Valuing property on the Shore
Michael Hall was born and bred on the North Shore, attended Rangitoto College and still lives locally, in Mairangi Bay. His interests outside work include a wide range of sports, getting out on the water whenever possible, or simply “kicking around” with his wife and two young daughters.
In his work life, he’s just as committed to the Shore. He’s a commercial and industrial valuer with North Shore-based valuation company Opteon, and has worked with the same company since 2004, when he graduated from university with a property degree. When he started, the company was called Sheldon’s and had been on the Shore more than 40 years.
In the last 18 months, Sheldon’s first formed a partnership and subsequently merged with international valuation company Opteon. In July last year Sheldon & Partners changed its name to Opteon.
Traditionally, property valuation companies have been relatively small operations, centred in a specific area where the valuers gain expertise in the local market. Sheldon’s partnership with Opteon changes that and makes Opteon the largest valuation firm in the country, while still maintaining the local connection.
Mike says the merger has provided Sheldon’s with greater access to technology enabling them to provide valuations more quickly and efficiently as time expectations become increasingly short. At the same time, it has been a case of the more things change, the more they stay the same: much of the art of valuation still depends on the skills, relationships and local knowledge of the people undertaking the work. And Opteon on the North Shore still has the same core of ten commercial and industrial valuers, and close to 30 residential valuers, all of whom know the local market intimately.
“The big upside of the merger with Opteon is the technological backing and their systems,” says Mike. “It enables us to produce valuations more quickly and efficiently, and Opteon’s technology expertise was a big plus.
“At the same time, it’s still exactly the same company and people. The New Zealand way of doing things hasn’t changed but, particularly in the residential sector, the software and data system has enabled us to collect, analyse, store and extract data more efficiently. The old-school way was to go to the site, take notes on paper and then have someone type up a report. Now valuers can enter data into a tablet, perform analysis and calculations, then produce a report from one integrated system; there’s no double handling .”
A typical day often still sees Mike spending the first part of the day visiting properties and recording data about those properties, before returning to the office to process and analyse the information he’s collected, crunch the numbers and produce a report.
It’s the combination of working with numbers, plus the endless variety of the valuations he works on, and the mixture of office plus field work, that has kept Mike in the industry since he graduated. With his father working as a commercial real estate agent, Mike was familiar with the commercial property market from a young age, and he thinks perhaps that influenced his choice of degree when he started university. At the same time, like most young people, he says, “I wasn’t sure what area I wanted to work in.”
He claims he “fell into” valuation, and still maintains that, regardless of whether you remain in the industry or not, it’s’s a good grounding for any graduate wanting to work in the property industry. He still enjoys the variety each working day brings – and the fact that he’s now well-established in the North Shore and Rodney markets, with a depth of knowledge and relationships built across the industry.
As a valuer, Mike says he interprets the market, looking not only at the type of property being valued, but also transactions that have happened most recently in similar types of properties in the area, and market trends in the sector under consideration. “We can’t predict the future,” he says. But it’s not just a matter of numbers. “We provide buyers and sellers with a good understanding of the value [of a property under consideration] and the potential upsides and downsides of a purchase or sale, enabling them to make informed decisions.
“I get real satisfaction out of providing accurate advice to clients. I like to see people getting the right advice to make the right decisions.”
“We provide an independent view of what we see as the value of a property. On occasion, not everyone agrees with [our valuations],” he adds philosophically. “So managing clients’ expectations are part of the job.”
He talks of instances where he’s been called in to value a property and his valuation has enabled the client to save or gain six figure sums which may not have occurred if they didn’t seek valuation advice.
In addition to valuations for sellers or purchasers of commercial/industrial property, Mike says he and his team of commercial industrial valuers also undertakes insurance valuations, feasibility studies, valuations for compensation claims (for example if part of a property is to be sold for road widening), financial reporting (valuation of assets), tax purposes, matrimonial claims and rental assessments. Each type of valuation requires its own considerations and calculations and Mike enjoys the different types of work.
A key reason for using a valuer is to obtain bank funding, as few commercial transactions take place without bank funding of some sort. Bank lending requirements are becoming stricter in the commercial and industrial sector, as they are in residential property. Mike’s proud that he (and Opteon) is on the panel of valuers approved by all the major banks – a testimony to the team’s expertise, their years of experience and the trust built with banks and the public over time. Given that banks require a valuation by one of their approved valuers, it’s a critical element in the company’s commercial success, as well as its credibility.
Over his nearly 14 years in the industry on the Shore, Mike says it’s been fascinating seeing areas develop and become established. “When I began, for instance, parts of the Albany commercial and industrial areas were new or not yet developed,” he says. “Some were grassy fields and now they are fully developed ans established precincts. There are very few areas of vacant land remianing.”
Mike’s reflections of the property market since he entered the industry demonstrate the cyclical nature of the market – and the challenges that come with each stage of the cycle. He cites the 2015-2016 period as particularly challenging for valuers. During that time, the value of most industrial and commercial properties (like residential properties) was rising quickly, with what seemed like price changes on a week by week basis and new highs being achieved at almost every auction. He says the market was moving so quickly, it was challenging to assess “current” market values, or forecast when price increases would slow.
Equally challenging, but for quite different reasons, was the Global Financial Crisis period (2008-2011). With the dramatic reduction in property values, valuers like Mike were charged with conveying difficult news to clients, especially owners of development land, which is among the most volatile in any market – quick to go up in a good market, and first to fall in a soft market. “People were expecting values to drop, but often not by as much as they were in some sectors. Managing expectations was a challenge. But we have to independently call the valuation as we see it.”
This article first appeared on Channel Magazine: Valuing property on the Shore