Martin joined Savills in 2004 and is currently responsible for Valuation & Advisory Services throughout Asia. He specialises in cross-border corporate and institutional property portfolios. The IVSC spoke to Martin to find out more about the evolution of the valuation profession across Asia, and the work Savills is doing to shape this.
1. Savills will sponsor the IVSC AGM and Institute of Valuers and Appraisers of Singapore (IVAS)/IVSC Business Valuation Conference in Singapore from 7-11 October 2019. Why is this event so significant?
This is the first time that the IVSC AGM is held in Singapore, followed by the IVAS/IVSC Business Valuation Conference. Singapore is a global business and financial centre and valuation is an important component of investor and corporate activities in the financial markets. This week-long event will bring together the leading valuation authorities from around the world including government representatives, global investors, banks, and many of the leaders of the world’s foremost valuation professional organisations to exchange views, ideas and discuss key trends, as well as opportunities to enhance confidence and trust in the valuation industry for the public good. Savills is proud to be involved in this initiative. We are glad to be aligned to this event and to be at the forefront of efforts to enhance international standards and professionalism in valuation.
2. Savills is listed in the UK and has more than 600 offices throughout the world. It is most commonly recognised as being a provider of real estate valuation services, although earlier this year Savills announced a new business valuation service based in Singapore, what factors have led to this development in your business?
As a leading service provider, our expansion plans are primarily driven by the needs of our clients; the demand for a single valuation solution covering both real estate, business and intangible assets became apparent to us about 3 years ago. Additionally, Accounting Standards across the world have been extremely effective in promoting a global reporting framework, which further prompted us to offer an all-inclusive service. We now offer our clients a high degree of consistency of reporting and project coordination, regardless of the classification or physical location of the assets or liabilities. At a corporate level, the opportunity to establish a market leading business valuation team also provided a strong degree of diversification to our less transactional revenue streams.
3. Despite a number of the high-level professional principles and competencies overlapping between real estate valuation and business valuation, fundamentally they are two different specialisms which require different skillsets and technical knowledge; how will Savills reflect this in the business valuation services they offer, as distinct from real estate valuation?
We view business valuation as a totally separate discipline to our real estate offering. The commonality is the value system that we subscribe to and the clients that we serve, many of whom request both services. Our dedicated business valuation team is led by Eric Teo, a recognised business valuation leader. Eric is the Founding Chairman of IVAS and Chairman of the IVSC Membership and Standards Recognition Board. The team is professionally trained with the relevant qualifications in business valuation, and are all members of various professional bodies. Our experts have extensive experience across Southeast Asia, having performed numerous business valuation engagements for a diversified portfolio of clientele across a broad spectrum of industries. We assess each case individually, and if ever a conflict of interest (or even a perceived conflict of interest) is identified, we simply decline the instructions.
4. For what purposes are your clients seeking business valuations? Is there a growing demand for these services and if so, what do you think is driving this?
We regularly receive requests for a plethora of purposes such as mergers & acquisitions, divestitures, capital raising, tax and statutory compliance, and restructuring to name a few.
With fair value management now firmly anchored in accounting practice globally, a lot of our cases now relate to various financial reporting requirements, where robust valuations play an important role
Additionally, business valuation has further gained prominence in Southeast Asia in recent years, given numerous developments such as the growing importance of intellectual property in business in today’s tech-centric economy, and the rise in arbitration and litigation proceedings due to commercial and shareholders’ disputes.
The IVAS/IVSC international business valuation conference will take place at Marina Bay Sands, Singapore
5. Singapore has adopted the International Financial Reporting Standards (IFRS). To what extent has this influenced awareness of, and demand for, professional valuations?
The introduction of IFRS certainly elevated the standard of valuations being produced, and undoubtedly instilled a higher degree of accountability across the industry in general. The global reporting framework not only provides a scope for valuations, but also a base from which auditors can more accurately assess the robustness of a report.
Lessons learnt from the Global Financial Crisis highlighted the importance of compliance with Accounting Standards, and we have since witnessed a greater awareness of the significance of valuations in the reporting process. Most prudent investors are now well versed on IFRS and are demanding a more consistent approach to the presentation of financial results when assessing the performance of a company.
6. How do you see the business valuation sector growing in professionalism? What lessons can be drawn from the real estate valuation profession which has become well established over several decades.
The real estate valuation industry is highly regulated by professional bodies on both a global basis by the Royal Institution of Chartered Surveyors (RICS) and locally by the Singapore Institute of Surveyors and Valuers (SISV). Each have their own professional standards and guidelines, and both contribute to the betterment of the industry as a whole.
Similar development exists within the business valuation industry. The establishment of the IVAS in Singapore is a good example. IVAS was founded in 2013 under the auspices of the Singapore Accountancy Commission (SAC), a statutory body of the Ministry of Finance, Singapore. IVAS was established to advance the business valuation profession. It seeks to broaden the talent pool, deepen the expertise of business valuers, and to ensure quality in the delivery of work. The objective is to ensure that the business valuers are competent, trained, developed and adhere to the professional standards set by the industry. This initiative resulted in a certification program launched by the institute which led to qualified and experienced business valuers being awarded the designation of Chartered Valuer and Appraiser (CVA).
Both the SISV and IVAS are members of the IVSC, as the global organisation that sets the International Valuation Standards (IVS) and Professional Membership Obligations.
At Savills, our business valuers are CVAs and our real estate valuers consist of members of SISV and RICS. The RICS has recently included business valuation as a regulated service. We have also implemented a global procedures document which governs our internal policies and reporting standards across both real estate and business valuation. It is important that our team at Savills maintains strict adherence to the professional standards of SISV, RICS and the Professional Membership Obligations of the IVSC when delivering quality valuation in the market place.
7. Do Savills provide business valuation services in other markets around the world?
At this stage our Singapore-based business valuation practice only covers Southeast Asian markets. We are currently exploring several expansion opportunities in North Asia, however we are extremely cautious in our selection process. Identifying an appropriately qualified team with the relevant level of experience is challenging, and we are happy to wait it out until we find the right people. While there are some commonalities in the valuation disciplines of real estate and business valuation, they are fundamentally different fields of practice and it is therefore vital to ensure the requisite skillset is available.
8. The valuation profession is likely to face a period of significant change in the coming years, in terms of how the process is managed, the role of the valuer and the benefits they can offer to clients. How is the evolution in technology, for example, likely to impact real estate valuation?
Valuation is seen by many in the real estate industry as a tedious task; but for good reason. There is undoubtedly a number of our processes which could have easily been automated many years ago, albeit at the sacrifice of the detail and professional experience required to conclude a qualified opinion. The key is to find a balance between automation and trusted advice. Savills is constantly exploring new automation initiatives and will be a leader in this global evolution. We have recently invested in numerous PropTech startup companies in both Singapore and abroad, with this in mind.
9. Real Estate Tech Start-ups are changing property valuation, what are your thoughts on this?
The introduction of AI has certainly assisted valuers by eliminating the more mundane aspects of the process. It will more than likely separate the industry by providing valuation solutions for least complex real estate asset classes. Conversely, the more sophisticated assets will still require human interaction and specialised expertise.
You can find further information from Savills at www.savills.com.sg