Disparities in the way different countries around the world measure property value can cause a negative impact on investment and global markets, and now experts are gathering for the first time in history in an attempt to create a global standard for property value assessment. The newly formed International Property Measurement Standards Coalition is hopeful that it can create global consistency in assessments that will help streamline financial reporting, reduce fraud and waste, and ultimately lead to a boost in property values. For more on this continue reading the following article from Property Wire.
For the first time ever the world’s leading property institutions are to meet today (Wednesday 01 May) to create a universal method of measuring property assets.
The meeting at the World Bank in Washington DC in the United States aims to tackle the problem of low investor confidence in property and its negative impact on financial markets.
At present, the way property assets such as a housing development or shopping centre, are measured varies wildly from country to country. With so many different methods of measurement available, it makes it difficult for those looking to invest in these developments to compare like with like.
This confusion can affect property values, lead to errors in financial reporting and, consequentially, undermine market confidence so it is hoped that new standards will ensure global consistency which will lead to fewer instances of fraud, a more transparent market, greater public trust and increased economic stability for investors.
Those attending include the UK’s Royal Institution of Chartered Surveyors (RICS), New York based Real Capital Analytics and Westfields Consultoria Empresarial of Brazil.
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Headed by RICS, this initial meeting of the International Property Measurement Standards Coalition (IPMSC) is the first step to delivering a global consistency and a reduced risk of fraud.
An example of this inconsistency is the way in which floor space is calculated. For example, in Spain, floor areas have been measured to include outdoor swimming pools. In parts of the Middle East they can include the hypothetical maximum number of floors that could be built on the existing foundations. And in Australia, measurements have included outdoor parking spaces, even when they are not physically adjoined to the property itself.
The IPMSC aim is to resolve disparities by developing and implementing International Property Measurement Standards, a set of standards for measurement that are principles based and internationally applicable, to be adopted by all nations across the globe.
‘This is a ground breaking initiative which has the potential to deliver huge benefits, both to real estate markets and to the economies and the populations they support around the world, by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements,’ said Ken Creighton, RICS director of professional standards.
Steve Williams, executive managing director of Real Capital Analytics, said that the accurate recording of land, building and floor area measurements is fundamental to market transparency. ‘Transparency in turn is a catalyst to the global capital flows that underpin the provision of adequate shelter, food and clothing to the world’s growing urban populations,’ he explained.
‘With the exception of language, it would not be an exaggeration to characterise global measurement protocols as the most urgent outstanding issue in the pursuit of global market transparency and performance comparability,’ he added.
Inconsistencies in commercial real estate measurement standards in Brazil have been responsible for confusion in the mind of space users, developers and investors, according to Ramsey Trados of Westfields Consultoria Empresarial which is based in São Paulo.
‘The discrepancies as to how space is measured can only further the distortions in values and overall definition of space. There is no doubt that unless there is an internationally recognized measurement standard, there can be no real internationally homogeneous standard of value,’ he added.
This article was republished with permission from Property Wire.