Investigation into the supply of information and measurement of transparency in the listed property sector

This article investigates the information that is available to shareholders and the public by listed property companies in order to make investment decisions. It also mentions the usefulness of this information for purposes of mass valuation of the portfolio of properties that are owned by these entities, or to extrapolate to other non-portfolio properties. The study makes use of a multiple regression analysis with empirical testing of property loan stock (PLS) companies in South Africa. It was found that only six of the PLS companies publish any useful information with regards to their property portfolio and only one provided sufficient information to be of statistical significance. It was also found that the provided information is lacking specific property and portfolio details and is, therefore, of limited use overall as far as investment decision-making is concerned. The method applied is, however, confirmed to be applicable for mass valuation techniques, but limited by the amount of information available

The impact of affordability on house price dynamics in South Africa

Lately, the residential property market in South Africa has experienced much turbulence. Some perceived growth as a ‘property bubble’, while others considered it a healthy investment opportunity. This article considers the fundamental drive behind residential property demand and analyses the recent property cycle compared to the past. It also considers the effects of residential property demand on the construction industry. The study investigates the variables that drive property demand and uses methods of statistical fit of historical macro-economic variables to apply to a South African context and to explain recent residential property activity. Research found that residential property demand and subsequent market prices are to a large extent influenced by affordability, which is indicated by capitalising rent as part of disposable income with the prime lending rate of banks. Gross domestic product, as the main indicator of growth within the country, is the main driver of disposable income for households, and can subsequently be used to foresee growth and its effect on affordability and residential property values. The article provides insight into the spending behaviour of households, and shows how that behaviour flows over into spending on housing, and the subsequent influence on residential property values

The valuation of commercial grain silos

A grain silo is a unique form of real estate because of its construction, use and income generation. The study is based on vertical concrete silos built for the sole purpose of storing grain. Silos are, in essence, income-producing properties, but because the tenant is the owner of grain and oilseed, the income produced by the silo fluctuates from year to year depending on the size of annual grain harvests. The purpose of this qualitative study is to establish which valuation methodology is best applicable to grain silos and to explore the factors that make grain silos unique in the determination of their value. Sources of information include historical research, unstructured interviews and case studies. The results of this study indicate that grain silos should be valued using the income capitalisation method. Income is calculated based on a long-term trend; expenses are calculated on financial information, and a capitalisation rate is calculated by adding risk to a baseline capitalisation rate. This study provides a guide to valuers and silo owners on how to determine the value of silos. The study focuses on grain silos that store maize and soya beans in the Highveld of Mpumalanga. The principles determined will be the same if other silos in other regions charge for storage and handling in the same way as used in this study

An analysis of the quality of property management principles in the South African public sector – A focus on residential property

The aim of this paper is to investigate the applicability of public-sector residential property management as implemented by the Department of Public Works (DPW) at national level to current leasing management practices. The article investigates current best practice in leasing of residential property and evaluates the applicability of these practices to the DPW, as the landlord, when letting out surplus residential properties. The findings indicate that the DPW residential leasing management is not in line with best practices, together with inadequate capacity in terms of the size of the portfolio and the requisite expertise to adopt and implement effective lease management of surplus state-owned residential property. Thus the DPW property-leasing function should be subjected to a review and re-engineering of the current status quo with guidance from an independent property-management advisory committee or reference group

Investigating the use of Automated Valuation Models (AVMs) in the South African commercial property market

The adoption of Automated Valuation Models (AVMs) in the field of property valuation is a trend, considered controversial and not readily accepted by the valuation profession. The aim of the article is to report on a study conducted in an attempt to determine whether the commercial property sector in South Africa is ready to accept and adopt or reject AVMs and to investigate the possibility of AVMs replacing professional valuation services for commercial property valuations. Limited research was available both nationally and internationally on commercial property AVMs. It was found that AVMs utilised for the valuation of commercial property are still in the development phase and cannot be considered feasible as yet. The major concerning factor is that commercial property markets are heterogeneous. AVMs offer various advantages over traditional methods, but there are also some disadvantages, which were identified in the study. Structured interviews were conducted to determine the opinions and sentiments of commercial property professionals towards commercial property AVMs. As no AVM system exists for commercial property in South Africa, no factual opinion or experience was obtained. The general attitudes towards AVMS were negative and a small percentage of respondents indicated that there may be future potential. AVMs were also regarded as a threat to the valuation profession. It was established that there is scope for commercial property AVMS, however, on a limited basis, and the results could be improved by combining these with traditional valuation techniques. Commercial property AVMs will never replace traditional valuations and can be implemented as a useful tool for verification and auditing of values

An analysis of the use of mass appraisal methods for agricultural properties

There are numerous factors that influence the price of a farm and some of these factors are not monetary related. This makes the task of the valuer complex and increases the possibility of large differences in the estimated market value determined and the actual selling price. This article reports the results of a study that analysed the unique and distinctive attributes of farms, in order to determine whether it is possible to develop a linear multiple regression model for the valuation of farms (which satisfies accuracy requirements) with reasonably available data. The improvement of accuracy levels of Multiple Regression Analysis (MRA) models as well as the limitations of using these MRA models during farm evaluations was also studied. By following a stepwise regression approach, 60 farms, primarily located in the eco-zone “mixed bushveld” western area of the Limpopo province, were analysed using ten independent variables. Three models have been developed. The results showed that a fairly accurate regression model could be developed. However, a model that achieves a high level of accuracy could not be developed, due to multifaceted reasons, including non-farm factors and the size of the geographical areas. Accurate MRA valuation estimates will be to the advantage of individual farm owners regarding their municipal tax assessments. It will lead to a wider use of MRAs for the valuation of farms, but great circumspect should be taken when using MRA models in farm valuations. This is due to the possibility that the MRA models do not satisfy minimum accuracy requirements. It is difficult, but possible, to develop a fairly accurate MRA model for the valuation of farms. Therefore, if currently used MRA models are not fairly accurate for municipal valuation purposes, it should be possible to improve the accuracy. Further research is recommended in the use of other regression techniques such as non-linear, geographic weighted regression and quantile regression. These other techniques would, however, require a larger data sample, in order to provide meaningful results

Characteristics of the safety climate in teams with world-class safety performance on construction projects in South Africa

Accidents and incidents in the construction environment are not reduced or eliminated effectively, despite numerous efforts made to improve health and safety in the industry. An extensive field of research has been conducted on how teams in the construction environment interact to deliver a project successfully in terms of cost, quality and time. Previous research exists on how team dynamics interface with safety, but is found to be of different focus or markets than this study. This study aims to determine the characteristics of the safety climate that exists in construction teams in South Africa in terms of world-class safety performance, when compared to teams with poor safety performance. An adaptation of the modified safety pyramid (Zohar, 2010) provides a useful conceptual model to investigate the link between safety performance and safety climate related to construction teams. By combining observations from literature and predominantly adapting the Safety Climate Questionnaire (SCQ), a number of directly measurable factors are identified that can be correlated with safety performance and utilised in this investigation to identify the unique characteristics of safety climate in construction teams with world-class safety performance. The characteristics of the safety climate in construction teams were divided into eight groups, namely work pressure, incident investigation, adequacy of procedures, communication and training, relationships, personal protective equipment, spares, and safety. The framework developed in previous studies is used for assessing the responses of safety users to that of safety performance observations. It is found that relationships within an organisation are a major contributory factor. in safety performance, but also the way in which the safety climate is enforced in an inclusive management style through proper procedure, training and communication. This also supports the results of Cohen (1977).&nbsp

Investigation into the supply of information and measurement of transparency in the listed property sector

This article investigates the information that is available to shareholders and the public by listed property companies in order to make investment decisions. It also mentions the usefulness of this information for purposes of mass valuation of the portfolio of properties that are owned by these entities, or to extrapolate to other non-portfolio properties. The study makes use of a multiple regression analysis with empirical testing of property loan stock (PLS) companies in South Africa. It was found that only six of the PLS companies publish any useful information with regards to their property portfolio and only one provided sufficient information to be of statistical significance. It was also found that the provided information is lacking specific property and portfolio details and is, therefore, of limited use overall as far as investment decision-making is concerned. The method applied is, however, confirmed to be applicable for mass valuation techniques, but limited by the amount of information available.Die artikel ondersoek die inligting wat aan aandeelhouers en die publiek beskikbaar gestel word deur genoteerde eiendomsfondse om sodoende beleggingsbesluite te neem. Die bruikbaarheid van hierdie inligting vir doeleindes van massawaardasietegnieke van die portfolio of nie-portfolio eiendomme word ook gemeld as ‘n sekondere aanwending. Veelvoudige regressie analise word gebruik met empiriese toetse van die eiendomsleningseffekte maatskappye in Suid-Afrika. Die ondersoek het bevind dat slegs ses van die maatskappye enige bruikbare inligting publiseer ten opsigte van hul eiendomsportefeulje en slegs een genoegsame inligting publiseer om statisties beduidend te wees. Dit was ook bevind dat die inligting tekortkom ten opsigte van eiendoms- en portefeulje spesifieke besonderhede om beleggingsbesluite te neem. Die metode wat toegepas is, bevestig egter die gebruik van massawaardasietegnieke, maar dat dit beperk word deur inligting wat beskikbaar is.http://www.ufs.ac.za/templates/journals.aspx?journal=12am201

Empirical analysis of space and capital markets in South Africa : a review of the REEFM- and FDW models

This paper assesses the different models, in conjunction with the different theories surrounding the distinction and interdependencies between space- and capital markets. First, the theory of space- and capital markets is discussed with reference to two models, the FDW and the REEFM models. The FDW model provides a diagrammatic explanation of the behaviour of the property market, while the REEFM is an econometric model based on statistical principles that are able to forecast property-market behaviour by interpreting specific given variables. The REEFM model as the perceived more sophisticated model, untested in South Africa, was then analysed to test its applicability in the South African context. The findings confirmed the applicability of the model, although one part is not confirmed and is suggested for further research.http://www.sajems.org/am201

Analysis of the South African input-output table to determine sector specific economic impacts : a study on real estate

Input-output analysis is a well known method of analysing specific economic activity and the influence of different sectors on the economy and on one another. This study investigates the ability of input-output analysis to consider the importance of commercial real estate on the economy. It analyses the economic activity, contribution to GDP, employment created and taxes generated with reference to direct, indirect and induced impacts. The research shows the contribution of the specific sector on the economy and highlights the ability of input-output analysis to determine the impact of different types of property and locational analysis. The interaction of property with the economy is discussed, which also enables the use of the analysis reported here for short term future forecasting, whereby expected real estate activity is used to forecast the direct, indirect and induced effects on the economy.The South African Property Association (SAPOA)http://www.sajems.orgam2016Construction Economic