Be assured that any blemish in your
character or valuation will be exploited in order to discredit you.
Your testimony will be contested by demonstration of technical
errors, inconsistencies and contorted analyses. Cross-
examination is not only aimed at proving you wrong, but also
in shaking your confidence in order to impair your emotional
control and mar your courtroom demeanour. Valuation is
not an exact science and valuers are very vulnerable in the
witness box. Your status and standing in the profession could
instantly and seriously be damaged with severe consequences
to your life as professional valuer. Therefore, valuers, beware:
Your good reputation is your most valuable asset. Do not risk
losing it.
In a perfect world all parties would behave in a civil and
gentlemanly manner. No one should get excited or angry,
voices should not be raised and witnesses should not be
intimidated or bullied. Unfortunately, although judges do
attempt to intervene in some cases, hostile and unsettling
tactics are part of the game. Keep in mind that the opposing
advocate is not your friend.
An expert should, however, always display professional
demeanour, keep emotions at bay and act courteously. Avoid
arrogance or aggression as this will only make an unfavourable
impression upon the judge. Answer honestly and to the
point. Make concessions where necessary. Nothing is more
transparent to an experienced judge than a witness who is
trying to avoid a question or who fails to admit mistakes or
oversights.
Witnesses are not confined to “yes” or “no” in answering
questions, but should avoid elaboration or digression as these
actions are equally annoying to judges. Follow the ABC rule of
testimony: (a) Listen to the question. (b) Consider the question
carefully and think what the answer should be. (c) Stick to your
expertise and give a straight answer.
It is inevitable that experts will disagree. Contradictory
evidence usually compels judges to make a judgment on the
credibility of witnesses which may, or may not, lead to rejection
or preference of a witness. In instances where conflicting views
are based on logical reasoning, the judgment would probably
be based on a consideration of the competing sets of evidence
viewed in the light of probabilities.
In summary therefore: Do not accept an assignment if you
are not really an expert in your field. Thoroughly prepare your
testimony as nothing beats good preparation. And in the wise
words of the grizzled Advocate Rit van Rooyen: “Understand
the ‘theory of your case’ (and your opponent’s case) and
liberally apply ‘elbow grease’”.
Lastly, do not forget that a witness testifies under oath which
places him/her under a legal as well as a moral duty to tell
the truth.
By Derrick Griffiths (BProc MAgric) is
a Fellow of the SAIV. After becoming
a state prosecutor he worked as an
attorney. He became a valuer in 1986.
He is the chairperson of the SAIV
Northern Branch Executive and serves
on the National Executive.
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ProtEctioN of PErSoNal iNforMatioN (PoPi) act aNd thE oBligatioNS it crEatES
V
INTRODUCTION
This article examines the rules and requirements of the
Protection of Personal Information Act 4 of 2013 (PoPI) and
the obligations it places on anyone collecting or holding
personal information on behalf of a natural or juristic person.
The nature of many businesses means that they can typically
end up processing large amounts of clients’, customers’ and
employees’ personal information. This personal information
can include anything from name, age and gender to identity
numbers and bank account details. Any business with
access to any of this information has a legislated duty to
protect the subject of this personal information in any way
necessary.
THE EFFECT OF DIGITAL PROCESSING
Because of the large amount of personal information which
will often be provided to a business, certain forms of data
processing have come into play. It is no longer practical
for this information to be kept in physical form, such as on
paper, because of the volumes of information involved, not to
mention the pressure to reduce our negative environmental
effect.
Digital processing or digital database tools are useful when
a large amount of personal information must be processed
efficiently. The possible risks in the use of these programs
need to be addressed and guarded against.
CONDITIONS
PoPI prescribes certain ‘Conditions for Lawful Processing
of Personal Information’. One of these conditions is
‘Accountability’. This condition prescribes that the
responsible party (being the party receiving the information)
must ensure the protection and confidentiality of personal
information. The responsible party must comply with all of
the measures put in place by PoPI to appropriately safeguard
confidential personal information against loss, destruction
or unlawful access.
Responsible parties must do everything reasonably
possible to protect against privacy infringements caused
by unlawful activities such as fraud, cyber-crime, phising
and malware. If an infringement does happen as a result of
unlawful activities, the responsible person has an obligation
to inform the affected person of the possibility of a privacy
infringement.
Another condition is that personal information must be
processed lawfully and in a reasonable manner. ‘Reasonable
manner’ suggests that information should be processed in a
manner which does not infringe the privacy of the data subject
(being the client or consumer providing the information).
Factors which would be considered in determining whether
information is processed in a reasonable manner would be
the purpose for which information is collected or processed
and whether or not the consent of the data subject has been
obtained. The condition of reasonableness is likely to be
relaxed significantly where the data subject consents to the
collection and processing of any personal information.
This condition should also be read with the condition the
collection of data must be for a specific purpose and for a
specified time, and that the data subject must be aware of
the purpose for which their personal information is collected
and processed.
As well as obtaining the informed consent of the data subject,
it is also necessary in terms of PoPI for the responsible party
to be open and transparent with the data subject about what
their information may be used for and who their personal
details may be provided to. It is also a condition that the data
subject may request at any time that any parties disclose
to them what personal information they hold and what that
information may be used for. This ensures that business,
employees and third parties are always held accountable for
the correctness of information held by them.
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While PoPI prescribes that the responsible party must do
everything necessary to protect a data subject’s personal
information, it becomes difficult to do this where the
disclosure of this information is necessary to provide a
service to a consumer or client.
CONSENT
The conditions prescribed in PoPI place emphasis on having
a data subject’s consent before collection, processing or
passing on any personal information. This consent should
be well informed, voluntary and unambiguous. The data
subject can revoke consent at any time.
The client should know exactly what personal information
is collected from them, what the purpose of the collected
information is and who may have access to their personal
information. Clients should also be informed of what security
meaures are in place to protect their personal information.
Data subjects should not be pressured to give consent to
their personal information being processed and/or passed
on to a third party and should never suffer because they
have refused consent.
DISCLAIMER
A comprehensive disclaimer may be the most effective
way to protect the responsible parties, as well as a way
to inform the data subject what personal information may
be processed, the purpose for which their information may
be used and to whom their personal information may be
disclosed. A responsible party should still inform a data
subject if any of their personal information is to be passed
on to a third party.
This disclaimer cannot limit or extinguish the liability of
a responsible party to adequately protect the personal
information of a data subject. It is important to obtain the
consent of the data subject before collecting and processing
their personal information or passing it on to a third party.
CONCLUSION
While the consent of the data subject can be obtained to
allow for the use and processing of their personal information,
the party responsible for the collection, processing and
protection of personal information should always be aware
of their duty to protect the data subject’s privacy, not only
in terms of PoPI, but in terms of the Constitution of the
Republic of South Africa, Act 108 of 1996, as amended, and
the right to privacy which is protected within.
Responsible parties should be mindful of their duty in terms
of the Companies Act 71 of 2008 to perform functions
assigned to them in good faith and in the best interests of
the company and their consumers. Responsible persons
are bound to act with a specific degree of care, skill and
diligence. This is especially true when handling and
processing confidential personal information.
By Christopher Tucker, partner and Charlotte Clarke, candidate
attorney at Schindlers Attorneys
BudgEt fEBruary 2017
Slight tax relief for property transfers, as the threshold
has been raised to R900 000 from the current
R750 000, with effect from 1 March 2017.
Transfer duty rate adjustments, 2017/2018
Property value (R) Rates of tax
R0 - R900 000 0% of property value
R900 001 - R1 250 000 3% of property value above R900 000
R1 250 001 - R1 750 000 R10 500 + 6% of property value above R1 250 000
R1 750 001 - R2 250 000 R40 500 + 8% of property value above R1 750 000
R2 250 001 - R10 000 000 R80 500 + 11% of property value above R2 250 000
R10 000 000 R933 000 + 13% of property value above R10 000 000
The maximum effective rate of capital gains tax has
been increased:
Legal entity 2016 2017
Individuals and special trusts 16.4% 18%
Companies 22.4% 22.4%
Other trusts 32.8% 36%
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THE SOUTH AFRICAN
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John Loos writes
On 24 January the South African
Reserve Bank (SARB) Monetary
Policy Committee (MPC) decided to
leave its policy Repo Rate unchanged
at 7%, where it has been since March
2016. This will leave Prime Lending
Rates at 10.5%.
This unchanged decision was widely
anticipated. Our FNB forecast is for
the Repo Rate to remain unchanged
through the entire 2017.
The decision comes despite a recent
food price inflation surge sustaining
Consumer Price Index (CPI) inflation at
levels above the 6% upper target limits
of the SARB, at 6.8% year-on-year in
December. However, the alleviation of
drought conditions appears set to lower
food price inflation, and we expect this
to gradually pull CPI inflation back into
the 3-6% target range this year.
The SARB forecasts 6.2% CPI inflation
average for 2017, returning to 3-6%
target range in the final quarter of
the year.
From a household and consumer
point of view we believe the SARB’s
current policy stance to be absolutely
appropriate:
• Current interest rate levels appear
sufficient to keep all exuberance
out of the household and consumer
credit markets, keeping household
credit growth low and contributing to
an ongoing and very healthy decline
in the all-important Household
SarB MPc lEavES rEPo ratE uNchaNgEd
2017 StartEd oN a vEry WEak NotE
Debt-to-Disposable Income Ratio.
Low consumer confidence doesn’t
necessitate any further rate hiking at
present in order to curb credit growth.
• But at the same time, the mild
rate hiking phase from 2014 to
early 2016, followed by the lengthy
period of unchanged rates has not
caused undue financial stress in the
household sector.
With regard to the housing market:
• The level of rates is well above the
recent percentage for house price
inflation, limiting the potential for any
unhealthy speculating activity in the
housing market.
• But on the other hand, the onset of
sideways movement in rates since
March 2016, we believe, will limit
the potential for decline in average
house prices, something undesirable
for mortgage lenders and mortgage
borrowers alike. The most recent
FNB House Price Index for December
inflated by a mere 1.6% year on
year, but we believe that unchanged
rates through 2017 will contribute to
ongoing low positive average house
price growth in 2017.
All in all, therefore, we believe that
current rate levels strike a nice balance
from the point of view of contributing to
healthy consumer/household financial
behaviour.
The FNB House Price Index for
January 2017 rose by a mere 0.3%
year on year, having already been in
month-on-month seasonally-adjusted
decline for the past six months. This
continues the slowing year-on-year
price growth trend since April 2016.
We continue to project low but positive
single-digit nominal house price growth
for 2017 as a whole, in the region of
2-3%. This overall growth for the year,
however, would be driven more by some
house price growth in the latter stages
of 2017, as the FNB expectation of
some economic growth strengthening
starts to have some positive impact on
residential demand, but the first half of
the year looks set to be fairly ‘flat’.
The FNB House Price Index for January
2017 saw its year-on-year rate of
increase slow further to a mere 0.3%,
from a 1% revised rate in the previous
month. This represents the nineth
consecutive month of slowing year-on-
year house price growth, from a 2016
high of 6.9% back in April of last year.
In real terms, when adjusted for
consumer price inflation (CPI), the index
recorded a year-on-year decline in
December 2016 of -5.4% (January CPI
data not yet available). In December, CPI
inflation measured 6.8%, while revised
house price inflation was a lowly 1%.
Real year-on-year house price decline
has been taking place since July 2016.
The average house transaction price in
January 2017 was R1 049 038.
The slowdown is the lagged impact
of residential demand that has been
slowing for some time. Others of our
residential market indicators, such as our
FNB Estate Agent Survey Activity rating,
have shown decline since well back in
2015, while the estimated average time
of homes on the market prior to sale had
risen from 11 weeks and one day in the
first quarter of 2016, to 15 weeks by the
final quarter estate agent survey.
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MoNth-oN-MoNth, the FNb
houSe PRIce INdex ReMAINS IN
deFLAtIoN
While the year-on-year house price
inflation rate manages to hang on to
some low positive growth, on a month-
on-month seasonally adjusted basis the
FNB House Price Index has shown six
consecutive months of price decline.
The month-on-month seasonally
adjusted calculation is a better way
to look at recent growth momentum.
While in its sixth month of month-on-
month decline, the rate of decline has
diminished slightly in recent months,
from a revised low of -0.38% month-on-
month decline in November, to a lesser
-0.31% by January 2017.
The periodic short dips in the month-on-
month rates of change, either to lower
inflation or most recently into deflation,
appear to coincide broadly with the
short-term fluctuations in the economy’s
performance.
The Manufacturing Sector Purchasing
Managers’ Index (PMI), one of the
economy’s leading indicators, has once
again dipped to below 50 in recent
months, signaling some contraction in
this large and cyclical sector. This sector
is a good barometer of the direction
of economic growth much of the time,
and the fluctuations in the month-on-
month house price rate of change thus
merely appear to be tracking economic
fluctuations.
ReAL houSe PRIce LeVeLS
Examining the longer-term real house
price trends (house prices adjusted for
CPI inflation), we see that the level as at
December 2016 was a mere +0.3% up
on the November 2011 post-recession
low, having lost -5.4% since December
2015. On a cumulative basis, therefore,
real house prices have made almost no
progress since the post-recession low
point in 2011.
The average real house price level is
-22.8% below the all-time high reached
in December 2007 at the back end of the
residential boom period.
However, looking back further, despite a
mediocre performance in recent years,
the average real price currently still
remains a massive 61.0% above the
beginning of 2001 level, around 16 years
ago, and a time back just before boom-
time price inflation started to accelerate
rapidly. We therefore still regard current
real price levels as high by historic
standards despite recent weakness. In
nominal terms, when not adjusting for
CPI inflation, the average house price
in January 2017 was 291.3% above the
end-2000 level.
coNcLuSIoN
The ongoing slowdown in year-on-year
house price growth to near zero is very
much reflective of ongoing weakness
in the household sector’s confidence
levels, as also seen in the weak FNB
Consumer Confidence Index readings
of recent years.
This in turn is reflective of slow
disposable income growth in a virtually
zero-economic growth environment,
following a multi-year growth slowdown.
Further pressures on household
disposable incomes emanate from
elevated consumer inflation, especially
in the area of food prices, which have
been drought influenced, and of course
ongoing increases in the effective
personal tax rates of households. Finally,
one mustn’t forget that interest rates
have risen moderately in recent years.
All of the above has served to gradually
slow residential demand, finally
reaching a point where residential stock
constraints have by and large been
eliminated, reaching that critical point
in the demand-supply balance where
house prices have started to decline
in real terms (ie when adjusting for
CPI inflation).
We continue to see certain signs of
a small recovery in the economy to
come in 2017, with the SARB’s Leading
Business Cycle Indicator continuing its
upward momentum of recent months,
turning to positive year-on-year growth
of late after a multi-year decline.
But some expected economic growth
strengthening in 2017 is only likely to
impact on house prices in the second
half of the year, and with a still slow FNB
economic growth forecast of around
1.1%, we don’t think that impact will
be strong.
Given only 0.3% year-on-year house
price growth as at January, and ongoing
month-on-month declines, it is possible
that we will see some year-on-year
price deflation in the coming months.
We continue to expect an average low
but positive house price growth rate
of between 2-3% for 2017 as a whole.
But that would be driven more by
positive growth in the second half of
the year, based on the expectation of
economic growth picking up, interest
rates continuing to move sideways at
current levels, and price growth later in
the year coming off the low base set in
recent months.
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Our annual Repeat Home Buyer
study for 2016 showed still further
strengthening in the Western Cape’s
ability to attract repeat home buyers
to the region, while also showing an
acceleration in Gauteng’s net outflow
of repeat home buyers. The Western
Cape now far outperforms the
other eight provinces in this regard.
This goes some way to explain the
province’s far stronger 2016 house
price growth than the rest.
Given that many people vote with
their feet, studying migration patterns
between regions in South Africa
can provide a good indication of
household perceptions towards regions,
perceptions of economic opportunity,
lifestyle or how well a region is run
perhaps. Deeds Office data offer us
the opportunity to gain an indication
of a region’s attractiveness by trying
to quantify the migration of repeat
property buyers between regions, in this
case between provinces. Repeat home
buyers are those who sell a property
and buy another one within a reasonably
close time period.
For the purpose of this study, we identify
all purchases by individuals (‘natural
persons’) where there is a corresponding
sale by the same individual within a
period six months prior to their purchase
(some who relocate may purchase a new
home before the sale of their old one), to
up to 18 months after that purchase (an
adjustment from prior studies where we
took a shorter period of only up to six
months after the purchase). The bulk of
these ‘repeat buying’ transactions are
within the same province, but some of
iNtEr-ProviNcial rEPEat hoME BuyEr MigratioN trENdS
these purchases, 16.1% in 2016, were
in a province other than where the
corresponding sale took place. This
figure represents our estimate of the
year’s inter-provincial re-location rate or,
the ‘repeat buyer semi-gration’ rate. It
isn’t an exact science, as some holiday
property buying might ‘slip through’,
while aspirant first-time buyers who
have re-located do not get included into
this figure. Nevertheless, we believe it to
be a good indicator of a large portion of
‘semi-gration’ flows.
the AGGReGAted NAtIoNAL
INteR-PRoVINcIAL RePeAt hoMe
buyeR MIGRAtIoN PIctuRe
The inter-provincial repeat buyer
migration picture shows 2016 to have
been another year of increase in the
rate of inter-provincial migration. From
12.8% of total repeat property buying
being estimated to be inter-provincial
repeat buying in 2015, the estimate
rose to 16.1% in 2016. This is now
significantly higher than the 6.2% lows
reached around 2009/10 just after the
last recession.
For a time, following the 2008/9
recession, we believe the rising trend
from 2011 was largely the lagged
response to the economic growth
recovery that started back in 2009.
Improved economic growth increases
the level of employment and economic
opportunity, in turn raising the mobility
of labour, which drives a greater level of
inter-regional migration.
However, economic growth has already
long been slowing, since around 2012,
and while that heightened mobility can
linger for some time after, we don’t
believe that the ongoing rise in the inter-
provincial migration rate can solely be
the lagged impact of that post-2009
economic recovery. Rather, we believe
that it is also because of the Western
Cape’s ongoing rise as a popular ‘semi-
gration’ destination, for reasons over
and above the short run economic cycle.
the WeSteRN cAPe AS A
PoPuLAR RePeAt hoMe buyeR
deStINAtIoN
Over the past decade or so, the Western
Cape has greatly enhanced its ‘appeal’
to repeat home buyers relative to many
other regions of the country. The province
maintains a competitive advantage,
which appears reflected in its having
the lowest percentage of repeat buyers
leaving the province, ie 8.1% of total
repeat buying in the province, as well as
by far the strongest net inward migration
(inward migrating repeat buyers minus
outbound ones) rate of repeat buyers
from other provinces.
This should not come as too much of
a surprise. The province has a highly
skills-dependent, services-dominated
economy, and the second highest per
capita Gross Domestic Product (GDP)
behind Gauteng. And from 1997 to
2005, over almost two decades, it has
also been neck and neck with Gauteng
as the joint fastest average annual
economic growth region, according to
IHSGlobalinsight estimates.
In addition, the City of Cape Town and
surrounding areas has the benefit of a
perceived high quality lifestyle compared
with many other of SA’s cities, and it is
this combination of good economic
opportunity along with lifestyle that
appears to be proving to be the winning
recipe in attracting both wealth and
skills to the province in relatively
abundant quantities.
The Western Cape aside, the remaining
three of the ‘big 4’ provinces, ie
Gauteng, KZN and the Eastern Cape,
find themselves with net outward
migrations of repeat buyers for much of
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the time (ie more repeat buyers leaving
the provinces than the number flowing
in), although the Eastern Cape moved
into very slight net inward migration in
2016. Net outflows are something that
one would think may not bode well
for those regions’ future economic
growth rates.
The net inflow of repeat property buyers
to the Western Cape has become
nothing short of spectacular, measuring
a staggering 17.4% of the province’s
total repeat buying, having accelerated
steadily since 2009, and even more
sharply from 2015’s 10.6% of repeat
buying. This net inflow percentage now
dwarfs the net migration rates of the
other eight provinces.
GAuteNG’S Net outFLoW
WoRSeNed IN 2016
On the other hand, Gauteng’s net
outflow of repeat home buyers picked
up speed to an estimated -9.1% of total
repeat buying in that province. This is
a significantly larger net outflow from
2015’s estimated -2.9%. This should be
a cause for some concern, as much of
this migration is the highly skilled and
more affluent part of the labour force,
and it takes with it significant skills
and purchasing power away from the
country’s largest provincial economy.
Interestingly, Gauteng’s gross outflow
of repeat home buyers, at 16% of total
repeat home buyers, is the third lowest
of all nine provinces. It is, however, not a
good attractor of incoming repeat home
buyers from other regions. We remain
of the belief that the Gauteng overall
skills attraction and retention situation
is not as bad as the repeat home buyer
migration estimates may appear.
Our reasoning is that we believe that
a significant portion of departures of
repeat buyers from Gauteng are for
non-work related reasons, ie retirement
and lifestyle. We pick this up in the FNB
Estate Agent Survey, which normally
points to a significantly lower percentage
of Gauteng departees doing so for
work-related purposes, as opposed to
other major regions. This suggests that
Gauteng may lose less active skilled
labour than may meet the eye.
In addition, we are always at great
pains to stress that we believe that
Gauteng benefits more from inward
migration of aspirant first-time buyers
in the early stages of their working life,
than do the smaller provinces, because
that province is still by far the largest
provincial economy and thus the major
place of economic opportunity for new
labour market entrants. Admittedly,
though, first-time home buyers cannot
be tracked in this study.
PoPuLAR deStINAtIoNS FoR the
MAjoR PRoVINceS’ ‘SeMI-GRANtS’
For Gauteng, the Western Cape is the
most popular destination for its ‘semi-
grants’, with 56.2% of its outbound
repeat home buyers heading for that
province in 2016. Of the ‘big 4’ provinces,
the other one whose ‘semi-grants’
favour the Western Cape is the Eastern
Cape, with 53.6% of that province’s
outbound repeat home buyers heading
for the Western Cape. KZN, however,
saw 46.64% of its outbound repeat
buyers heading for Gauteng in 2016,
making Gauteng still their most popular
destination, followed by 34.77% of its
outbound repeat buyers going to the
Western Cape.
For outbound repeat home buyers from
the Western Cape, Gauteng remains the
most popular destination, with 45.88% of
this group headed there in 2016, followed
by 21.82% headed to the Eastern Cape.
coNcLuSIoN
The Western Cape’s strong inward
migration of repeat home buyers
continued, and indeed appeared to
strengthen further, in 2016. At 17.4%
of the province’s repeat home buying,
no other province’s net inflow of repeat
home buyers comes close.
MaJor rEgioNS coMParEd
We believe that the further acceleration in
net inflow of repeat home buyers in 2016
explains much of the Western Cape’s far
superior house price growth in 2016.
As at the final quarter of 2016, the
FNB Western Cape House Price Index
showed year-on-year growth of 8%.
The next strongest growth rate of the
FNB Provincial Region House Price
Indices was the index for the five smaller
provinces (ie Limpopo, Mpumalanga,
North West, Free State and Northern
Cape), which measured a mere 1.4%,
followed by Gauteng’s 1.2% and
KZN’s 1%.
While the Western Cape was the clear
‘outlier’ in 2016, with far stronger house
price growth than the rest of the country’s
major regions, there have recently
been clear signs that this market has
been slowing. At the other end of the
scale, it appears that the Eastern Cape
and KZN are the weaker of the major
provinces, which may have to do with
a combination of a high dependency on
a weak manufacturing sector as well as
drought conditions. Somewhere in the
middle, Gauteng ticks along slowly, with
the City of Tshwane appearing to be its
stronger sub-region.
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John Loos
Household and Property Sector Strategist:
houSE SizE SEgMENtS
The long-term focus on size continues
to be a key factor in the South African
housing market, with ‘smaller remaining
better’, still driving stronger house price
inflation in the small-sized segment
compared with the other two segments
in 2016. This relative ‘outperformance’
of the small-sized segment is expected
to remain broadly intact over the longer
term, with especially the large-sized
segment underperforming noticeably.
However, there is something of a
‘tipping point’ that can be reached in
times of severe economic weakness and
significant interest rate hiking, where the
small-sized segment’s superior house
price growth can be ‘temporarily’ halted.
This segment can be more cyclical than
the medium- and large-sized segments
at times because it is a bigger target for
the more cyclical first-time buyer and
buy-to-let groups.
In tough economic times these groups
fade faster than the repeat buyer groups,
while financial stress can also proliferate
faster in the small-sized segment during
such periods. So, in the very tough year
of 2009, for instance, we saw the small-
sized category experiencing the fastest
house price deflation of the three to the
tune of -7.6% for that year, compared
with the medium-sized category’s -1%
and the large-sized segment’s -3.6%.
2009 was a significantly tougher year
than we expect 2017 to be, though, so
the small-sized segment may still get it
right to narrowly outperform the others
this year. But it is always worth noting the
risks, in this case that severe economic
shocks can impact more heavily on this
segment if and when they occur.
SEctioNal titlE SEgMENt
The sectional title segment is typically
more cyclical than the full-title market.
This means that in tougher economic
and interest rate times it can weaken a
bit more significantly then the full-title
market, but in relatively good times can
perform a little better, as it has done in
recent years of relatively good market
conditions until recently.
Both segments continued to soften
late in 2016, but to date certain of the
key performance indicators still put
sectional title as mildly stronger than
the full-title segment. Our FNB valuers
perceive more of a slowing in sectional
title than in full title, but this has not yet
fed through into relative house price
inflation performance differentials, so
for the time being sectional title house
price growth remains slightly ahead of
full title.
houSE PricE iNflatioN vS rENtal iNflatioN
Looking into 2017, we expect that
average house price inflation will by
and large underperform rental inflation
in another tough economic year. We
project house price growth for 2017
to average around 3%, down from
5% in 2016, in lagged response to the
economic growth slowdown and interest
rate hiking of recent years up to 2016.
Looking into 2017, we would expect to
see some decline in estimated levels of
foreigner buying for two reasons.
Firstly, we go into 2017 with significantly
more expensive local property from
many foreigners’ points of view, given
the strengthening of the Rand last year.
Secondly, there have been some
concerns that global housing markets
have run hard for a number of years,
and that they may be due for some
correction. We could thus see housing’s
global popularity as an investment
moderate somewhat.
AFRIcAN coNtINeNt FoReIGNeR
buyING
Finally, 2016 saw a continuation of
the multi-year rising trend in foreign
buyers from the rest of the African
continent, expressed as a percentage
of total foreign buyers of domestic
housing. From a 10.5% low in 2010,
this percentage has risen to a 27.95%
average for 2016, the highest annual
average estimate for African continent
buyers since we started this survey
question back in 2009.
forEigNEr BuyiNg
The result is expected to be some
gradual increase in the Average Gross
Yield for 2017, ‘gradual’ being the
operative word, from an expected
average of around 9.1% at the end of
2016 to nearer to 9.3% by the end
of 2017.
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THE SOUTH AFRICAN
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FNB business experts share their views on the Budget Speech.
Attie Anderson, head of Commercial Property Finance at
FNB Business:
There was not much in the Budget Speech related directly to
the commercial property sector; the indirect consequences
will, however, be felt by the industry. The fact that personal
income tax was increased, together with higher fuel levies, will
put consumers under even more pressure. Retail properties will
be affected by lower trading volumes, especially those retail
centres aimed at the high-end market and durable goods. We
may well see an increase in vacancy rates as the impact of the
‘tightening the belt’ reality starts affecting spending patterns.
Some good news was the increase of the transfer duty
threshold on properties from R750 000 to R900 000. This may
assist property investors in the rental stock market.
Dawie Maree, head of Information and Marketing at FNB
Business, Agriculture:
This was a fairly optimistic budget that will put the credit
rating agencies at ease. As with SONA 2017, the focus was
on transformation. The budget does, however, offer limited
scope for transformation; given the fact that allocation for land
redistribution declined by 3%, but for restitution it increased
by 2.5%. Allocations for farmer support and development
increased by 10% to R3.79 billion; this will go a long way in
assisting subsistent farmers.
A concern for agriculture is the introduction of the sugar tax for
both intrinsic and added sugar beverages. It is still not clear
how this will be implemented and consultation is continuing.
Another concern is the additional fuel levy and levy for the
Road Accident Fund, totalling 39c/litre. The diesel rebate
system is still in place and increased from R2.62/litre to R2.83/
litre. This is about the only assistance that farmers get from
government, compared with other farmers in the world which
are heavily subsidised.
Yudhvir Seetharam, head of Analytics at FNB Business:
The 2017/2018 Budget Speech was well received amidst both
political and economic uncertainty in South Africa. There were
key encouraging points for entrepreneurs in particular. While
the Minister stated that economic growth is slow and times
are generally tough, he also said that “we draw strength from
the resilience and the diverse capabilities of our people, our
business sector, our unions and our social formations”.
1. The Medium-term Expenditure Framework (MTEF) has
allocated R3.9 billion of funding for SMEs. This would
help entrepreneurs with high potential business ideas turn
those into a reality. Indeed, the Minister mentions that the
benchmark of success is whether we as a country (and
more so with business owners) “create jobs, eliminate
poverty and narrow the inequality gap”.
2. Commodity prices have recovered from previous lows,
boding well for those exporting goods. This, along with
drought relief, should see a good recovery in our raw
materials and agricultural sectors.
3. The recovering Rand also helps strengthen business and
consumer confidence; this implies a positive economic
outlook for the year. However, while growth is expected to
be positive, the Minister also mentions that it is below the
NDP goals.
4. There needs to be a streamlining of regulatory functions
and investment approval processes, particularly for SMEs.
This is seen as the DTI leading the initiative to make it
easier to start and run a business. Sectors that are getting
focused attention would be in tourism and hospitality, but
the increased sales in these sectors might be offset by a
strengthening Rand.
uNPackiNg 2017 BudgEt SPEEch for your BuSiNESS
V
in the midst of a fluctuating Rand and an economy in need of
resurgence, Minister Gordhan provides a glimmer of hope to
businesses against the backdrop of an already slow growth economy.
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FeLLow in Focus
André ZybrAnds
i came into the valuation profession because I
can’t sit still, and even less so behind a desk.
even today, 43 years later, I enjoy the profession
as much as ever.
It is wonderful to ‘land’ in a profession for which one has a passion. Being a valuer gave me
the opportunity to travel to many parts of the country, often it felt like an extended holiday.
My career started at the then Pretoria City Council. We as candidate valuers were fortunate
to have excellent mentors such as Boet Marais as City Valuer, with Chris Smal and Tom
Wybenga as his deputies. They taught us the theory of valuation and not simply to do
things automatically, without fully understanding what we were doing. This experience
underlines to me the importance that a valuer in training should be in the full-time
employment of a professional.
After obtaining my Diploma in Valuation, I had the opportunity to complete my BCom
specialising in property valuation. Unfortunately this course under the guidance of
Professor Nic Maritz was later discontinued.
As I was working in a municipal environment I was taught how to do municipal valuations.
A misconception in the profession and with the public at large is that municipal valuations
are an ‘inferior’ class of valuation. The reality is that a municipal valuer must determine
the market value of each and every property in the municipal area. This means that a
municipal valuer must be able to determine the value of any type of property, whether
it is a house, shopping centre, power station, mine, a right in land or any other type of
property that one can think of. Some of the most important court cases today involve the
determination of the value of property for rating purposes.
In 1977 I became a member of the SA Institute of Valuers and in 1992, a Fellow. My
involvement with the Institute created opportunities for me to represent the Institute on
various forums and to serve as a member on the then SA Council for Valuers, now known
as the SA Council for the Property Valuers Profession (SACPVP).
I served on the Council from 1988 to 2005 and as President from 1996 to 2001. One of
the highlights during this time was the establishment of the Practical Workschool in 1990.
The Workschool served as a ‘test’ to determine the practical competence of a candidate
to become a ‘fully fledged’ valuer. Unfortunately the current Council no longer regards this
test of competency to be of much importance and limited value is attached to it; this does
not serve the best interests of the profession.
André with the Facit machine
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THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 127
While serving on the Council and as a member of the Northern Branch of the Institute
opportunities arose for me to represent the profession on various forums, inter alia,
involvement with the development of property legislation, eg the Property Valuers
Profession Act, 2000, the Municipal Property Rates Act, 2004, the Property Valuation Act,
2014 and the current Expropriation Bill.
Looking back on the development of the profession and of technology, various
developments stand out. In the 1970s there were no computers or even pocket calculators:
a huge machine with the brand name Facit was used. To determine the extent of an area,
the length would be entered into the machine by pressing the appropriate keys; for the
width a handle had to be turned the number of times equal to the measurement taken on
site. So if the building was 25 x 17 metres, 25 would be entered and the handle would be
turned 17 times to get the result of 425m².
Although today we use modern technology for most things, the bottom line is that a valuer
must still interpret human behaviour in determining market value. No machine or computer
can determine the value of a property without the input of a human being.
The expansion of the profession is limited by the demand for valuations. We can advertise
the profession as much as we like, but the demand on valuation services will be limited. It
is my opinion that the SACPVP is failing the profession in various ways. The greatest way to
expand our profession is to include appraisers into our midst. I know this is an uphill battle.
In 2001, as President of the Council, I wrote a comprehensive letter to the Minister of Public
Works at the time, Ms Stella Sigcau, requesting her to take up the matter of the appointment
of appraisers with the Minister of Justice. To my knowledge nothing happened.
In 2004 I drafted a document on various entry levels for appraisers indicating, inter alia,
registration requirements as well as acceptance under a ‘grandfather’ clause. If this
inclusion of appraisers, subject to various requirements, were approved, it would expand
the profession tremendously and, importantly, allow the SACPVP to monitor the valuations
carried out by current appraisers. Unfortunately once again nothing happened.
At a meeting in February 2015 I informed the Council that there were approximately 2 200
appointed appraisers. If one assumes that 500 of these appraisers are also professionals
registered with the SACPVP, there remain 1 700 appraisers who could be accommodated
by the SACPVP on various levels.
I was fortunate to be appointed to various Valuations boards in terms of previous legislation,
later to the Limpopo Valuation Appeal Board and also on numerous occasions as an
Assessor to the Land Claims Court. I gained extremely valuable experience by sitting
on these forums. My wish for the future is that I will be able to continue passing on my
experience to the profession wherever possible.
S A I V a t h o m e
While searching for photographs I
remembered that I used to rally. This
photograph was taken in 1975 with
my brother-in-law who was mostly my
navigator. I am the guy on the right with
the short pants.
As president of the then SA Council of
Valuers from 1996 to 2001
My other passion – cycling - a photograph
In my younger days as cyclist. I started
racing in 1966 and represented Northern
Transvaal on the road and track. My best
achievement was to win a gold medal at
the SA Championships in the 4 000 metre
team pursuit. I kept on racing until 2007.
50
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froM thE gS’S officEV
let’S Set ouR GoALS FoR 2017: More benefits for SAIV
members – Adding Value to your membership.
During 2016 there were a few opportunities where our
members were able to save money. Assisting members by
providing them with needed ‘educational’ tools will be part of
Adding Value in 2017.
And 2017 got off to a great start! The International Valuation
Standards 2017 (IVS2017) has been made available to all our
members. Our sincere appreciation goes to the International
Valuation Standards Council (IVSC) for their efforts in
producing IVS2017. It is now up to each SAIV member, as
a professional, to ensure that your valuation reports comply
with the IVS2017. Read more on the IVS2017 below.
The Valuers Manual is the next Adding Value offering from the
SAIV.
The Valuers Manual is a comprehensive reference guide
needed for property valuation. It covers many aspects of
property valuation and is continually updated with new
legislation. The Valuers Manual, another ‘must have’ in your
office, will be offered to our members at a 25% discount.
The key to success in the valuation profession is conducting
valuations of high quality and delivering reports that speak to
professionalism - a point I believe that cannot be argued.
I am sure that as the year progresses we will be able to assist
you to succeed in the valuation profession.
Melanie N Vallun
General Secretary
S A I V a t h o m e
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ivSc lauNchES NEW gloBal StaNdardS for valuatioN ProfESSioN
V
london, 18 january 2017: the International Valuation Standards
council (IVSc), the global standard setter for valuation practice
and the valuation profession, has launched IVS 2017, marking
an important milestone towards harmonising valuation practice
across the world.
IVS 2017 will serve as the key guidance for valuation
professionals globally and will underpin consistency,
transparency and confidence in valuations which are key to
investment decisions as well as financial reporting.
The launch is the latest step in IVSC’s mission to raise
standards of international valuation practice as a core part
of the financial system, for the benefit of capital markets and
the public interest.
The Standards have been created following an extensive
consultation process from April to October 2016. More
than 100 official comment letters on the initial drafts of IVS
2017 were received from a range of stakeholders, including
valuation profession organisations, individual professionals
and academics.
IVS 2017 comprises five General Standards and six Asset
Standards. The General Standards set requirements for the
conduct of all valuation assignments including establishing
the terms of a valuation engagement, bases of value, valuation
approaches and methods, and reporting.
The Asset Standards include requirements related to specific
types of assets, including background information on the
characteristics of each asset type that influence value and
additional asset-specific requirements regarding common
valuation approaches and methods used.
The latest version of the Standards bring greater depth to
IVS, as was requested by members, including the major
accountancy firms and other stakeholders.
Sir David Tweedie, Chairman of IVSC, said: “IVS 2017
represents the latest in IVSC’s continuing commitment to
developing high-quality valuation standards.
“The valuation of assets, both tangible and intangible, plays
an essential role in financial and real estate markets – and
therefore the global economy. IVS 2017 will be instrumental in
improving valuation practice and will bring greater efficiency
to capital markets.”
Nick Talbot, CEO of IVSC said: “We are very thankful to our
many member organisations and other stakeholders for their
input to improve the Standards. This input has ensured IVS
2017 is fit for purpose and that its adoption will boost the
transparency of, and confidence in, valuations for the benefit
of business and the public.
“IVS 2017 has been designed with the specific aim of allowing
continued, targeted improvements to the standards from the
new expanded Standards Board we are putting in place.”
S A I V a t h o m e
Members of the SAIV can obtain their copy of the
IVS2017 from www.saiv.org.za
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VALUERFEBRUARY 2017, NO 127
in MeMoriaM
johan (jc) Fourie of the Northern branch passed away on 29 November 2016.
our sincere condolences go to johan’s family and friends.
S A I V a t h o m e
SAIV membership statistics as at 1 February 2017
Members
Fellows
Life members
Retired members
Non-practising members
Non-resident affiliate members
Non-resident members
Active members total
Honorary members
Student members
Other members
All members total
46
3
1
50
10
10
60
42
3
1
46
10
10
56
56
1
2
1
60
24
24
84
59
1
3
1
64
25
25
89
131
6
7
1
145
1
38
39
184
122
6
6
2
136
1
33
34
170
430
20
3
13
4
470
6
122
128
586
426
20
2
11
3
462
6
112
118
580
181
14
3
8
2
208
2
41
43
244
170
13
3
10
2
198
2
41
43
241
6
9
15
0
15
21
7
28
0
28
844
44
6
31
8
6
9
948
9
235
244
1192
819
43
5
31
8
21
7
934
9
221
230
1164
1 FEBRUARY 2016 VS 1 FEBRUARY 2017 Cen
tral
1/2
/201
6
Cen
tral
1/2
/201
7
Eas
tern
Cap
e 1/
2/20
16
Eas
tern
Cap
e 1/
2/20
17
Kw
aZul
u-N
atal
1/2
/201
6
Kw
aZul
u-N
atal
1/2
/201
7
Nor
th 1
/2/2
016
Nor
th 1
/2/2
017
Sou
th 1
/2/2
016
Sou
th 1
/2/2
017
Gen
eral
Sec
reta
ry 1
/2/2
016
Gen
eral
Sec
reta
ry 1
/2/2
017
Tota
l per
cat
egor
y 1/
2/20
16
Tota
l per
cat
egor
y 1/
2/20
17
HAVE A QUERY? CONTACT USMembership: [email protected]: [email protected] queries: [email protected] | 086 100 SAIV
53
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VALUERFEBRUARY 2017, NO 127
S A I V a t h o m e
PLEASE NOTE
• SEMINAR/WORKSHOP/LUNCHEON/TALKSHOP DETAILS (venues, topics, CET hours and costs)
WILL ONLY BE AVAILABLE CLOSER TO THE DATE OF THE ACTIVITY
• ACTIVITIES ARE SUBJECT TO CHANGE
PLEASE CONTACT THE RELEVANT BRANCH SECRETARY FOR FURTHER INFORMATION
2017 At A GLANce
MONTH DATE BRANCH ACTIVITY
March 7 CENTRAL AGM and Workshop
March 22 KZN AGM and Workshop
March 24 SOUTH AGM and Two-hour Breakfast Workshop
March 29 NORTH Branch Meeting, AGM and Workshop
March 31 EASTERN CAPE AGM and One-day Seminar
April 20 KZN Committee Meeting
April 20 NORTH Branch Meeting
April 25 SOUTH Branch Meeting
May 18 NORTH Branch Meeting
May 25 EASTERN CAPE Workshop Luncheon
May 31 SOUTH Branch Meeting
May 17 to 19 KZN NATEX MEETING, NATIONAL AGM & OTHER EVENTS
ARTICLES AND LETTERS ARE WELCOMEContact The Editor:[email protected], [email protected] on 011 442 5644
54
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VALUERFEBRUARY 2017, NO 127
P R O F E S S I O N A L D I R E C T O R YEA
STER
N CA
PE
GAUT
ENGBOYD VALUATIONS (PTY) LTD
Commercial, Industrial and Retail Property Valuers and Consultants11 Providence Place, Old Seaview Road, Port Elizabeth 6070PO Box 27981, Greenacres 6057Tel: 086 111 1789 • Fax: 041 368 9815Cell: 082 655 9299 (G Boyd) • Email: [email protected] J Boyd: B Com (Real Est), MSc (Property Studies) NDPV, MRICS, MIVSA, Professional Valuer
BRUCE MCWILLIAMS INDUSTRIES (PTY) LTD
Property Managers – Brokers – Developers - ValuersBMI House, 85 Cape Road, Mill Park, Port ElizabethTel: 041 396 1400 • Cell: 083 227 3496E‑mail: [email protected] • Web: www.bmi.za.netMark Bakker: Managing Director, Professional Valuer, MIVSA
MASSEL PROPERTYSERVICES (PTY) LTD
Specialists in mass valuation, valuation monitoring, rates policies, expropriations, market valuations, property consultationBuilding No 4, Bartlett Lake Office Park, Bartlett, Boksburg 1459PO Box 5117, Boksburg North 1461Tel: 011 894 2311 • 011 918 4895/6/7 • Fax: 086 686 1952Email: [email protected] F Collatz: Professional Valuer, FIVSA, BTech Real Estate, BComm (Unisa), HDip Mun and Admin Law (RAU), IAAO • D W Lombard: Professional Valuer, MIVSA, NDip Prop Val, IAAO
RATES WATCH
The municipal valuation and property rates watch dogUnit 1, Bartlett Lake Office Park, Dr Vosloo and Trichardt Road, BoksburgS 26 10’14.9” E 28 15’14.3”PO Box 15550, Impala Park 1472Tel: +27 11 918 0544/0237 • Fax: +27 086 504 7720Email: [email protected] Massel: CEO • Kokkie Herman: Director, Rates •Ben Espach: Director, Valuations
GRIFFITHS VALUATIONS
Rynlal Building, Suite 41, 320 The Hillside, Lynnwood, PretoriaPO Box 95099, Waterkloof 0145Tel: +27 12 346 4083 / +27 12 346 3972Fax: +27 12 346 6584Derrick Griffiths: Professional Valuer, B.Proc. (NDPV, FIVSA)Cell: +27 83 297 2757 • Email: [email protected]
Attorneys, Notaries, Conveyancers,Valuers, Labour Law Practitioners,Estate and Tax Planning Practitioners29A President Boshoff Street, BethlehemPO Box 693, Bethlehem 9700Tel: 058 303 5241/4 • Fax: 058 303 6926 • Email: [email protected] Breytenbach: MIVSA, Professional Valuer • Danie du Plooy: Professional Associated Valuer
BREYTENBACH MAVUSO INC
FREE
STA
TE /
NOR
THER
N CA
PE
EDRIC TRUST (PTY) LTD
Property, Letting, Sales, Sectional Title Administration, Valuations, Insurance Agents22 Elizabeth Street, Bloemfontein 9301PO Box 300, Bloemfontein 9300Tel: 051 448 9431 • Fax: 051 430 8815 • Email: [email protected] V Fullaway: FIVSA, Professional Associated Valuer, AppraiserEmail: [email protected] • Schalk van der Vyver: Candidate Valuer, Student Member • Neil Fullaway: Candidate Valuer, Student Member
VALQUEST
Property Valuers550 Chopin Street, Constantia Park, PretoriaPO Box 32836, Glenstantia 0010Tel: 012 998 6111 • Fax: 012 998 6722 • Email: [email protected] Vallun: FIVSA, Professional Valuer, NDPV • Marius Groenewald: MIVSA, Professional Associated Valuer, BSc Construction Management, MSc Real Estate
VALUDATA
Valuers, Assessors & Property Consultants3 Petrus Street/Straat 3, Heuwelsig,Kimberley 8301 or 1 Angel Street, NewPark, Kimberley, 8301PO Box 80, Kimberley 8300Tel: 053 831 3382 • Fax: 086 657 0342 • Cell: 082 553 1172 (Pierre de Klerk, Sole member of Panprop CC)Email: [email protected] and cc to [email protected] cc t/a Valudata Reg. no. 1986 0158 0123
55
THE SOUTH AFRICAN
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DOUGLAS PROPERTY VALUATIONS CC
Tel: 021 794 2702/20 • Fax: 021 794 2707 • Email: [email protected] members are:Colin Douglas: Professional Valuer, Appraiser, BComm, Nat Dip Prop Val, Nat Dip Building Construction • Cherry Douglas: Professional Valuer, Appraiser, BA (UCT), HDE (UCT), Nat Dip Prop Val (UNISA)Other Valuers:Paul Bowen-Davies: Professional Associated Valuer, Nat Dip Prop Val (UNISA) • Geoff Douglas: Professional Associated Valuer, BA Hons (Rhodes) BEd (UCT), Nat Dip Prop Val (UNISA) • Sydney Holden: Professional Associated Valuer, BA BComm Hons, Real Estate, MTRP (SA)
JERRY MARGOLIUS & ASSOCIATES
Property Valuers, Appraisers, Sectional Title Consultants, Arbitrator, Mediator and Umpire PO Box 400, Green Point, Cape Town 8051Tel: 021 434 4702 • 0861 825 848 (VALUIT) • Cell: 082 425 8793Fax Mail: 0866 840 240 • Email: [email protected] Jerry Margolius: M. Phil (UCT), NDip Prop Val, HDip. Arbitration, FIVSA (Life), Aarb, MRICS, Professional Valuer, Chartered Surveyor (Valuations)
MILLS FITCHET MAGNUS PENNY
Countrywide Valuations of Property for all purposes. Specialising also in Agricultural/Forestry Property. Offices in Johannesburg and PietermaritzburgSuite 303, Newspaper House, 122 St George’s Mall, Cape TownPO Box 4442, Cape Town 8000Tel: 021 424 5284/1540/1287/1782 • Fax: 021 424 1146Email: [email protected] A Gibbons: AEI (Zim), FIVSA, Professional Valuer • M R B Gibbons: NDPV, CIEA MIVSA, Professional Valuer • Kyle Keefer: Candidate Valuer
STEER PROPERTY SERVICESt/a STEER & CO
Valuers of Commercial, Industrial and Residential property. Also valuers of Plant and MachineryPO Box 1879, Cape Town 8000Tel: 021 426 1026 • Fax: 021 426 1183Email: [email protected] • [email protected] M Hofmeyr: MIVSA, Professional Valuer, Appraiser • John P van der Spuy: MIVSA, NDPV, Professional Valuer, Appraiser • Nina Vass: BSc (Hon) Property Studies (UCT), Professional Associated Valuer, Appraiser
Property economists, valuersand town planners. Valuationsnationwide of all property types11 de Villiers Street, Bellville 7530PO Box 1566, Bellville 7535Tel: 021 946 2480 • Fax: 021 946 1238 • Email: [email protected] Rode: BA, MBA, Professional Valuer, FIVSA, CEO: Rode & Associates (Pty) Ltd • Karen Scott: BCom Hons, Professional Valuer, MIVSA, MRICS • Monique Vernooy: BTech, NDREE, Professional Valuer, MIVSA • Madeniah Jappie: BSc Hons, Professional Associated Valuer • Tobias Retief: B.A, NDREE, Professional Valuer, MIVSA • Janelle van Harte: Candidate Valuer • Marlene Tighy:BSc Hons, MBL, Pr Sci Nat, Professional Valuer, MRICS
RODE & ASSOCIATES (PTY) LTD
WES
TERN
CAP
E
APPRAISAL CORPORATION
Professional Valuers and Appraisers withoffices in Cape Town and Southern Cape. Member of SAPOA35 Kloof Street, Cape Town 8001PO Box 4157, Cape Town 8000 • www.appraisal.co.zaTel: 021 423 6400 • Fax: 021 423 6410 • Email: [email protected] F du Toit: NDPV, NDPD&M, FIVSA, Professional Valuer, Appraiser • Ms J L Falck: BCom (Hon), FIVSA, MRICS, Professional Valuer, Appraiser • S E Jacobs: NDRE, Professional Associated Valuer • W R Green: NDRE, Candidate Valuer • R Jackson: BSc (Hon) Property Studies, Candidate Valuer • K C Davids: Candidate Valuer
ADVAL VALUATION CENTRE
Property ValuationsUnit 8, Mountain View Office Park, 28 Bella Rosa Street, Rosendal, Bellville 7530PO Box 5339, Tygervalley 7536Tel: 021 914 9062 • Fax: 021 914 2184www.adval.co.zaJ F (Johan) Cilliers: BTechPV, NDPV, FIVSA, MRICS, Professional Valuer, Appraiser • A Cilliers: BTechPV, NDPV, MIVSA, ProfessionalValuer, Appraiser
WES
TERN
CAP
EGoIndustry DoveBid SA
Valuation, appraisal & disposal specialists of industrial & corporate plant, machinery, equipment & propertyA liquidity services marketplaceNational footprint, global reach10 Evelyn Road, Retreat, 7945, Cape TownTel: 021 702 3206 • Fax: 021 702 3207www.Go-Dove.com/southafricaJohn Cowing (Managing Director), [email protected] John Taylor (Associate Director), [email protected] Kim Faclier (Property Managing Director), [email protected] Donovan Dalton (Head of Valuations), [email protected]
P R O F E S S I O N A L D I R E C T O R Y C O N T I N U E D
THE SOUTH AFRICAN
VALUERFEBRUARY 2017, NO 12756
MPU
MAL
ANGATETRAGON VALUERS (PTY) LTD
Professional ValuersPO Box 2654, Evander 2280Tel: 017 632 1552 • Fax: 086 514 5981Email: [email protected] • Witbank • SecundaJ J Steyn: Professional Valuer, NDPV, MIVSA • J Reyneke: Professional Valuer, NDPV, MIVSA • O J Potgieter: Professional Valuer, NDPV, MIVSA • WJ Nel: Candidate Valuer
MILLS FITCHET
Countrywide valuations of property for all purposes. Offices in Gauteng, Cape and KwaZulu-Natal
“We value our land” • “Si linganisa intengo yomhlaba”Tel: 033 330 6990 • 033 234 4321 • Fax: 033 330 3158 • 033 234 4751Cell: 082 895 8880 • 082 781 3875Email: [email protected] • [email protected] R Stephenson: BAgric Mgt, AFM (UK), LLB (Natal), FIVSA • T R L Bate: MSc, BSc, Land Econ (UK), MRICS, MIVSA • S B G de Klerk: MSc, BSc Bldg, Pr.CPM, MCIOB, NDPV, MIVSA • S Aldridge: NDPV, CEA, MIVSA
VALUERS AFRIKA (PTY) LTD
Valuers, Appraisers, Property Consultantsc/o de Clerq and Wes Street, Ermelo 2351PO Box 2472, Ermelo 2350Tel: 017 811 2212 • Fax: 086 676 4502 • Email: [email protected] Winckler: Professional Valuer, Appraiser (FIVSA) • Ian Müller: Professional Valuer • Sydney Lukhele: Professional Associated Valuer • Christiaan Winckler: Candidate Valuer, Professional QS
APPRAISAL CORPORATION
Professional Valuers and Appraisers withoffices in Cape Town and George. Member of SAPOAUnit 3 Beetlewood, 25 Wellington Street, George 6529Tel: 044 874 1902 • Fax: 044 874 2831 • Email: [email protected] • www.appraisal.co.zaM J Steinmann: NDPV, NDCS, MIVSA, Professional Valuer, Appraiser • J F du Toit: NDPV, NDPD&M, FIVSA, Professional Valuer, Appraiser
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