The Harmonisation Of Property Valuation - The Role Of Valuation Parameters And Terminology

The rapidly advancing internationalisation of property investment and finance has created a multitude of transnational engagements of investors, financiers and properties, changing property valuation from a national to a truly international discipline. The differences in national valuation approaches present a severe limitation of the informational value and comparability of property values. These circumstances bring about the growing need for harmonization, in analogy to the development in financial reporting and valuation standards for consolidated accounts. While the harmonisation of value definitions has progressed considerably through the efforts of the IVSC, valuation methodology has been mostly neglected. This can be attributed to the complexity of the matter as well as to professional differences regarding the need for a standardisation. This paper points out an alternative approach emphasizing the role of valuation parameters and terminology in the harmonisation process. In order to substantiate the role of valuation parameters, the structure of property valuation in the international context is illustrated. The analysis of the traditional view of the structure serves as a basis for the development of the model of the extended context of property valuation. Having established valuation parameters as an effective route for the harmonisation process, the potential for the qualitative and quantitative standardisation of valuation parameters is examined and the results are summarized. This process is closely related to valuation terminology, of which the supportive role for the harmonisation is outlined. In conclusion the harmonisation of different national valuation terminologies is put forth as a practical step towards standardised valuation parameters.