Tuesday, June 12, 2012

South African game farm values: A farm agent responds from the Waterberg

                                             Game ranch in the Waterberg

I had two posts last year about the decline in South African game farm values and openly wondered if farm buyers were scared off by the radical land expropriation rhetoric of Julius Malema, who was then President of the African National Congress Party’s Youth League, but has since been dismissed and disavowed by the ANC Party and President Jacob Zuma.  Malema specifically said:

They (whites) have turned our land into game farms…We must take the land without paying. They took our land without paying. Once we agree they stole our land, we can agree they are criminals and must be treated as such.”

Farm agent Marius Willemse, who is active in the Waterberg Province which I visited, has this to say:

"As I’m not a wannabe politician, I won’t dwell on the political utterances. The words do not reflect ruling party or government policy. The rule of law prevails in South Africa. It is therefore unfortunate that once said such statements can not be undone.

I’m also not an economist or sworn valuator; I’m a farm agent servicing the Waterberg and believe game farm prices are influenced by many more factors. No single factor ever full explains a market’s performance.

Property prices in South Africa are currently still depressed as in many other parts of the World. It is partly a reflection of the money and capital markets and a result of the global economic fall out.

Many of the Buffet, Branson and sheik types of this World are currently off fighting other battles and not investing in what in a lot of instances is recreational property.

This lower level of foreign investment has a knock on effect. Local farm owners aren’t able to sell and then immediately reinvest the proceeds in another property, driving prices higher.

Current pricing also expresses normal cyclical activity. We’ve had an excellent run with year-on-year farm price growth as high as 47.5 % in the second half of 2008 (FNB National Farm Valuations Index). The market is simply taking a breather and if it is in negative territory then this will also only last a while. Before we know it the cycle will once again repeat itself.

The Waterberg area is special. It is malaria free, scenic and game rich, wild Africa at its best. It is close to the Johannesburg international airport and the heartland of the South African economy. It is easily reachable on a four lane highway and the road to its centre, Vaalwater, is currently being rebuilt.

The area is slowly but surely getting its act together. It is now a UNESCO-recognised biosphere reserve and there is a growing collaborative approach to marketing the area as tourist destination.

I think that as soon as the global economic dust settles we will once again see very significant farm price growth in the Waterberg".

I hope I didn't previously present a false impression of South Africa as seething with racial strife. What I witnessed was quite the opposite.  My Afrikaaner hosts seemed proud of the progress, both social and economic, that their nation has made in the last two decades, and never had anything disrespectful to say about black people. While riding the freeways of Pretoria I saw many German luxury cars being driven by young black people, much like Atlanta, suggesting an inclusive economy which allows all races to prosper. The closest thing to a racial conflict I saw was when one of the hosts had an argument with a black meter maid "My taxes pay your salary!"
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