RICS Research Report: The Role of International and Local Valuation Standards in Influencing Valuation Practice in Emerging and Established Markets
RICS (Royal Institution of Chartered Surveyors) research launched this month (March 2014) finds international valuation standards have a key role to play in setting professional and ethical best practice and valuer responsibility.
Evidence from the report argues that International Valuation Standards (IVS) and the RICS Red Book are increasingly requested during property transactions by international investors.
The report commissioned by RICS and authored by a joint research team from the University of Ulster and the University of Reading was presented to an audience at MIPIM 2014 in Cannes by RICS Senior Vice President Martin Brühl, FRICS (Fellow of the Royal Institution of Chartered Surveyors).
Underlining the demand for international standards in valuation documented in the report, researchers concluded that valuation standards have a major role to play in regulating professional practice and promoting trust in valuers globally.
Currently the use of local valuation standards around the world can cause confusion, particularly amongst international investors; and whilst the report sets out a number of differences between emerging and established markets, in respect of valuation practices, (such as the methodologies used and reporting styles), it is clear that there is a shift towards greater consistency and demand for an international benchmark.
As part of a comparison between markets on the use of standards, the report presents an overview of local and international valuation standards used across emerging and established markets, with a focus on four countries; Brazil, China, the UK and the US.
Of the four countries investigated the established markets of the UK and US use a single valuation standard such as the RICS Red Book, which incorporates the International Valuation Standards (IVS) within it, in the UK and the Uniform Standards of Professional Appraisal and Practice (USPAP) in the US. In contrast the emerging markets of Brazil and China have a proliferation of local standards which are technical rather than principles based.
The report demonstrates the significance of International Valuation Standards for sustainable international growth and recommends that an effective synergy between international and local standards can offer investors greater confidence in global valuation practices.
RICS Director of Global Research & Policy, Dr Clare Eriksson, commented:
“This research provides strong evidence that there is a clear demand for internationally recognised valuation standards. Having such standards in place will help to ensure that valuers worldwide work to a consistent set of professional and ethical standards which will provide greater assurance to international investors. Working in collaboration with local and international standards setting bodies, RICS has a key role to play in promoting and regulating global valuation standards.”
Report author, Dr Lesley Hemphill, said:
“The report findings are significant in identifying the progress made by emerging markets in setting and enforcing standards whilst recognising the impacts of data limitations and market immaturity. A lot of importance is still placed on local valuation methodologies and reporting styles. However, a greater level of consistency and commonality now exists between established and emerging markets, often underpinned by international standards. This will help to drive investor confidence in local valuation practices.”