IVSC to improve standards for the valuation of investment and development property
31 January 2014
The Standards Board of the International Valuation Standards Council (IVSC) has launched a public consultation on its proposals to improve the standards for the valuation of investment property and of any property that is under development.
The two consultation drafts issued today are the latest stages of a process that started two years ago when industry bodies representing some of the largest Real Estate Investment Trusts (REITs) and property companies approached the IVSC requesting that it act to tighten up its standards in the light of issues that they had experienced.
Board member Simon Landy of Colliers International in Thailand explains:
“The increasing requirement around the world for companies to report their results in accordance with International Financial Reporting Standards had revealed some inconsistent and even poor practice in dealing with the valuation of investment property. An example was the treatment of properties held in special purpose vehicles; in other cases it was not clear if intangible assets such as the brand of a shopping centre operator were being reflected in the real property value.”
The Board is proposing a series of alterations to its existing standards to clarify how such issues should be addressed. Another aspect concerned the valuation of property that was either identified for development or which was under development on the valuation date.
According to Landy there was continuing evidence of dubious practice in some parts of the world:
“Although the IVSC had issued a standard on the valuation of investment property under construction a few years ago, the principles in that standard apply to any type of property that is under development. There was a problem because some people did not realise this so we are proposing to change the current standard to make its wider application clear.”
Comments on the proposals are invited before the end of April 2014.
Copies of all the consultation drafts may be downloaded from the IVSC’s website: www.ivsc.org
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