Property Investment in South Africa

The global financial turmoil and general bewildered political status in South Africa, have the effect on investors to slow down property investments and rather place their funds within the financial arena. It is a well-known fact that inflation and the devaluation of money units results into negative growth over periods of 5 years and longer. The secrets to property investments are to buy at the bottom-end of the market value and ensure that takers for these properties are on demand and in the increase, thus the future of the investment is financially determinable. Buy-to-Rent has proven to be a sustainable investment, with first-time tenants as takers. I am persuaded that a qualified property valuer, can operate objectively, as he has no vested interest in the transaction and neither does the market value of the property have any correlation to the valuation fee. Investors should place less weight on the lower/bargain valuation fees, when in need of a property professional, this can result in lesser quality work, which can turn-out to be costly, when making poor investment decisions. Quality market research takes time as and most of the time does require physical footwork. The same regardless attitude towards proper insurance advice, is found be an acceptable norm… why pay for an insurance assessor…it will never happen to me! For most people their immovable properties are a rather large proportion of the investment portfolio, for which we all have worked so hard to accumulate, so then WHY neglect the risk management component to your wealth? Added services:

Exclusive custom research reports on all types of property and the property markets;

Handle entire objection process on General Valuation Roll for Cape Town;

Consultation on all property matters;

Agricultural Business

With the valuation of agricultural farm land, the value attributes on the farm is identified and then categorised and apportioned as to determine the monetary contribution towards the entire entity in order to derive at the market value. Read more

Plant and Machinery Valuations

More notes on Plant and Machinery Valuations;

Machinery are often leased for the following reasons:

A lease is “the right to use” an asset rented for a period for predetermined production etc.

Specialised maintenance is more economical as per lease contract!

A lease offers a more predictable lifespan of a machine and further the renewal options and at the end of lease the options are to a greater extent.  Read more

Redevelopment of Property

Redevelopment of Property:  One property or an entire suburb!

  • Timing
  • The rate of development

redevelopement-graph

Urban Land Economics 2004; Jack Harvey and Ernie Jowsey

As can be seen from the above graph is that with the acquisition, the use of the building for income generation takes priority. The land presents a secondary value apportionment. Let us assume that the economical lifespan of the building is 25 years, which is presented by the figure Z.

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In search of the correct applied valuation methodology

In my valuation career, now more than 30 years, there has been an increasing shift from linear valuation methodologies to more judgement-based approaches. Although some of the fundamentals still hold true, it is possible to modify existing linear methods to account for non-linearity by incorporating professional judgement of the valuer. Read more

Movable and Immovable Assets

This article provides a brief account of some definitions and terminology used in the property industry. The aim is to highlight the distinction between the terms movable and immovable assets (also referred to as property).

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Factors Influencing Investment in Immovable Property

As you probably know, modern day real estate economies are cyclical and goes through cycles of suppressed market conditions, where property prices are relatively low, to expansionary conditions of unsustainable high levels. Holding an investment through an economic cycle and buying or selling at the appropriate time is the aim of most investors. However, apart from the general real estate economic cycles, there is also the property investment cycle or building life cycle. The two are not exactly the same but they are very close.

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The intricacies of valuing a retirement village

The writer is fortunate to have access to accumulated information, having been in the industry for more than 30 years, and working with various stakeholders such as bankers, buyers, sellers, investors, brokers, researchers and many others. Given this accessibility to relevant and practical information, sensitised for confidentiality, some general guidelines and notes can be shared as to the valuation approach and methodology to be used in valuing the frail care, food and catering, and assisted living units within a retirement village. Read more

What determines the value of land

“How does the pattern of land use determine the types of property to be found in an area and their values”?

Land in a sense has no value of itself, but for the right to which the land can be put. Improving the use rights in land will generally lead to an increase in value. Land can be zoned for residential-, commercial-, industrial, agricultural and several other uses. Normally, the extent or magnitude to which a property will be developed is dictated by the demand for such a utility. This is also known as the highest and best use of a particular approved right in the land. Read more

Factors to consider when choosing a valuation method

 

Introduction

Valuation of real estate refers to the estimation of the most likely selling price (market price) or the worth of the property to an individual or group of individuals i.e. investment value (Baum and Crosby, 2008). There are many valuation methods. Methods such as the sales comparison, single capitalisation as well as the term and reversion are considered traditional approaches while others such as the discounted cash flow (DCF) and arbitrage valuation models are considered contemporary valuation approaches. Traditional valuation approaches are backward-looking, based upon the principle that a property’s value depends upon its economic and physical characteristics. On the other hand, Read more