Real Property Valuation

Real estate assets such as land and buildings (or in valuation terms, real property interests) are, more often than not, significant assets of companies. These assets are commonly required by accounting standards to be reported at their fair values on the companies’ financial statements. It is therefore pertinent for the valuation process of such assets to be efficient and effective for the financial reporting eco-system to function well.

The International Valuation Standards (“IVS”) issued by the International Valuation Standards Council (“IVSC”) is a set of widely recognised international valuation standards for the undertaking of valuation assignments, using generally recognised concepts and principles that promote transparency and consistency in valuation practice. Both International Valuation Standards (IVS) 20173 and IVS 20204 contain a Framework, five general standards and six Asset Standards (including Asset Standard IVS 400 Real Property Interests and Asset Standard IVS 410 Development Property). A real property interest is defined in Asset Standard IVS 400 as “a right of ownership, control, use or occupation of land and buildings”. Simply put, real property interest includes real estate, land and anything permanently affixed to it, and the bundle of legal rights related to the real estate.

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Generally, valuation for financial reporting purposes will involve the valuer (“Valuer”) as the professional service provider, the reporting entity as the client (“Client”) and the auditor (“Auditor”) as the reviewer for audit purposes.