A Pinching Absence of Qualified Valuators

The Food and Agriculture Organisation (FAO) funded report on the absence of qualified valuators contributing to high land prices in the country needs to be taken seriously and acted on fast. “We need to listen and share what it is that contributes to the price increase on agricultural land. We have no time to play blame games. Our upcoming young professionals cannot afford a house even in Okuryangava. Most of us will retire without a piece of land. Let us look at factors and see if there is something that we can do. If our Land of the Brave is not affordable to us, where do we go buy land? Is it in South Africa or Zambia? We need to find solutions,” said Dr Nashilongo Shivute, Under Secretary for Land Management in the Ministry of Lands and Resettlement.

The FAO report highlights the shortage of qualified valuators and the risks that come from such shortcomings. Shivute confirmed the shortage, saying Namibia has no specific legislation that governs valuation as is the case in other countries.

The report found that one of the reasons for high farmland prices stems from Namibia being faced with an acute shortage of skilled land valuers. Valuations therefore tend to be self-fulfilling as transaction comparables are, to a certain degree, the result of ‘in-house’ valuations. To some extent, the report says, valuations are ‘making’ the market, rather than ‘following’ the market. The report, released last week, indicates that the valuation profession in Namibia is not well developed, with farmers in particular receiving little or no professional aice.

Additionally, the Directorate of Valuation and Estate Management in the Ministry of Lands and Resettlement needs to be strengthened, and there is no uniform valuation methodology or standards to which farmers, government or Agribank subscribe. The report says valuation inconsistencies and variations when tracking market transactions due to weak institutional capacity have added an extra dimension to the problem.

“This lack of consistency, together with the dependency of the market on government and Agribank valuations, emphasises the need for valuation and other land administration activities to be undertaken at an optimal level. … Research undertaken during this study indicates that these institutions are operating sub-optimally. Consequently, there is an urgent need for institutional capacity building,” the report suggests.

According to the FAO report, anecdotal evidence suggests that estate agents do influence the prices at which land is offered. The agents often do this by making comparisons with previously achieved farm prices when aising their clients.

“However, their aice is normally given to the land owners and therefore has no real effect as an offer price only becomes the sale price if the offeree accepts it. The same applies to private valuers who aise land owners,” the report states.

The lands ministry normally makes counter offers based on the valuations done by internal valuers in the Directorate of Valuation and Estate Management.

Therefore, the report revealed, government valuers have been valuing farms mainly using the comparison method of valuation which entails making comparisons with other sales in order to arrive at value estimates for a subject farm.

“Government would then be aised to make counter offers based on these value estimates, which after negotiations with owners would become the sale prices of these farms. The valuations are thus influenced by previous high government purchase prices as well as high affirmative action loan scheme (AALS) purchase prices,” noted the report.

The lands ministry’s accountability report of 2009 highlighted a general consensus that land prices had increased considerably and that there was a widening gap between government land valuations and the prices offered for land.

It was also observed that whilst landowners were willing to offer their land to AALS buyers, they were hesitant to offer land to the lands ministry.

The main reason reportedly given by land owners was that the prescribed process of land acquisition did not allow land owners to negotiate a price with the ministry before an offer was either accepted or rejected.

The report said the effect of this was that many land owners opted not to sell as they would not have a chance to negotiate a price for their land before a counter offer was made .

Source : New Era