IVSC Wants Consistency in Investment Property Valuation
The International Valuation Standards Council reported Dec. 4 that an increased global interest in investment property has exposed numerous inconsistencies in the valuation approaches used in different parts of the world. The organization is pushing for consistency and is soliciting opinions on the creation of global valuation standards for such properties.
The push for consistency is being spearheaded by Simon Landy, a member of IVSC’s Standards Board and executive chairman of Colliers International in Thailand.
Simon noted in the organization’s consultation document that the rapid increase in the volume of cross-border investment over the past decade, especially in emerging markets, could potentially expose investors to added risk from subpar or inconsistent valuation practice.
“Compared to other more liquid investments, investors in products backed by property are more reliant on valuations when buying or selling products,” Simon noted in the document. “The IVSC has an important role in promoting best practices and greater transparency for valuations in this sector.”
Simon noted that the adoption of International Accounting Standards around the world is another factor exposing valuation inconsistency because the previous lack of specific international standards means that valuations have been inconsistent between various countries, making it difficult to make comparisons.
“The rollout of the International Financial Reporting Standards is requiring valuations of investment properties to be undertaken in some markets where there has not been a long tradition of regular valuations and where there is limited transactional information and other data,” Simon noted. “Our project aims to bring greater consistency to the reported values.”
The Discussion Paper is available on the IVSC website. Comment letters are due by Feb. 28, 2013, and can be submitted to CommentLetters@ivsc.org. The Appraisal Institute’s Professional Standards and Guidance Committee is reviewing the Discussion Paper and determining its response strategy.