ERES CONFERENCE STOCKHOLM, SWEDEN 24 – 27 JUNE 2009 THE RELEVANCE AND IMPORTANCE OF THE NEEDS OF...

ERES CONFERENCESTOCKHOLM , SWEDEN

24 – 27 JUNE 2009

THE RELEVANCE AND IMPORTANCE OF THE NEEDS OF THE PROPERTY INDUSTRY IN SOUTH AFRICA IN INFORMING THE

CURRICULUM DEVELOPMENT OF GRADUATE PROPERTY STUDIES IN AN EMERGING ECONOMY LIKE SOUTH AFRICA: LESSONS TO BE LEARNT BY OTHER EMERGING COUNTRIES?

MR GRAEME JAY AND PROFESSOR FRANCOIS VIRULY SCHOOL OF CONSTRUCTION ECONOMICS AND

MANAGEMENT AT THE UNIVERSITY OF THE WITWATERSRAND, JOHANNESBURG

1ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly

PURPOSE AND BACKGROUND

•To investigate what knowledge and competence is required by the property industry in South Africa of graduates;•To survey senior management of property companies in South Africa for the purposes of this research;•To determine the relevance of the curriculum currently offered by the CEM at Wits; and•To determine the application of this research for the academic requirements of other property programmes in emerging countries.


PURPOSE AND BACKGROUND•CEM at Wits is currently involved in a process of curriculum development and review of the degrees that we offer, viz:

•Quantity Surveying (Undergraduate);•Construction Management (Undergraduate);•Property Studies (Undergraduate) and •Property Development and Management (Postgraduate).

•Our undergraduate programmes are currently 4 year degrees (SA equivalent of an Honours degree) and the School is investigating the possibility of making these 3 + 1 year degrees to allow students to exit with a 3 year Bachelors degree.


BODY OF PROPERTY EDUCATION KNOWLEDGE IN

SOUTH AFRICA•Mooya (2007) indicates that property programmes in SA have been influenced by the goals and philosophies of institutions of higher learning as well as the personal interests of university personnel.•Typically, most property programmes have been “bricks and mortar” programmes housed in the Schools of Construction, Quantity Surveying and Engineering. This has obviously had an impact upon the direction of curriculum development.•Property studies programmes generally have had to “piggy back” on these programmes.•Also, SA does not have a professional body such as RICS in the UK to influence the development of property studies programmes. There are professional bodies such as the SACPVP and the SACQSP, but none of the professional bodies in SA offers any focus for property studies.


BODY OF PROPERTY EDUCATION KNOWLEDGE INTERNATIONALLY

• Schulte (2003) has indicated that the evolution of property studies in different countries varies.

• Mooya (2007) says that investment finance and markets seem to lack emphasis in SA courses.

• Real estate programmes in the US and UK emphasise the financial aspects of the real estate market, such as DCF, NPV, IRR and Valuations.

• Programmes in African countries generally reside in the area of Land Economics and therefore have different emphasis.

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FACTORS THAT WILL INFLUENCE CURRICULUM DEVELOPMENT IN SA• Due to the peculiarities of the SA market,

there are certain factors that will influence curriculum development in future, such as:– Political issues;– Land reform;– Legislation;– Differences in financing structures in the SA

market; and – Globalisation.



Pacific Rim Ranking

Topic UK Ranking Other European Countries Ranking

1 Discounted Cash Flow Analysis 1 15

2 Yield Calculation and Forecasting 2 7

3 Risk and Return Analysis 3 6

4 Government Policy on Real Estate 15 4

5 Property Taxation Issues 28 14

7 Ethics 32 25

8 Property Market Cycles and Forecasting

5 3

8 Property Market Modelling 8 3

9 Land Use Regulations 23 10

Approach by academics and property practitioners in the UK, Europe and the Pacific RimSource: Data from Rabianski J.S and Black, R.T (1999) as presented by Viruly (2007).


Research Focus AFRESSample of 35 Articles

Topic Frequency RankingAppraisal/Valuation 12 1Professional Development 12 1Government Impact 10 2Land Regulation 7 3The Economy 6 4Lease Analysis/Property Management 5 5Taxation 5 5Banking 5 5Ethics 4 6Investment Benchmark 3 7Market Information 2 8Property Market Analysis 2 8

Sample of topics of 35 articles which were presented at the AFRES 2003 and 2004 conferences in Nairobi and Kampala

Source: Viruly (2007)


Asset Management:•Equity valuation methodologies •Fixed income valuation methodologies

Property Management/ Broking:•Property marketing •Property optimisation •Dealing with land claims •Utilising management •Management principles and practise, years 1, 2 & 3•Integrated management

Financial institutions:•African and international property economics •African and international property investments •African and international urban land economics

Property trader & developer investment bank:•Art of negotiating •Design and architecture •Urban planning •Listed property environment

Additional subjects to be included in University curriculum (by industry classification)

Source: Jay (2009)


Subject Knowledge Good PoorProperty Development 33% 67%Property Investment 22% 78%Property Law 62% 38%Property Economics 33% 67%Property Valuation 67% 33%Property Finance 33% 67%Property Portfolio Management 37% 63%Basic Statistics 50% 50%Further Statistics 37% 63%Property Environment 67% 33%Property Planning 33% 67%Marketing 50% 50%Financial and Cost Management 55% 45%Introduction to Construction Project Management 57% 43%

Environmental Management 42% 58%Commercial and Industrial Law 67% 33%Accounting 62% 38%Urban and Land Economics 56% 43%Facilities Management 1 57% 43%Facilities Management 2 42% 58%Project Management In Developing Areas 43% 57%

Poor versus good knowledge of subjects graduates entering the property industry haveSource: Jay (2009)


Area of skill shortage Property managementCommercial project management skillsQualified and experienced asset managersQualified and experienced property managersExperienced property accountantsAsset managementProperty FinanciersDevelopment Project managersProperty investments specialists (equity)Individuals with property skill/knowledge with AfricaEvaluations of cash flowsIntegrated management SkillsAccounting skillsLegal skillsProperty Acquisition and sellingTown Planning: limited technical skillsProperty AdministratorsEnvironmental issuesPeople skillsDirect Property understanding

Skills shortage in the property industry in South AfricaSource: Jay (2009)

CONCLUSION AND RECOMMENDATIONS

•Two schools of thought in terms of what should be included in university programmes relating to property studies.

•Academics - adequate knowledge on subjects relevant to the industry they are going to enter.•Practitioners - insufficient in terms of what skills are required in the workplace.

•General agreement most stakeholders that the needs of business and industry must be considered when reviewing and creating university programmes in property studies (and most other industries). •Tri-facetted relationship is proposed in determining a body of knowledge that is appropriate to property studies.

•Academia, industry accreditation bodies and employers should have a reciprocal relationship in order to present the best fit solution for property programmes to be aligned with current local industry needs. This is imperative to designing the most suitable property programmes to engender industry and the profession as a whole.

ERES Conference 24 - 27 June 2009

Graeme Jay and Francois Viruly 12

CONCLUSION AND RECOMMENDATIONS

•There are a number of issues that have been highlighted by the research, some of which reiterate the various schools of thought on the subject.•It is clear that industry is calling for some kind of legitimization and professionalization of the industry, through an internship type programme that is linked to a registration body. •By professionalising the industry, it could encourage more students to enter the field of Property Studies. This will also ensure that the property industry is viewed in a more credible manner.•Secondly there are certain subjects which can be categorised into local, international, technical and managerial, which should be looked at for possible inclusion into property studies curricula in the South African environment. • The relevance of the technical, local and international subjects would have to be debated amongst academia on an individual basis. However, again this could form part of elective or specialised programmes, like those being offered in the UK. •It is however clear that graduates are lacking in certain practical skills as well as technical knowledge, and that graduates are not work ready as per the requirements of the industry they wish to enter. Academia need to take cognisance of these factors and try and improve the curriculum to ensure graduates are better equipped to enter the industry now and in the future.


WHERE TO FROM HERE?•The research that has been conducted is regarded as Part 1 or as a preliminary research paper to further explore the issues and topics relating to creating an optimal curriculum for the Schools of Universities in South Africa that offer property studies and for other emerging countries.•To include alumni students as a secondary population to sample is intended to provide a more thorough representation.•To study in more detail the degree programmes offered by other Universities internationally.•Any further ideas?


ERES CONFERENCE STOCKHOLM, SWEDEN 24 – 27 JUNE 2009 THE RELEVANCE AND IMPORTANCE OF THE NEEDS OF...

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