VALUATION REPORT
VALUATION OF PORTION 2 OF FARM AVONTUUR NO 116, GEORGE DISTRICT
1. INSTRUCTION
Instruction was received from the owners of Farm Avontuur 166/2, Pixieshelf One Hundred &
Tweny Five (Pty) Ltd, (mr F Negri) supported by the Department of Land Affairs, to determine
the market value for the property in order to consider its usage for an agricultural land reform
project.
2. MARKET VALUE
By market value is meant the amount for which the property would be exchanged between a
willing seller and a willing buyer in an open, (“arm’s length”) transaction at the date of
valuation. Such transaction is presumed to take place after proper marketing and wherein
both parties acted knowledgeably, prudently and without compulsion.
Furthermore, in the case of the subject property, the market value pertains to the land that
comprises the property and all buildings, structures and fixtures on the land; that is, those
fixed assets that can not be removed when the farm is sold.
3. DATE OF VALUATION
The date of valuation is 5 November 2008 and all factors that could have had an influence on
the value of the property at that date is taken into account.
4. DESCRIPTION OF THE SITE
4.1 Administrative
The property is described as follows:
Description
Area
Owner
Title Deed
Zoning
Portion 2 (remaining extent) of the Farm
Avontuur
348.6530 ha
Pixieshelf One Hundred & Tweny Five
(Pty) Ltd
T9245/1922
Agriculture
4.2 Location
The farm is situated in the farming area known as Rondevlei Heights, east of Wilderness. It
could be reached from the Seven Passes road or from the road from Rondevlei in the south.
4.3 Physical
The farm is shown on the attached aerial photo. It has undulating and sloping land of which
about 85% could be farmed on. The remaining land has steep slopes and are covered in
forest. It overlooks the Rondevlei and the Indian Ocean. The Klein Keurboomsriver runs on
the western boundary of the farm. There are three dams on the property.
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4.4 Farming activities
The farm is being operated as a dairy farm for which it is most suitable. Its carrying capacity is
500 cows for milking purposes or 800 beef cattle. About 300 hectares of the farm is covered
with a mixture of rye grass and kikuyu for grazing and about 50 hectares has steep slopes and
is covered with forest.
The dairy business is in full operation with the latest equipment available for processing – see
the description of improvements.
4.5 Improvements
The property has two dwellings, three labourers’ cottages, a shed, a fully equipped dairy
building and a comprehensive irrigation system on it that are all fixtures on the property itself.
There is also much equipment on the farm for diary farming purposes, which do not form
fixtures on the property and are therefore not valued. It may however, play a positive role in a
sale of the property if it was sold together with the property.
4.4 Water entitlements
Water entitlements on a farm are strictly controlled by the Department of Water Affairs. It
adds value to the property as there is a cost attached to obtain water rights. The cost of
building a dam also adds value to a property as opposed to the same property without any
dams.
The following dams exist on the property:


Main dam of 400 000m³ with a 4.8 ha surface area and fed by a mountain stream.
Two small dams of 40 000m³
According to the owner, the main dam is registered with the Department of Water Affairs. It is
also possible to extract water at a certain point in the river.
5. HIGHEST AND BEST USE
The zoning of the property is Agriculture in terms of the Section 8 Scheme regulations
applicable to this area. The primary use in terms of the zoning is agriculture but several
consent uses may be considered, i.e. an additional dwelling unit, farm store, farm stall,
intensive feed farming, riding school, nursery, service trade, and tourist facilities. Additional
dwelling units may be considered at a ratio of 1 per 10 ha with a maximum of 5 units, over
and above the main dwelling and one additional unit. That means that a maximum of 7
dwellings may be permitted on the farm.
6. APPROACH TO MARKET VALUE IN THIS CASE
A transaction for the sale of the property will be executed on the basis of its farming potential,
the assets that are fixed to the property that makes diary farming possible as well as the water
rights that goes with it. The two dwellings will add further value as it is a sought after area to
stay in, i.e. they would be utilized as residences even without any farming. The property
therefore consists of various components that all add value to it. The market value will take all
these components into account as they will all be considered in a transaction in which a
purchase price is determined.
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7. METHODS OF VALUATION
The method of comparable sales is the most realistic method to arrive at market values. The
aim is to find properties that were sold in the open market that are similar in nature. However,
because farms differ so much in nature and the potential for farming and the fixtures such as
irrigation differ, hardly any sale is similar and directly comparable. This method therefore has
to be combined with other methods.
There are two alternative methods to follow:
a) Obtain the general value of comparable sales or in the market in terms of R per hectare
for the land and add the value of the components on a cost basis.
b) Increase the value per ha proportionally to the number and value of additional fixtures
to the land.
The last named method is too generalized to apply on its own but could be used as a control
figure. It would be more effective to use the general trend in sales per ha as a base and add
the cost of the improvements to it.
The value of the water rights in recent times became a saleable commodity in its own right.
However, to accurately estimate the value thereof requires a specialist study or valuation.
Budget constraints on the valuation do not permit this; therefore a rough estimate had to
make which was discussed with an expert in this field.
8. COMPARABLE SALES OF FARM LAND
A Deeds Office search revealed some sales of farms in the area. All of them have very few
improvements of value on them and are not directly comparable. The details of the sales are
as follows:
Farm no
Size
166/14
166/19
179/6
179/11
179/15
3,2102
42,3398
66,3429
5,9314
7,5070
Date of sale
ha
ha
ha
ha
ha
15-10-2008
22-08-2005
28-02-2008
16-10-2008
10-09-2007
Purchase
price
R 485
R 2 850
R 4 000
R 1 200
R 1 600
000
000
000
000
000
Gross price
ha
R 151
R 67
R 60
R 202
R 213
per
080
312
292
313
333
It should be noted that the above sales are of relatively small farms of which those properties
of less than 10 ha are not farmable entities. They are more suitable for rural residential use
and the values for that purpose are reflected in the unit prices.
9. VALUATION
As explained above, the value of the property is made up of four components, i.e. the value of
farm land, the value of the water entitlements and the dams, the value of the buildings and
the value of the fixed assets. A detailed estimate of the various values are shown in Annexure
C. Because the buildings, structures and fixtures are all in a relatively new and good condition,
only a small annual depreciation factor of 1% is allowed for.
a) Value of farm land
The subject property consists of 85% arable land and 15% (50 ha) of the land that is too steep
to develop. The 85% farming area can further be divided in 200 ha under irrigation and 100 ha
dry land.
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The value of the farm land only, according to the general market values mentioned above, are
calculated as follows:
100 ha x R 60 000 = R 6 000 000
200 ha x R 30 000 = R 6 000 000
50 ha x R 10 000 = R
500 000
Total value =
R 12 500 000
b) Value of dwellings
The two dwellings are in a good condition. The replacement value of a dwelling of this type
would be at least R 4500 per m². The total value using these tariffs will be R 1 867 815.
Compared to the sales prices of various dwellings in the urban areas, this is a reasonable value
that a purchaser would be willing to pay for the house in any other setting.
c)
Value of other buildings
The other buildings consist of the labourer’s cottages, ablution block of the labourers, the shed
and the fully equipped dairy building. The total cost thereof is estimated at R 3 948 600.
d) Fixed assets and structures
Assets and structures that are fixed consist of the irrigation systems fences, tanks and pipes as
set in Annexure B and C. They are valued at R 2 624 270.
e) Water
As explained, the water rights add considerable value to the property as it is expensive to
obtain and to establish on a farm. A proper study of the value of the water rights will
necessitate a study of its own which could be costly. However, an expert on water rights has
been consulted who informally (meaning that the estimate is not be used as a professional
opinion without further verification) estimated the value of the water rights as R 1 500 000.
To construct dams similar to those that exist on the farm, would have been costly. The existing
dams therefore add value to the property as the buyer of the farm will obtain the built dams as
part of the farm. The said expert estimates the value of the dams at R 2 000 000 being the
amount which it would have cost to construct the dams today.
The total value of all the components and therefore the property with all its fixed assets, is the
total of the above values, i.e. R 24 440 685. In an open market transaction this estimate will
be rounded off, after negotiations to a purchase price of R 24 400 000. This amount gives a
gross overall value of about R 70 000 per ha which serves as a good control figure for the
value of the property.
10. CONCLUSION
It is submitted that a willing buyer and a willing seller would obtain the information as set out
above and follow a similar the reasoning.
A certificate in which the amount of R 24 400 000 is certified as a realistic market value for
Portion 2 of Farm Avontuur 166 is attached.
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11. Limitations and restrictions
This valuation is compiled and subject to the limitations and exclusions as set out in Annexure
D to this report.
W M de Kock
Professional Valuer 2466
5 November 2008
ANNEXURE
A
ANNEXURE
B
STRUCTURES AND FIXED ASSETS ON PORTION 2 OF FARM AVONTUUR 166
A.
Buildings and facilities
1 warehouse - 540 m2 (cement floor)
2 Kraals (1 new + scale)
2 water pumps (4 stroke engine) + 2 water pumps (electrical engines)
5
200 000 litres reservoir tank in cement for cows drinking water
1 dip for cattle
1 spray system for dairy cows
2 new transformers 100 kw each Ruraflex + complete new electrical system
1 stable for calves
1 dam evacuation for dairy waters - 100 m2
25 kms of new fences (new wires, poles + droppers)
Number of camps all newly fenced: 20, all with water
7 kms x 40 mm pipes from main dam to second dam and camps
3 workers houses with electricity- 1 Ablution block (3 toilets, 3 showers + cleaning area)
Water tanks for workers drinking consumption: 15’000 litres
2 dwellings:
Type
Main dwelling
Second dwelling
Size
308m²
135m²
Year built
2002
2001
Content
3 bedrooms, 2 bathrooms, kitchen and lounge
2 bedrooms, 2 bathrooms, kitchen and lounge
All the areas around the warehouse, workers houses+ owners’ houses are compacted with
gravels
All sceptic tanks with new french drains (owners houses and workers houses)
B.
Irrigation equipment
1 electrical water pump with 100 kw electrical engine
Pump 75 Kw Southern Cross RHF – Delivery 216.000 litres/hour
2.4 kms x 300 mm diameter high pressure main irrigation line installed underground in the
field + 10 rain guns/ cannons (60 mm diameter)- Type Sprinkler 280 Naan with 16mm x 8
mm nozzle
23.9m3/h @4 rar - 130 x 6 meters quick coupling aluminium pipes (650 m total length)
T outlets every 144 m on the line
New centre auto irrigation pivot connected to main line at 10 bar pressure covering 30
hectares
C.
New dairy building
(Equipment and milk quality: EEC approved for export)
New Metallic galvanised metal structure and Roof +
New milking Machineries (New Zealand: Waikato) 20 swings
New Electricity and plumbing installation for dairy
2 New 100 Kw transformers each + Ruraflex rate subscription
2 new 25 Kw transformers for irrigation purposes
12 Water tanks (5 000 litres/each)
Parlour & in out area in cement
Silo 20’000 Mt + basement
Pipes for evacuation of dairy waters + dam (100 m3)
3 Inox Tanks of 5 000 Litres each for milk refrigeration
Soil:
Top soil 30 to 60 mm with clay underneath
ANNEXURE
C
SUMMARY OF ESTIMATES FOR VALUE LAND AND FIXED ASSETS
Item
Area/quantity
Rate or formula
Estimated value
Land
Irrigated
Dry land
100 ha
200 ha
R 60 000 per ha
R 30 000 per ha
R 6 000 000
R 6 000 000
6
Steep and forest
land
Sub total
Buildings
Main dwelling
308 m²
Second dwelling
135 m²
Labourers cottages
50 ha
3 x 100 m²
80 m²
Shed / warehouse
540m²
Dairy building – including
installation and fixtures
for diary production
Reservoir tank
Workers tanks
Transformers
Sub total
Water assets
Dams
Entitlements
Sub total
TOTAL
R 5 00 000
R 12 500 000
Ablution block
Sub total
Structures
Fences
Kraals
Dip
Stable for calves
Sub total
Fixed assets
Central Pivot
irrigation system
10 cannons
40 mm pipes
Water pumps
R 10 000 per ha
308 x R 4 500 less 6%
depreciation
135 x R 4 500 less 7%
depreciation
300 x R 3 000 less 7%
depreciation
80 x R 4 000 less 7%
depreciation
Cost less 7%
depreciation
Cost less 5%
depreciation
R 1 302 840
R 564 975
R 837 000
R 297 600
R 1 674 000
R 1 140 000
R 5 816 415
25 km
2
1
1
Cost less 7% depr
Cost less 7% depr
Cost less 6% depr
Cost
R 348 750
R 48 360
R 14 100
R 150 000
R 561 210
1
Cost less 1% depr
R 841 500
10 @ 2.4 km
7 km
1 x 75 Kw
1 x 100 Kw
2 x electrical
1 x 4 stroke
200 000 l
15 000 l
2 x 100kw
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
less
less
less
less
less
less
less
less
less
7% depr
5% depr
5 % depr
5 % depr
5 % depr
7 % depr
7 % depr
7 % depr
7% depr
R 716 100
R 23 250
R 118 750
R 201 400
R 11 400
R 13 950
R 69 750
R 23 250
R 43 710
R 2 063 060
R 2 000 000
R 1 500 000
R 3 500 000
R 24 440 685
ANNEXURE
D
LIMITATIONS AND RESTRICTIONS
PERTAINING TO THE VALUATION OF PORTION 2 OF THE
FARM AVONTUUR NO 166, GEORGE REGIONAL DISTRICT
A This valuation report has been made with the following general assumptions:
A.1 No responsibility is assumed for the legal description or for matters including legal or title considerations. Title to
the property is assumed to be good and marketable unless otherwise stated.
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A.2 The property is valued free and clear of any or all liens or encumbrances unless otherwise stated.
A.3 Responsible ownership and competent property management are assumed.
A.4 The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy.
A.5 The valuation has been prepared on the basis that the full disclosure of all the information and factors, which may
affect the valuation, has been made to ourselves, and we can not accept any liability of responsibility whatsoever for
the valuation, unless such full disclosure has been made.
A.6 All engineering information is assumed to be correct. The plans and illustrative material in this report are included
only to assist the reader in visualizing the property.
A.7 It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render
it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that
may be required to discover them.
A.8 It is assumed that the structures and buildings, if any, are within the boundaries of the property; that they are,
where applicable, lawfully on the property and constructed in accordance with the National Building Regulations, the
Municipal Zoning Scheme and municipal bylaws.
A.9 It is assumed that there is full compliance with all applicable state and local environmental regulations and laws
unless non-compliance is stated, defined and considered in the valuation report.
A.10 It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a
nonconformity has been stated, defined, and considered in the valuation report.
A.11 It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative
authority form any local or national government or private entity or organization have been or can be obtained or
renewed for any use on which the value estimate contained in this report is based. It is assumed that the utilization of
the land and improvements is within the boundaries or property lines of the property described and that there is no
encroachment or trespassing unless noted in the report.
B This valuation report has been made with the following general limiting conditions:
B.1 The apportionment, if any, of the total valuation figure in this report between land and improvements applies only
under the stated client instruction and is hypothetical. The separate allocation for land and buildings must not be used
in conjunction with any other valuation and are invalid if so used.
B.2 Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for
any purpose by any person other than the party to whom it is addressed without the written consent of the valuer, and
in any event only with proper written qualification and only in its entirety.
B.3 Unless otherwise indicated, all figures quoted are exclusive of Value Added Tax.
B.4 The valuer herein by reason of this valuation is not required to give further consultation, testimony, or be in
attendance in court with reference to the property in question unless arrangements have been previously made.
B.5 Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the
valuer, or the firm with which the valuer is connected) shall be disseminated to the public through advertising, public
relations, news, sales or other media without the prior written consent and approval of the valuer.
W M de Kock
Professional Valuer 2466
5 November 2008
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