Valuation methods

As one of South Africa's largest valuation firms, Rode has valued properties with a market value of close to R20 billion during the last twelve months (roughly $3 billion US).

Rode’s property valuation services are underpinned by regular, rigorous surveying of market rental levels and capitalisation rates to ensure more uniform and realistic market valuations in South Africa. The results of these surveys are published in three research journals which include Rode's Report – used as a key reference source by property practitioners.

Rode’s pioneering work in the field of property valuation includes:

• Capitalisation-rate estimates: The development of regression models to estimate the standard capitalisation rates of office and industrial properties and, more recently, shopping centres
• House valuations: The application of multiple-regression techniques to value houses in SA
• The opportunity cash flow (OCF) method: This method is used for determining the market value of income-producing properties, using a combination of capitalisation and discounting. This method was developed in 1986 by Rode's founder, Erwin Rode, and it incorporates the difference between contractual and open-market rentals, quantified by means of the OCF.

Rode's valuation approach largely avoids forecasting, which invariably introduces a significant measure of subjectivity. Evidence of the authority of Rode in the marketplace is that Rode is asked from time to time to evaluate the valuations of competitors.

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