Commercial property valuations ‘accurate despite market conditions’

Posted 06/11/2009

The accuracy of commercial property valuations has remained almost unchanged despite volatility in the market, according to the Royal Institution of Chartered Surveyors (Rics).

Research commissioned by Rics discovered that 59.5 per cent of commercial properties sold during 2008 achieved prices within ten per cent of their market adjusted valuation.

In 2007, the figure was 60.4 per cent, despite market conditions being much more predictable than in 2008, when prices fell by an average of 26.3 per cent.

Luay Al-Khatib of Rics said: “Despite unprecedented market volatility and uncertainty, the evidence suggests that the valuation profession has kept pace with the curve and performed to exceptional standards.”

The figures for 2008, which were compiled by Investment Property Databank (IPD), showed that valuations for shopping centres were most likely to be accurate, with 76.7 per cent of sale prices within ten per cent of estimates.

Offices were least likely to be correctly valued, with only 54.7 per cent of sale prices within ten per cent of the predicted mark.

Another recent IPD report revealed that commercial property capital values in the UK rose by an average of 1.5 per cent in the third quarter of 2009.