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VALUER THE SOUTH AFRICAN VALUER February 2017, NO. 127 MPRA SEMINAR 2016 SOUTHERN BRANCH SPRING SEMINAR MUNICIPAL BALANCING ACT

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VALUERTHE SOUTH AFRICAN

VALUERFe

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ary

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MPRA SEMINAR 2016SOUTHERN BRANCH SPRING SEMINAR MUNICIPAL BALANCING ACT

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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

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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

[email protected]

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

1

3

4

14

26

28

34

37

40

42

47

48

54

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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 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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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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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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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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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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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”.

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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.

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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.

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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.

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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.

[email protected]

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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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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:

[email protected]

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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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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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.

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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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THE SOUTH AFRICAN

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

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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

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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

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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

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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

SOUT

HERN

CAP

E

KWAZ

ULU-

NATA

L

SAIV members are encouraged to become

part of the Professional Directory.

Promote your company and support your

profession’s mouthpiece.

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

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Contact us for full details on the use of the SAIV’s logo

and other advertising options: [email protected]

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