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Commercial valuations ‘more accurate’

The accuracy of commercial property valuations improved in parts of Europe during the credit crunch despite ‘unprecedented circumstances’ and growing market uncertainty, according to a new report...

While valuations improved in France, Germany and the Netherlands, they were down slightly in the UK, the report from the Royal Institution of Chartered Surveyors shows.

The Valuation and Sale Price Report shows that 59.5 % of UK valuations in 2008 were within 10% of sale prices, down slightly from 60.4% the previous year.

France achieved 49.3% within 10% of the final sales price, up from 40.2% in 2007.

Germany did even better with 60% of properties within 10% of sale price, up from 47.6% the previous year, as did the Netherlands where the rate improved from 50% in 2007 to 62.4% in 2008.

‘This level of accuracy was achieved despite growing market uncertainty due to the severe lack of liquidity in the commercial property market brought about by the global credit crunch,’ the report says.

Overall capital values fell across the four major European real estate markets with some countries experiencing a more severe correction. The UK saw the sharpest decline of 26.3%, followed by France where capital growth of -6.0% was recorded.

The falls experienced by the Netherlands and Germany were more subdued at -1.7% and -1.4% respectively.
 
‘Despite a challenging economic environment, the gap between the sale price of an asset and its preceding valuation has tightened.

The dearth of global finance impeded investment activity with the number of transactions declining in most markets,’ explained RICS spokesperson Luay Al-Khatib.

‘However, rising yields attracted greater interest, particularly in the UK where capital values fell sharply.

Despite unprecedented market volatility and uncertainty, the evidence suggests that the valuation profession has kept pace with the curve and performed to exceptional standards,’ added Al-Khatib.

Source: www.propertywire.com

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