Johannesbug -The Gupta family’s main residence – a mansion on three levels on a large piece of land in one of Johannesburg’s most expensive suburbs – has been valued at only R490 000 in the latest municipal valuation roll.
This is less than the property – set on on a 4 207m2 plot – was worth in May 1994 when it changed hands for R559 000 and less than half its value of R950 000 in October 1995 when South Africa’s property market languished in the doldrums.
According to a valuations report produced by Lightstone, the comparable sales valuation is R6.75 million.
The property in Saxonwold Drive, Saxonwold, one of four adjacent stands bought by Arti, Atul, Chetali and Rajesh Gupta, was valued at R16.89m in the last valuation in 2008, but mysteriously plummeted to only R490 000 in the latest valuation. Municipal valuations are based on the value of the land in comparison to other properties in the area and any improvements or buildings. The latest valuations will come into effect in July.
The decrease in the municipal value means the rates will drop from about R7 844 a month to only R157.90.
The radical decrease in the valuation of the Gupta family home goes against the tide which saw some Johannesburg homeowners in suburbs neighbouring Saxonwold hit with increases of up to 48 percent in supplementary valuation rolls.
The average valuation of around 80 000 properties was increased by 75 percent, which caused a furore. The City of Johannesburg has proposed a 5.3 percent increase in rates this year.
The other properties in the compound have been valued at R7m (on a 4 059m2 stand), R10.1m (1 723m2) and R3.79m (3 687m2). Together the 13 676m2 compound has been valued at R21.38m2, which works out to about R1 563 per square metre, which is on the lower side for the area considering the improvements the Gupta family has made to the property which includes a helipad, four mansions, a swimming pool and a cricket pitch amid manicured gardens, according to a report in the Sunday Times in 2011.
At the time, the newspaper valued the compound at R52m.
A history of sales in the area in the past five years (the period between municipal valuations), show the average price of a house in Saxonwold dropped from R5.32m last year to R4.62m this year. The average price in 2009 was R4.44m compared with R5m in 2010 and R4.41m in 2011. A 2 023m2 property in a neighbouring street to the Guptas sold for R8.35m in August while the cheapest house in the area – on a 3 696m2 property – sold for R4.3m last May. A 4 047m2 property in the suburb sold for R5.5m in November.
This week, estate agents who operate in the area termed the valuation “laughable” and “outrageous”.
“It’s absolutely ridiculous. Such a property (for R490 000) doesn’t exist (in Saxonwold),” said the Saxonwold agent for one of the country's top real estate agencies. She said a comparable price was R6m “at the bottom end”.
Jeanine Fincher of Chas Everitt agreed there wasn’t a property available in the area for R490 000 and said the low valuation was “ridiculous”.
Roger Price of Lew Geffen said the average price in the area was R5.5m and the average stand was 2 000m2. He said even vacant land went for much more, estimating that a 1 000m2 stand would sell for upwards of R1.5m. “you wouldn’t find anything for that (R490 000),” he said.
John Mendelsohn of the DA, shadow MMC on the Municipal Public Accounts Committee, said “one should be alarmed” that the valuation of the Gupta house was just R490 000. “It may be a finger error, but it needs to be corrected,” he said.
“The DA will be releasing a statement on Monday on what should be done about this. In terms of Municipal Property Act the municipal manager has the opportunity to object to this valuation and the municipal valuer has to submit the corrected value of the property,” he said.
He said it was impossible for the city’s valuers to inspect all 800 000 properties which meant it was possible for human error to occur.
Gupta family spokesman Gary Naidoo and the City of Johannesburg failed to respond to requests for comment. – Additional reporting by Thabiso Thakali
Saturday Star