Property Rates – Hot Potato Or All Is Well?
An information session took place at the Middelburg Chamber Offices on 22 January 2024. Mr Gerrit van der Merwe, Snr Vice President of the Middelburg Chamber of Commerce and Industry (MCCI) chaired the meeting with property management sector members. Mr. Phumlane Mkhize, Director of Property Valuation, Steve Tshwete Local Municipality (STLM) updated the members.
Mkhize explained the income approach to property valuation, factoring in net income and minimum returns. He said there are many undervalued properties in the municipality, like logistics and warehouses. While STLM recognizes the difficulties of property management, including expense ratios and energy efficiency, however, Property Tax remains a significant income source for the organization.
According to Mkhize, STLM’s goal is to ensure fairness in all sectors, such as tourism industry by offering transparent rates and income to property owners. They conducted an analysis on property values in the CBD area. They considered factors like traffic, pedestrian activity, and rental income to ascertain the value of the properties. He also highlighted how important it is for investors to be engaged and for the town to embrace digitalization for its future growth.
The members urged the municipality to be reasonable in valuing property, and to cap rates and basic assumptions. The safety and the maintenance of infrastructure in areas such as the CBD makes investment and development risky. Assumptions about property values will cause numerous disputes.
Members expressed concern that property values in a specific area may not increase but decrease in some areas. Some stresses caused by STLM is the way business cannot access the Spatial Development information, severe project delays, and government inaction. The property sector is a complex process that requires careful consideration because of the involvement of various stakeholders.
Factors like recession, vacancies, and the distinction between commercial and residential rentals influence the value of a property. The difficulty in filling office rental vacancies due to COVID should be factored into STLM’s calculations.
In light of the strains faced by the construction and property investment sectors, MCCI is urging STLM to prioritize creating an investor-friendly environment in our area. The Chamber sees a future for all sectors, but the delay in implementing the SCADA system affects the sustainability of the property and manufacturing sectors.
Members can confirm the value of their properties at Property Valuations – Steve Tshwete (stlm.gov.za) and how to dispute the value of their properties.