Recently released figures show that, in the first nine months of this year, the South African commercial and industrial property industry rose 9% – almost double what equities achieved in the same period. This is encouraging evidence that commercial property in this country remains an attractive option for those wanting to diversify their investment portfolio, while still ensuring a relatively secure and steady income.

In the challenging economic conditions in which we currently find ourselves, industrial property helps to limit the overall volatility of an investment portfolio, and tends to yield income at higher returns than the prime lending rate. This results in a positive cash flow situation for the investor right from the start.

The most important priority when considering commercial or industrial property for investment purposes is ensuring the right tenants, who will make regular payments on time, are found. It’s also extremely important that you charge market-related and appropriate rentals, which is when the services of an experienced and knowledgeable property valuator can help you with a Fair Rental Determination for either gross, semi-net or triple net leases.

How To Choose The Right Valuator

If cash flow is tight, the temptation might be to choose the cheapest valuator you can find, regardless of whether or not they have the necessary qualifications and competence. In South Africa, all practicing valuators must be registered with the South African Council for the Property Valuers Profession.

When undertaking a property valuation, the Terms of Engagement document between the client and the valuer is of utmost importance. This document provides all the details of the responsibilities and scope of work required, and should include, among others, a complaints handling procedure statement confirming that the valuation has been done in accordance with IVS and RICS (Royal Institute of Chartered Surveyors) Valuation Professional Standards.

The Property Partnership is one of 118,000 RICS members worldwide, meaning you can rely on us to promote best practice, represent your interests and provide impartial advice. To find out how we can help you, talk to us today.