THE South African Council for the Property Valuers Profession says investors in listed property funds should complain to it if they think valuations done by property valuers have not been carried out properly.

Council vice-president Jenny Falck says the council can investigate a matter only after a complaint.

Last week, professional valuer Norman Griffiths, who was speaking at the second annual Investment Property Databank South Africa valuation conference in Sandton, said that when new listed property funds came to the market in recent years some property valuers may in effect have been forced to rubber-stamp values agreed on by owners and vendors.

In some cases property funds may have overvalued their properties. Once the funds are listed, unit prices plummet as investors find the underlying properties are worth far less than they were led to believe.

Griffiths said a major problem was that valuers were brought on board by new listings only at the 11th hour after a due-diligence study had been completed. Listed property funds may look at valuations as necessary evils that should be dealt with as quickly as possible.

Valuers find themselves under huge pressure to complete valuations in time for listings.

They are supposed to value properties independently and agree or disagree on values, but time constraints force them to accept information provided by due-diligence studies, whereas normally they would investigate the lease structuring and the properties themselves.

Griffiths believes valuers should be brought on board at the beginning of the due-diligence process to give them enough time to do their work properly.

The South African Council for the Property Valuers Profession says a valuer who takes on work from any client should give a professional valuation, whether or not the client is happy with the valuation.

Falck says: "We must give an objective view; we are professionals. If someone is rubber-stamping I think he or she must be taken to task."

Angelique de Rauville, MD of listed asset management company Provest, says some property valuers have been pressured to provide "overvaluations" to secure business from listed funds, companies and unlisted institutions.

But, says De Rauville, listed property valuations have recently come under scrutiny because of overvaluations, and property valuers have been exposed.

"The whole question of valuations has now become very pertinent to the listed property sector, while unlisted institutional portfolios can still be subject to manipulation. But now that valuations are more under scrutiny, valuers are moving in the right direction."

Property economist and valuer Erwin Rode says it is "short-sighted" for property valuers to let themselves be "prostituted" by listed property funds.

"You can only lose your integrity once. Even the parties who prostituted you would lose their respect for you," Rode says.
Rode says the South African Council for the Property Valuers Profession has "teeth", and must act against valuers who act improperly.