 Let's talk about the value of property. How do we determine the value? What are sort of the factors that contribute to us knowing the value of a property? And how can one maintain it and ultimately either increase the value of a property? Yeah, I think, to me, it's such an interesting subject. And good evening, welcome to the Private Property Podcast. My name is Tumi and I'm your host for tonight. I'm sure everyone has been having a beautiful week and we are back as usual, 7 p.m. right here on the Private Property Facebook page. If you are joining us on the Twitter Spaces, thank you so much for joining us. Hopefully you guys are gonna stay till the end of the conversation because we are talking something everybody needs to get to know about tonight. Our topic tonight is how the value of property is shifting. So if you are in the market of buying or you're looking to sell or you want to invest and grow your portfolio, tonight's conversation is something that you really wanna make sure that you pull out that notepad and start jotting some of these notes down. Tonight I'm being joined by Kharat Kutia, who's a managing director at RealNet Holdings, who's going to be chipping into the conversation and telling us how really the value of property has been shifting over the past 10, 15 and even the recent past. Kharat, good evening and welcome. Hi, good evening to me and it's great to be on your show again and good evening to all your viewers and your listeners. Thank you so much for joining us. We really appreciate the time. Let's jump into the conversation and tonight we're talking property valuations and how ultimately the value of property is changing and how things, the prices are going either up or down. Let's talk about the value of property. How do we determine the value? What are sort of the factors that contribute to us knowing the value of a property and how can one maintain it and ultimately either increase the value of a property? Yeah, I think to me it's such an interesting subject and the answer, the multiple items that you take into account when you value a property but I think the most important one for sellers and buyers and potential investors out there is to look at the ultimate value is determined by willing buyers, willing sellers so the free market environment. But I think the specific things that does make a difference when you look at property and you compare them from a value point of view is the location of the property, always important. The size of the property being one of the key elements if you look at some valuations or most done around the square meter. So the bigger the property in square meters the bigger the value would be as a norm. Then rooms and amenities also be important. So if you compare two-bedroom unit to a three-bedroom or four-bedroom unit so then again size comes into play as well as the facilities or the ability for the property to accommodate more people which is called value when we talk about property values and then the layout, the practicality and the purpose of the property also plays a role. So again, if you look at a family home the question is how well is the home accommodating to a family and what type of family can accommodate larger families? Is it a lock up and go for single people? So again, I think purpose and practicality and layout does play a role when we get to value. Security and green technology is one of the important things these days that does play an important role when buyers look at a property. And again, if you look at the value of a property and comparing values then these type of items do make a difference when buyers are comparing properties of the same size and amenities with one another because these do have value to certain buyers. Then smart technology connectivity I think especially connectivity in these days. So properties in areas where there's less connectivity from a fiber point of view or work from home point of view also influenced from a value point of view. And then ultimately our system in South Africa also works from a value point of view is comparable sales. So that would be when you take all of the previously mentioned items to compare properties and then that actually becomes the value of a property what are willing buyers who are willing to pay for property based on all the amenities size and so forth of the property. So your second question what can you do to maintain a property and does it output a value? It definitely helps with value because I think the one thing that you haven't noticed is how does it lose value? We always talk about how do you appreciate a property or make it worth more? But I think an important notice also properties do decline in value when they become an age property where the structure becomes a little bit aged etc. And again bad maintenance to a property is definitely a negative influence on your property value. So good maintenance definitely a plus when you want to increase or maintain the value of your property make it comparable in the market get top dollar for it when you want to sell it. And then how do you increase the value of your property? You can always extend it you can add rooms to it square meters as long as it's within the building plans or approved building plans within your the rights of your property or your earth. And yeah, I think anything that you can add like getting off the grid those types of technologies that you can add to your property will also increase it outside of the obvious. Thank you so much for that. Do you know a couple of episodes ago we spoke specifically about how people can waterproof their houses and how this ultimately just increases their the value of their property. So I just want us to talk a little bit how it translates into rent and sense for them. Are we saying that if you if you maybe winter proof your house and put all of these eco-friendly and eco green things to it like you know the offerings that are available in the market are we saying that it will raise your the value of your property by 10, 20 percent? Do we have a rough figure so that someone who is willing or who's looking at doing this knows how much they're going to increase the value of their property by you know roughly. To me also again is an interesting question. So if you look at at the cost of getting off the grid these days and adding cells to your property and solar and so forth I think it's still it still needs to be tested what that percentage would be because I think again if you look at buyers which remember these type of technologies might be more important to certain buyers which wants to be self sustainable and off the grid versus somebody that can buy a property which is larger in size and maybe offers more amenities in a different location but do not have these green technologies in them. So I think it's a very it's a difficult for me question to answer what percentage will it add because I think it's definitely something which would be specific to a buyer. If we look at new developments though most of them are starting to use green technology in the development and you can see those are definitely I think let's say between 10 and 15 percent more expensive or up to 20 percent more expensive than units that do not have that type of technologies in it. The difficulty from a sales point of view again is as I said is the affordability of a unit or properties always the key element when it comes to value and if you add these technologies and you add 10 or 15 or 20 percent to the value or the price of the property let's not talk about value let's talk about price then you are definitely limiting the number of available buyers that will qualify for that property and all that's willing to pay that extra dollar to get that type of peace of mind if you want to call it that or modern technology in the property. Sure, thank you so much for that. If I'm already a property owner and I've got this house and I've been owning it for a couple of years and I would like to now know the value of my property if it has appreciated or depreciated how do I go about that? What are the steps that I need to take in order to ascertain the value of my property? So the first step would always be the advice would be to get a professional in to guide you along the value of property because I think it's the same for any of us so let's say I'm in real estate for most of my life but I want to buy a car then where do I start? It's the same principles that surely a buyer would be in a car, maybe mileage, condition, quality, brand etc in real estate there are basic fundamentals as I said, amenities, size, location and other properties that makes comparable sales which is registered in the deeds office and this type of information might not always be freely available to the consumer I know on certain sites like like you'll be portals like yourselves in Lightstone there are guidelines but I think for the consumer just to make it easy is estate agents are registered and qualified estate agents or property practitioners as we now call are trained to do this and it's a free service so I think start there ask a property practitioner that's registered and qualified to come and give you a comparable sales value based on other sales in the area and to show you which sales that are comparing it with that would be step one because that's actual deeds office information which means it's factual and value and then secondly which what I always do is I would look at it from a buyer's point of view if you're a seller and you go to prior property the portal you enter the suburb which you're looking to search you put in the criteria very much the same as your own property would be from an amenities point of view, size, location etc and then you would see what the range of available properties are in that suburb and that gives you to me that gives you a quite a good idea I think as a consumer what the value range or the price band would be in which your property would fall just from outside in point of view but the actual fact would be in a state agent property practitioner and or qualified registered value if you want to get that level of valuation. Alright, I want to ask about the increasing or decreasing of the value of property because a lot of people are going into buying properties investments now because they believe it's very lucrative because property appreciates and in some cases we find that it depreciates so it's not really clear to a lot of people in terms of the method there in terms of why does property appreciate annually and why does in some cases it depreciate can you quickly just take us through high level to say this is the reason why most properties appreciate and this is the reason why most of them depreciate? Right, again I'm going to try and keep it as simple as possible so I think that the key there is that so property is a scarcity element I mean there's no additional land being made so the available property for development or land that's available for development is quite restricted which means supply and demand means if there are more people, if the population grows then there would be a demand for more housing and that housing can be either for people to rent and or to buy which means either way it's a good thing for property ownership because remember if you're an investor you're looking for that supply side of rentals which means people want to rent a property to live in and so the moment that there's supply and demand then there will be an increase in value as a norm so if you look at what they talk about property inflation and you look at inflation at which we all know there's the consumer price index the inflation by which products grow and services are escalated annually it means that if a developer starts developing today and they finish the product only let's say a beginning of next year there would be most probably one or two or three I think these days it might be even more with the cost of fuel that's rising so drastically there would be definitely an escalation in the material price that they use for building which is a meant zinc steel all that type of materials which means that property becomes more expensive to develop as a starting point it can never become less expensive to develop a property from this year to next year so that's where inflation plays a role where property prices as new properties are more expensive to build it means that all property prices must grow with it as well so then if you look at inflation let's say inflation is at the moments between five and six percent I think the CPI then there would be a house price inflation which Lightstone I think at the end of January they stated was 4.35% so house price growth would be more or less around that number so which is still single digits at this point in time and then interestingly enough the different segments in price bands grow at different rates and again I think that is due to demand so entry-level pricing and sectional titles is more demands more affordable than full title or lifestyle status units and that means the growth or the ability to grow in the lower end of the market is bigger because of the demand and the affordability that's there versus the top end of the market which is a smaller percentage in growth maybe per annum but remember in real terms there is still a smaller percentage on a higher value which means there's still growth I think sometimes we tend just to look at the percentages versus the actual random outgrowth that happens in these mid to top range properties which is still significant even if the percentages are low so I think that's just to try and answer the question it's quite a technical question of our price inflation, et cetera, works but then the question the other important question that you asked to me is why do we sometimes find ourselves as property owners having a property which we bought let's say about 18 months ago and that property is now when we found the property petition or we try and sell it it's actually, it feels like it's either worth exactly what I paid for it two years ago or 18 months ago and that has been negative growth and that's when you see there's actual negative growth in the market and that just means again remember supply and demand is the ultimate stimulus for property and when interest rates start going up as it's doing at the moment even though it's small increments and the pressure on consumers from an inflation point of view and living cost point of view is increasing like it is at the moment as well it means less people can afford properties in certain price ranges and the moment that's that demand type is down which is an influence of economical effectors such as interest rates and just the state of the economy then it means that there's less demand which means property prices will not grow as quickly and is aggressively in percentage and in real terms as it would when the market is buoyant and the economy is buoyant and property prices have been growing slowly or negatively for a couple of years like we saw just after COVID which I think property prices has really sort of caught up to where the growth will allow it to go now and will slowly grow from here as we see the economic cycle turn and the interest rate cycle turn Well thank you so much for that, Akhara Tan hopefully everybody who's watching at home has received so much insight about this topic tonight on how they can increase the value of their property and what to look for when you're looking in the market in terms of projections if you are buying for investing if you are buying for living or if you're just overall looking to manage and maintain it and want to also increase it if you really have a property that you have purchased so thank you so much, Khara Tan we really, really appreciate you taking our time and really talking to us tonight the love is coming in from social media and everybody is legit sending their green hearts to say thank you so much and we really appreciate it You're so welcome to me thank you for the opportunity and thank you for your viewers, enjoy it Thank you, have a good evening You too, thanks Aiyu Thanks Faham Bye And with that we have come to the end of today's episode where we specifically spoke on how you can increase the value of your property and what to look out for what are those things that you need to look out for and where or where we are seeing this going where we are seeing property valuations going in the next five, 10 years the location of the property the amenities that are around it and so many other different factors that play a role Thank you so much for joining us tonight on the Private Property Podcast See you tomorrow, 7 p.m. sharp and if you are joining us on the Twitter Spaces thank you so much keep, stay tuned you may just find something really, really beneficial for you Thank you so much and have a good evening