2. ERES CONFERENCE STOCKHOLM, 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 1 ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly

3. 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. 2 ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly

4. 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. 3 ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly

5. 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. 4 ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly

6. 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. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 5

7. 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. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 6

8. 7 Pacific Rim Ranking TopicUK RankingOther European Countries Ranking 1Discounted Cash Flow Analysis 1 15 2Yield Calculation and Forecasting 2 7 3Risk and Return Analysis 3 6 4Government Policy on Real Estate 15 4 5Property Taxation Issues 28 14 7Ethics 32 25 8Property Market Cycles and Forecasting 5 3 8Property Market Modelling 8 3 9Land Use Regulations 23 10 Approach by academics and property practitioners in the UK, Europe and the Pacific Rim Source: Data from Rabianski J.S and Black, R.T (1999) as presented by Viruly (2007).

9. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 8 Research Focus AFRES Sample of 35 Articles TopicFrequencyRanking Appraisal/Valuation 12 1 Professional Development 12 1 Government Impact 10 2 Land Regulation 7 3 The Economy 6 4 Lease Analysis/Property Management 5 5 Taxation 5 5 Banking 5 5 Ethics 4 6 Investment Benchmark 3 7 Market Information 2 8 Property 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)

10. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 9 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)

11. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 10 Subject KnowledgeGoodPoor Property Development33%67% Property Investment22%78% Property Law62%38% Property Economics33%67% Property Valuation67%33% Property Finance33%67% Property Portfolio Management37%63% Basic Statistics50% Further Statistics37%63% Property Environment67%33% Property Planning33%67% Marketing50% Financial and Cost Management55%45% Introduction to Construction Project Management57%43% Environmental Management42%58% Commercial and Industrial Law67%33% Accounting62%38% Urban and Land Economics56%43% Facilities Management 157%43% Facilities Management 242%58% Project Management In Developing Areas43%57% Poor versus good knowledge of subjects graduates entering the property industry have Source: Jay (2009)

12. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 11 Area of skill shortage Property management Commercial project management skills Qualified and experienced asset managers Qualified and experienced property managers Experienced property accountants Asset management Property Financiers Development Project managers Property investments specialists (equity) Individuals with property skill/knowledge with Africa Evaluations of cash flows Integrated management Skills Accounting skills Legal skills Property Acquisition and selling Town Planning: limited technical skills Property Administrators Environmental issues People skills Direct Property understanding Skills shortage in the property industry in South Africa Source: Jay (2009)

13. 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

14. 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. ERES Conference 24 - 27 June 2009 Graeme Jay and Francois Viruly 13

15. 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 24 - 27 June 2009 Graeme Jay and Francois Viruly 14