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10 November 2008

Commercial property valuations in the UK most accurate in Europe

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by Lin Freestone

Commercial property valuations in the UK most accurate in Europe

The majority of UK commercial property valuations fall within 10% of sale prices, according to the latest RICS Valuation and Sale Price Report, produced in collaboration with IPD.

The UK valuations are the most accurate of the four largest property investment markets in Europe, with 60.4% falling within 10% of sale prices during 2007, and 84.5% within 20%. This level of accuracy was achieved despite market uncertainty due to the severe lack of liquidity in the commercial property market as a result of the global credit crunch.

In comparison, Netherlands valued 50% of properties within 10% of sale prices, followed by Germany with 47.6% and 40.2% in France.

Between September and December 2007, the number of properties sold below valuation almost doubled, compared to those sold earlier in the year, an indication of the beginning of the financial crisis.

In October 2007 sales dropped to a yearly low, but rose significantly in November and achieved the highest figure of the year in December as investors were forced to sell below valuation price in order to free up much needed capital.

A RICS’ spokesperson commented that this annual report is a vital measure of valuations, ensuring that the relationship between valuation and selling price is closely monitored.

The IPD Valuation and Sale Price research study has been running for over 20 years and was first undertaken as a collaborative study with the Royal Institution of Chartered Surveyors (RICS) in 2003. The analysis in this year’s report covers the markets of France, Germany, the Netherlands, and the UK.

IPD is a global information business, dedicated to the objective measurement of commercial real estate performance.


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