SA Valuer March 2021

We have had a wonderful year in the launching of our webinars, embracing the new world of technology! Our partnership with Event Options has ensured a smooth and professional transition to running webinars.

We have converted to a cost-effective new platform to run the organisation and this was sourced and managed by Lerato, who did a fantastic job in getting it up and running on her own at the end of last year.

We have just gone through our Branch AGMs and webinar on the REMO platform which is another first for us and it is exciting to see the development in technology which has allowed us to catch up and network with our colleagues and friends virtually.

Our theme for this year will be “Back to Basics” and we will be running webinars along this line during the course of the year – please keep a lookout for these exciting developments. As always we love hearing from you and the presentations that you would like to see.

We will be kicking off with static webinars this year, and will also be launching our “You Tube” channel so that we can reach as many of you as possible and keep you up to date on the latest trends affecting your business, you personally and the profession, whilst also educating the general public on the role and importance of the Valuer! We would encourage you to put forward suggestions on our static webinars as well.

I continue to hold you all in my thoughts during these COVID times and send condolences to families that have been tragically affected by COVID.

“Keep your thoughts positive because your thoughts become your words. Keep your words positive because your words become your behaviour. Keep your behaviour positive because your behaviour becomes your habits. Keep your habits positive because your habits become your values. Keep your values positive because your values become your destiny.” Mahatma Gandhi.

Keep safe and well until we talk again.

Tracey Myers
SAIV President

2020 was not only an unprecedented year but a year full of difficulties and uncertainty for many. I hope that you and your loved ones are safe and healthy and are finding ways not only to deal with the emotional, physical and mental strain brought on by the high levels of anxiety that these past months have brought, but to also appreciate the simpler joys that life has to offer.

As for the Institute, 2020 has proven that we are resilient people and that some circumstances will force even the hard at heart to adapt and keep up!

As difficult as it was, we’re pleased to say that we had a great year.

We hosted a series of webinars which were well attended and had overall good reviews. It’s been most encouraging to see how well they’ve been received. We were able to provide a total of 22 possible CET points through the ten webinars hosted in 2020! Thank you to all who attended and took on so well to this new medium by playing it forward and embracing technology. I would also like to thank you for taking the time to complete the post-webinar surveys; these assist us greatly with the planning and improvement of our future webinars and give us a guide when selecting webinar topics to bring in the future.

We will continue to work towards keeping the costs of webinars as low as possible. There are however costs involved with each webinar production such as fees payable for the Zoom platform, fees for the support and management team, marketing material and so forth. We heard your requests from the post-webinar surveys, and we will be bringing you a number of live and static webinars in 2021, including a “Back to Basics” series where we will be focusing on the practical application of valuation methods. The details will be made available soon!

The end of 2020 saw us moving away from our old platform, YM and introducing Glue Up. Thank you all very much for your patience while we were busy with the system migration and experiencing some downtime. If you have not already activated your profile on Glue Up, you are highly encouraged to do so as soon as possible. Please remember that to access the platform, you must use the email address that is registered with us. If you have any issues, please get in touch with us and we will gladly assist. We hope that you will enjoy the modernised platform and also find it relatively easy to navigate. We look forward to bringing you more features on this platform.

The new platform will also make it easier for us to manage the Mentorship Programme, which has grown significantly since the initial intake. This platform will ensure the ease of accessing information, submitting assignments and moderating the Mentees’ assignments. We have been hard at work having engagements with other external parties and creating collaborations on the Mentorship Programme to ensure the sustainability of the programme and to assist Mentees in obtaining employment opportunities, which will ensure their retention within the valuation profession. It is truly heart-warming to already see the impact of the Mentorship Programme. There have been some incredible success stories of Mentees obtaining work opportunities through the networks built through the programme and a few Mentees who were also able to sit for the board exam in 2020, which we are so proud of.

I’m also pleased to announce that for the 2021 year, Natex has approved 8 bursaries for students studying towards a valuation-related qualification. This is something that we can be proud of as the Institute because not only are we making a difference in people’s lives, but we are also actively contributing to growth of the valuation profession, which is recognised as a scarce skill. Our bursaries close each year on 31 October, application forms are available from our website.

Some exciting news! We’ve had an addition to the GM Office team after having a vacancy for over 18 months. Lebone Malope joined us at the beginning of February in the position of Office Manager having come from a retail property background. Anne-Marie and I are pleased to have an additional person in our team and she’s already making such a big impact. We wish her well in her role.

In closing, amidst all of the chaos and uncertainty, we’ve had a relatively good year as the Institute and we have you our valued members to thank for that. Thank you for your continued support!
May goodness and grace surround you always.

‘til next time,

Lerato

Perspectives Paper: Challenges to Market Value
The IVSC’s Tangible Assets Board has received feedback that in some markets there is an increasing difference between Price and Value. Whilst quantifying this difference in valuation terms has commonly been acknowledged as difficult in undeveloped markets where there may be few (if any) comparables and non-transparent information, it has also become increasingly challenging in developed markets despite the abundance of information that exists in these ecosystems.

The current coronavirus epidemic has created a significant layer of uncertainty which has permeated all markets and led to various challenges, particularly as it relates to the availability of market information in a pandemic world. This isn’t necessarily just confined to the basis of Market Value but it still raises its own specific challenges. How does the valuer quantify Market Value with a lack of market comparable information in the new COVID-19 world? Where market comparable information is available, have the parties ‘acted knowledgeably, prudently and without compulsion’? Does a pandemic environment enable parties to undertake ‘proper marketing’ or do sales that are witnessed in the early stages of such an event represent an environment comprised of overly willing sellers and opportunistic buyers that is more aligned with a liquidation market?

All of this comes at a time when some organisations around the world are considering a transition away from Market Value because of the difficulties such a basis of value creates during volatile markets.
The IVSC’s Tangible Assets Board has published a paper looking at this subject in more detail. You can download their Perspectives Paper – Challenges to Market Value by clicking below:

Technical revisions to IVS set out
Further to the publication of IVS (effective 31 January 2020) the Standards Review Board, together with the Business Valuation Board, Financial Instruments Board and the Tangible Assets Board, have decided to publish targeted revisions to IVS. This is based on feedback received since that publication and valuation standards harmonisation discussions held with the Appraisal Foundation and the Appraisal Institute of Canada during 2020, and consequential amendments in light of expected revisions to Financial Instruments standards.

The IVSC is planning to publish revisions as needed based on market feedback. The consultation process for IVS (effective 31 January 2020) Additional Technical Revisions is now open. Accordingly, the Standards Review Board encourages participation within the three-month consultation period ending 30 April 2021 from all individuals and organisations. The IVSC is committed to a fully open and collaborative consultation process. All comments received as part of the consultation process will consequently be published on the IVSC website.

Further details are provided on the consultation pages of the IVSC website.

Commenting on the address, SAIV president Tracey Myers said they are thrilled to hear about the launch of the Economic Reconstruction and Recovery Plan which focused on a massive rollout of infrastructure throughout the country; a massive increase in local production; an employment stimulus to create jobs and support livelihoods; and the rapid expansion of our energy generation capacity.

“The delay in implementing the proposed infrastructure rollout plan will have a massive effect on the development that needs to be undertaken in the Built Environment. Developers are working on new developments and in order to do that we need to maintain the infrastructure which becomes a developer’s cost. The lack of infrastructure leads to the developer incurring the cost of the upgrading or installation of new roads which leads to the development being overpriced with the financial institutions not being willing to fund, ultimately resulting in the developer not being able to produce,” said Myers.

The SAIV also believes some of the direct knock-ons of delayed infrastructure development include the Gautrain expansion project being stalled and the delay in a new road network which would result in less traffic in business hubs including Sandton. “This results in people spending more time in cars which emanates in lost productivity hours further hampering economic growth,” she said.

In conclusion, Myers stressed that valuers have a big role to play in the economy and urged the government to work with different stakeholders including business to hasten infrastructure growth. “As valuers, we are valuing land during pre-development to see if financial institutions will provide support. Additionally, we are valuing existing structures for re-bonding and insurance purposes, which makes us critical in the infrastructure space. The valuation profession determines the values for the local and national government and this is the basis of the calculation of rates and taxes revenue for municipalities, and ultimately the economy. We are hoping the proposed infrastructure development plan will revive interest in the market, which will ultimately lead to development in the construction industry”.

Social media has assisted us greatly with promoting our events, embarking on a membership drive, reaching out to graduates, marketing the Institute as a credible organisation and many more. We have seen immense growth on the platforms over the years, and the information below showcases our growth in 2020. In 2021 we expect to see an increase in the size of our online communities and impressions as well, which is defined as the number of people who get to see our posts. We are also aiming to increase engagement, which refers to the number of people who interact with our posts. Our Social Media platforms have also been a major contributor in driving traffic to our website.

The above graph, shows the four social media platforms we are currently using as the Institute. We have a presence on Facebook, LinkedIn, Twitter and Instagram with the introduction of a YouTube channel in the pipeline which will be our video sharing platform. Facebook is currently our biggest platform, followed by LinkedIn, Twitter and then Instagram.

The Facebook page is the highest contributor of engagement with a 25% increase in followers witnessed. In 2020 we ran the Student Matters webinar on the platform as a live broadcast that was free of charge and made available to everyone.

Our Twitter account continues to be the perfect platform for live event updates. We have used it to promote speakers who have taken part in our webinars by relaying live information. In 2020, the platform gained a total of 652 followers, which translates to a 67% growth.

Our LinkedIn page has become a valuable tool for engagement with professionals on the platform. The introduction of the Events platform has been a breath of fresh air, giving us the opportunity to register our webinars on the platform as well as invite attendees. In terms of follower growth, our LinkedIn page received the highest number across all platforms with a total of 760 followers translating to a 67% growth. There is a high likelihood that our LinkedIn page will account for most followers across all platforms by the end of 2021.

The SAIV Instagram account is small compared to our other platforms. However, the page  has recorded the highest percentage growth at 72% The page saw an increase of 72 followers in 2021.

If you fall into this group, you may be considering home alterations or extensions to gear up for a future of remote working; but if you live in a sectional title complex, this can be complicated, with an arduous, sometimes expensive, process to be followed, cautions specialist sectional title attorney and BBM Law director Marina Constas. “Surely one of the advantages of home ownership is that you can ‘build-on’ when you need to. In a sectional title scheme, this is not the case,” Constas stresses.

“Now that you need a more permanent workspace at your home, and the dining room table will no longer suffice, you may be thinking of building on a room or two. You may be considering a loft office in a double volume space. You could build a home office into the roof; or enclose the balcony or patio. Perhaps you have contemplated kitting out the garage as a home office and parking your car outdoors. None of this can happen in a sectional title complex without the members of the body corporate first approving the extension by special resolution,” she notes, adding that the Sectional Title Schemes Management Act sets out the process that must be followed before an owner even considers getting plans drawn up and approved by Council.

Constas explains that the first step when considering home extensions in a sectional title scheme is to ask the managing agent to call a special general meeting of the body corporate, to propose the passing of a special resolution giving consent for the owner to extend the boundaries of their section. “The owner must go to this meeting well prepared, with all the supporting documentation needed to justify their proposed extension. This includes architectural drawings of the proposed new section. A land surveyor should be consulted, to give an indication of how much the planned extensions will increase the owner’s section. If this is by 10% or more, the owner would also have to obtain consent from all of the bondholders of all the units in the complex. Before the special general meeting, I would recommend that the owner wanting to extend should conduct a public relations exercise and discuss the extension with all his neighbours. In many cases, other owners object just because they feel they were not consulted,” Constas says.

Enclosing a patio or balcony may seem to offer a simple solution to space problems in the new remote working world. It is not simple in a sectional title development, according to Constas. “Just because you have a balcony or patio, does not automatically mean that you can enclose it, for a variety of reasons. The first of these reasons is a municipal zoning requirement called coverage or Floor Area Ratio (FAR), which determines what percentage of the area of the erf may be covered with habitable building. A balcony is not ‘habitable building’ until it is enclosed.

“To determine if there is sufficient available FAR at the sectional title scheme to enclose a patio or balcony, you would first have to consult a town planner or architect. Then, if the balcony formed part of your section, you would need the permission of the trustees as well as the building department of the local Council. However, the balcony or patio may be shown as common property on the sectional plan. Enclosing it, would therefore mean extending your section, and you would need to go through the same long process required for any other extension.”

A new management rule of the Sectional Titles Schemes Management Act deals with the situation where an owner wants to enclose a registered exclusive use area balcony. “In this instance, the owner would need an ordinary resolution from the body corporate, subject to reasonable conditions prescribing the use or appearance of the structure,” Constas explains.

Sectional title owners considering converting their garage into a home office and rather parking their car outside may also run into problems, she advises. “The Sectional Titles Schemes Management clearly states that an owner may not use a section or exclusive use area for any other purpose than that indicated on the sectional plan. A garage may not just be converted into a living space or a home office. In one recent instance, an owner who wanted to convert her garage into a hair salon ran into problems. Firstly, it was concluded that parking her car outside would impact other owners as there were already limited public parking spaces. Secondly, she was seeking to change the section from its purpose – which was for parking a vehicle.

“Alterations in sectional title are not impossible, but they are not easily undertaken, and owners should arm themselves with the facts before proceeding,” Constas concludes.

“Demystifying Sectional Title” is a best-selling book co-authored by Constas and Karen Bleijs, an adjudicator with CSOS (the Community Schemes Ombud Service) that addresses this and other sectional title issues. Now in its third edition, the book is aimed at educating and informing anyone living, buying or leasing property in a sectional title complex, or anyone who deals with sectional title in any manner. Demystifying Sectional Title is available online at http://demystifyingsectionaltitle.co.za/

ABOUT MARINA CONSTAS AND BBM LAW
Marina Constas is a specialist sectional title attorney and a director at BBM Law, which has branches in Houghton, Bedfordview, Pretoria, Umhlanga Rocks and Cape Town. Marina is the co-author of the best-selling book, “Demystifying Sectional Title”, which is the definitive guide for anyone living, buying or leasing property in a sectional title complex, or anyone who deals with sectional title in any manner.

For more information, please contact:

Marina Constas at BBM Law
Tel: 011 622 3622

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