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Press release

31 JAN 2019

Valuation notification: an RICS update

Technology is revolutionising consumer behaviour and having a profound impact on traditional retailing across much of the globe. While online retail sales worldwide still only amount to around 10% of total spending, this has increased from less than 6% just five years ago and an even greater proportion of purchasing decisions are now influenced in some way by the digital experience.

Predictably, this headline number masks significant divergence at a national level; the UK is leading the way with close to one pound in every five being spent through online channels with China not very far behind. Other countries at the forefront of this trend include Norway, Finland, South Korea, Denmark and Germany with the US consumers spending a broadly similar percentage digitally as the global average.

RICS issued a 'valuation notification' in December to the UK market, to warn of structural change in the commercial retail market and to underline the need for RICS registered valuers to reference the widest range of evidence available, including relevant market analysis and commentary, in their work. Such notifications are issued when there is weight of evidence that there is structural market change or substantial uncertainty. This notification was timed to take into account the end of year valuation process.

The notification supplements red book guidance which all our registered valuers adhere to, and simply underlines the requirement to base valuations on the widest possible evidence base. As well as transactions, valuers should also take into account other evidence such as the RICS' Commercial surveys. RICS Red Book adopts the International Standards set by the International Valuation Standards Council including the definition of Market Value, the requirements for the valuer to act independently and objectively and to apply recognised valuation methodologies for the purpose of the valuation.

Alongside the signals provided by the public markets, the RICS UK Commercial Property Market Survey provides another source of intelligence on the outlook for real estate.