Core Valuations

[Core Valuations @CoreValuations]

A Lodge on a game farm can be valued by capitalising the net income or by applying the depreciated cost approach.

[Core Valuations @CoreValuations]

Exotic game can be very expensive. It is usually done on a small area of 50 ha to 100 ha. It is more like a feedlot than a game farm.

[Core Valuations @CoreValuations]

A house is easily over valued on a game farm. A house on a farm is usually of less value than the same house in a town.

[Core Valuations @CoreValuations]

Infrastructure are for example boreholes, water provision for the game, game fence & farm roads.
The value of Infrastructure is embedded in the value of the land. Thus, it is not added additionally.

[Core Valuations @CoreValuations]

With the valuation of a game farm, the value of the building structures is added to the value of the land to calculate the total value of the farm.

[Core Valuations @CoreValuations]

Game is normally not included in the value of a game farm, it is a loose asset. It can be included on the specific request of the client but it must be valued and stated separately in the valuation report.

[Core Valuations @CoreValuations]

The quality and configuration of the game fence influence the value of the game farm, because it determines the game species that can be kept on the farm.

[Core Valuations @CoreValuations]

Closeness to another large reserve such as the Kruger Park, Timbavati, Sabi Sand, Klaserie, etcetera - increases the value of a game farm materially.

[Core Valuations @CoreValuations]

More factors that influence a specific game farm's value:
3. The farm shape and outlay. Narrow long shapes are not preferable
4. The extent
5. The location

[Core Valuations @CoreValuations]

There are factors that influence a specific farm's value:
1.) The access to the farm. How easy or how difficult is it to reach the farm.
2.) Right of way servitudes. It is a real nuisance if there is a right of way servitude

[Core Valuations @CoreValuations]

More reasons why game farms differ in value / ha
3.) Presence of Malaria ( foreign visitors often prefer malaria-free areas; thus, the value / ha is higher)
4.) Veld types differ. Sweetveld areas are usually higher in value vs sourveld areas

[Core Valuations @CoreValuations]

Game farms differ in value / ha for many reasons, some are:
1.) Grazing carrying capacities differ.
2.) Relative distances to other game reserves have an influence

[Core Valuations @CoreValuations]

Prerequisites for a game farm:
3. There must be secure and safe drinking water for the game, even in times of a severe drought.
4. Fire breaks are critical to prevent and control fires.
The availability of enough grazing at all times is essential

[Core Valuations @CoreValuations]

Prerequisites for a game farm are:
1. It must be game-fenced all around, with 2.4m height fence of acceptable configuration
2. There should be no internal cattle fences which prohibit the game to roam freely.

[Core Valuations @CoreValuations]

What makes it a game farm?
The bushveld cattle farm with free-ranging game on, is not a game farm.
The karoo sheep farm with springboks alongside the sheep, is not a game farm

[Core Valuations @CoreValuations]

Game Farm vs Wildlife Farm
A Game Farm is a smaller intensive wildlife production unit that is fenced on which wildlife is managed intensively for the production and harvesting of marketable game products

[Core Valuations @CoreValuations]

For a capital intensive business, as well as a business with a high investment in working capital (debtors and inventories), future free cash flow should be used.

[Core Valuations @CoreValuations]

Usually the Net Profit After Tax earnings is the preferred choice for the valuation computation.

[Core Valuations @CoreValuations]

If the revenue stream is expected to fluctuate, the DCF method and not the capitalisation method must be applied.

[Core Valuations @CoreValuations]

For a business or investment property one needs to assess the future pattern of revenue streams in terms of their year-on-year volatility