I am writing to you in a more relaxed social and economic climate in the country, exactly a year after the stranglehold of COVID lockdowns. The business challenges of the COVID era still prevail in today’s business, but the resilient spirit of South Africans keeps us all hopeful. StatsSA has reported a gradual increase of business failures over the past few years despite interventions to soften the covid blow. However, I’m encouraged by the fact that as much as most members were affected by the COVID headwinds, the extent of valuation business closed has not been as severe as national statistics. This observation should affirm all valuers that our services are in demand both in the buoyant and downturn economy. You would agree that some of you have done a fair share of valuations for distressed sales/mortgages and/or opportunistic buying in one form or another as proof of the resilience of valuation services.
Consistent with the above, the ability of valuers to adapt in a fast-changing environment and make informed decisions has been drawn into the ESG legislative changes in the built environment. It is for this reason that the SAIV has invested a lot of effort to bringing the profession closer to ESG experts as a means to enhance the necessary valuation toolkit. It remains a valuer’s innate responsibility to pronounce on any aspects that directly affect market value.
The role of the public sector remains central to the valuation exercise. Recent updates of municipal valuation rolls impact the biggest cost line item on property outgoings. Aggravating the overall increase in rates on the owner-side of property valuations, is the ever-increasing utility costs, including water and electricity; hence the ability of the property to independently generate its own energy and water-harnessing systems has become an important value-determinant. All these challenges have amplified the role of a municipal valuer as a key decision-maker who also carries the burden of addressing a huge number of objections.
It follows that macroeconomic growth clearly lags behind the rate of increase in costs. Likewise, rental growth lags operating costs (a lot of you would correctly argue that growth in valuer salaries and fees lag CPIX). These dynamics continuously put pressure on property values. As a measure of risk and return, capitalization rates have also been under immense pressure, as reported by various research publications. External factors like rising interest rates, inflation, and an unstable political environment do very little to inspire confidence and improve sentiment in the property sector. Despite all these recessionary pressures, overall activity remains positive in the property market, albeit some sub-sectors experiencing corrections and others showing modest growth.
The reality that some of our most experienced and best-skilled valuers are finding opportunities outside of the country is a positive indictment but also a cause for concern as this erodes the profession locally. We do, however, continue to stay in touch with our members abroad and the SAIV plans to forge knowledge-sharing opportunities which you can look out for in the near future.
I would like to take this opportunity to congratulate the new Branch Executives and thank them for their commitment. I would like to extend a special welcome to those that are new to the branch leadership structures. The branches have assembled very strong teams that will take the organization to the next level. The branches understand the key deliverables and flagship projects that the SAIV needs to execute.
The most important of these projects being the Mentorship Programme. It’s fitting to recognize the hard work that the branch executives have ploughed into the Mentorship Programme over the past year. I would like to single out Dave Furness, who has become a source of inspiration and beacon of hope to many candidate valuers. Just like Dave, I would also like to encourage more retired or semi-retired valuers to follow suit and help support this important project that is key to the sustainability of the profession in the country.
To this end, I would also like to congratulate the 2022/2023 cohort of valuers that have passed their board exams, especially those that were members of the mentorship programme. The SAIV dedicated its resources to offer board exam preparation sessions to everyone including non-members. For this, I would like to recognize Dianne de Wet and Werner Sarvari for their valuable presentations to the board candidates.
Lastly, the month of May will culminate into the National Executive Meeting and AGM which marks my two-year tenure as your President. I have indicated my intention not to stand for re-election and hand over to the capable pipeline of leadership in our fold. Therefore, I relinquish this responsibility gracefully and am filled with great hope that the future of a South African valuer remains positive. I am indebted to each one of you for the opportunity and support that you have given me over the past two years. I am committed to staying within the leadership structure and providing full support and a smooth transition to the next President. I will also participate in some of the strategic projects that I have been involved in to see them through.
I look forward to meeting you at the next AGM.
Till next time.