As the RICS kicks off a new campaign to increase regulation and 'raise global awareness of business valuation standards' it marks the start of an important 12 months for the surveying profession. I can't help but compare the ongoing transformation of the traditional surveying firms to the revolution of stockbroking during the 1980's with an ever greater requirement to provide investment advice and analytical services as opposed to pure transactional activity. As consultants we are seeing client expectations change as banks and financial institutions look to build longer-term relationships with fewer consultancies rather than continuously commissioning piece meal work. Property consultants are increasingly required to provide (strategic) portfolio advice and asset management expertise to maintain and improve capital values, especially across non-prime property. Surveying firms need to underline their credentials and show that they can add value on an individual asset basis with seasoned management teams best placed to exploit opportunities.
But how does this impact on the valuation profession?
In the current climate where investors, occupiers and developers are all being required to perform thorough due diligence at an individual asset level, demand is increasing for seasoned and skilled valuers. The RICS continues to reiterate the harm of 'inconsistent valuations on growth and the ability to raise finance' and this reflects the need for valuers and surveying firms to have extensive city centre and regional exposure to be able to credibly reflect the value of individual assets.
The valuation profession is once more gaining momentum and surveying firms are realigning teams, whilst keeping a tight lid on efficiencies and costs. Residential investment, sustainability and the leisure sector are seen as key growth areas and the profession needs to react accordingly. The market is still suffering from limited levels of traditional Red Book valuations, with fierce competition between surveying firms, and thus the commercial sector is more focused on refinancing existing debt packages and ongoing portfolio / fund valuations. As such there is a requirement to differentiate, develop expertise in new specialisms and underline our expertise in a given market through direct and pro-active involvement. Accordingly I am increasingly keen to encourage valuers to participate in research and special projects and to represent the profession through committees and professional bodies. Whilst the RICS embarks on an exercise to rewrite the Red Book and improve valuers' training, independence and objectivity, as individuals we have a requirement to become more pro-actively involved in the industry and strengthen our credibility. The Investment Property Forum is one such means.
Changes to the Red Book
The RICS has launched a new edition of the Red Book (March 2012) to incorporate a number of changes to the existing edition to make it compliant with the new International Valuation Standards (IVS), in effect from January 2012. Whilst the new Red Book edition is merely an interim measure to ensure the existing material complies with the new IVS, a completely new Red Book is planned for 2013 . The interim edition, however, provides revised guidance and procedural rules for valuers to ensure users of valuation services have increased confidence that valuations have been undertaken in compliance with the highest possible standards and within international standards. It cannot be doubted that this move to further regularise the valuation profession and to align it with the International Accounting Standards Board (IASB) can only be a good thing, as there is a need to re-assert itself as objective and independent. Inconsistent valuations will of course affect businesses ability to grow and even continue trading, however I would stress that regulation is one thing and application another.
Investment Property Forum - Next Generation Group
I would like to make you aware of the Next Generation Group, an initiative launched by the IPF, aimed at individuals with between 5 and 15 years experience in the UK property investment market. The strength of the IPF lies in its diverse membership and its successful affiliations with associations such as the APB. It provides a comprehensive programme of free lectures and seminars, access to additional training and education and the opportunity to network with a wide array real estate professionals. For further information please contact either myself or Sue Forster of the IPF (sforster@ipf.org.uk 020 7194 7922)
Nicholas Howe
Lambert Smith Hampton
Email: nhowe@lsh.co.uk
