Categories: Municipal Valuations, News, Press Releases592 words2.3 min read

26 August 2021: Insurrection, looting, rates rebates and COVID-19


August 30, 2021


Insurrection, looting, rates rebates and COVID-19: SAIV draws attention to how current events impact property valuation

In the ever-evolving social, political, and economic landscape of South Africa, there is always a wider impact of current trends and events which goes far beyond news headlines. This is true across all sectors, especially in the property valuations industry where investment sentiment and the economic position of the population plays a massive role in market trends. To unravel the impact of recent events on the market, the South African Institute of Valuers (SAIV) recently hosted an informative webinar which addressed the recent insurrection, looting, rate rebates and COVID-19 impact.

Facilitated by SAIV president, Malusi Mthuli, the webinar boasted high calibre speakers including Eileen Andrew, Vice President at MSCI Inc; Mandla Hadebe, Real Estate Executive in Real Estate Finance in Wholesale Division at Standard Bank; and Janet Channing, MD of MetGovis.

Presenting on recent trends in the real estate industry, Andrew demonstrated how the pandemic severely impacted net income in 2020 across all property types – especially office parks. Distribution centres are the only property type which has seen growth. “Return on investment has also been low, as valuations have decreased and the rent reversion rate has increased. Property owners have had to adjust rentals due to ongoing economic concerns,” she said. Vacancies have also sharply increased since 2020.

Janet Channing presented on the impact of the July civil unrest in KwaZulu-Natal and the role of property valuers in the relief and rebuilding process. “The advice to valuers and property owners is that we need appropriate quantification of damages. We’re going to have to be cautious and  collaborate with colleagues from the built environment; the quantity surveyors, the architects as well as the engineers, towards being able to take a responsible view as to what the damages actually are as a result of this unrest.” She mentioned that according to the Municipal Property Rates Act, ‘a municipality may grant relief in respect of categories of owners of properties situated within an area affected by a disaster within the meaning of the Disaster Management Act (2002) or any other serious adverse social and economic conditions’. The relief provided is in the form of a reduction in the municipal valuation of the property in relation to a certificate issued for the purpose by the municipal valuer, effective from the date of the disaster.

To provide perspective on the transactional and financial side of the market, Mandla Hadebe presented on industry trends. “We are looking at up to 35% vacancies in the office space market, even in the popular business nodes. There are many companies reassessing their space requirements and I don’t think we can expect office space to go back to business as usual if social distancing is to continue. Building good relationships with tenants has become vital for property owners, who are having to come to the party with massive rent reductions just to keep a tenant,” said Hadebe. He added that there has been a growing frequency of offering lower rent in exchange for longer lease agreements.

The webinar made it clear that the valuations industry is a complex one, requiring well educated professional valuers who can interpret market trends appropriately. “The work of valuers has an impact on every single person in South Africa. Valuation is not a skill easily learned from a book or a class; it takes ongoing education and mentorship from others in industry,” concluded Mthuli. In line with this, the SAIV looks forward to continuing engagements with the industry to promote knowledge sharing.