The relevance of real estate valuations for institutional investors and banks – views from a European expert group
The valuation profession is likely to face significant changes in coming years in terms of how the valuation process is managed, the role of the valuer, as well as the added value to clients.
This RICS Insights paper examines the challenges facing the global valuation profession drawing on the experience and opinions of an expert panel.
Exploring technological developments (such as Automated Valuation Models, Big Data, Artificial Intelligence and Blockchain) as well as changing client expectations, including the future value of a building and taking into account sustainability, the paper gives a number of recommendations for further debate. These include:
- the need for valuers to update their skill set;
- whether the valuer could, or should take on an advisory role next to the traditional role of providing a (market) value; and,
- a plea for the development of data standards as lack of high quality and consistent data continues to be a source of concern.
We are grateful for the involvement and support of INREV (European Association for Investors in Non-Listed Real Estate Vehicles) and EMF-ECBC (European Mortgage Federation-European Covered Bond Council).
Through discussion to added value
This paper serves as the starting point of an industry-wide discussion. We look forward to bringing the debate to your country, including valuers, investors, banks as well as the PropTech sector. Only by continuing the discussion between providers of valuations and their clients can we futureproof the valuation profession and ensure a continued added value.
Valuations are arguably more important for investment in real estate than any other major asset class. Real estate has gained popularity among investors in the recent low-interest rate environment, but the industry should not forget that valuation remains a potential Achilles’ heel, particularly in difficult market conditions. Debating the issues identified by this paper should help limit that risk and ensure that real estate remains in investors’ favour.
Accurate and transparent property valuation is essential to the mortgage lending and covered bond business on a number of crucial levels. Any work to understand the challenges and opportunities facing valuers and the services they provide into the future can only be beneficial. The fact that this paper was been elaborated by way of a collaborative effort between the valuation profession and its clients makes it all the more relevant and useful.
We welcome your thoughts and comments
Please send your feedback to Sander Scheurwater
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