Article | Intelligent Investment
The 10 innovations and disruptions that will impact property valuation
November 20, 2020
Property valuation is undergoing a period of transformation in terms of technology, the services provided to clients and even the role of the valuation professional.
Here are the 10 innovations and disruptions expected to impact property valuation around the world in the coming years.
Evolving Client Requirements
The property industry is demanding more in terms of valuations, assessments and advice on the long-term value of buildings, marking a step away from the previous focus primarily on current market value. This will kickstart an evolution in how clients select and utilise valuation services, with the standard offering replaced by a broader and more dynamic range of services and product options.
The Role of the Valuer
The increasing automation of many parts of the valuation process, the growing importance of data analysis and interpretation, and evolving client requirements all have implications for the role of the valuer. A far more diversified workforce likely will emerge, with valuers no longer focusing purely on the physical asset, leases and operating costs. Data analysts, statisticians, programmers, accountants and industry-specific specialists are already embedded in valuation teams worldwide—a trend that likely will accelerate in coming years.
Government regulations and incentives, the potential for cost savings, occupier requirements and the shift toward corporate social responsibility are driving a focus on sustainability in commercial real estate, which is spurring the development of green buildings worldwide. Investors will increasingly seek high-quality properties with these attributes, while incorporating sustainability and wellness criteria into their value-added strategies to ensure portfolios align with this long-term trend. Future valuations of properties must take these factors into account.
Valuation professionals will increasingly use data collected by smart technology to more accurately gauge the current and future performance of real estate assets. Much of this data supports cost management, such as repairs and issues around functional obsolescence. Beyond simply harnessing this data, valuers will have to apply and interpret how this information impacts current and future value.
New Market Entrants
The coming years will see specialist property valuation providers face growing competition from new entrants to the valuation business. While many of these new entrants may lack the first-hand property data, market knowledge and talent leveraged by real estate services firms, established valuation providers will have to respond by accelerating their adoption of smart technology and analytics tools to remain competitive.
Intelligent Valuation Platforms
Support applications integrating real time data are rapidly becoming indispensable for valuation professionals seeking to perform accurate and efficient assignments across markets and asset classes worldwide. These platforms will eventually assist in providing an underlying assessment of property value and greater clarity to investors on the attractiveness of a potential acquisition. These platforms also help valuation service providers homogenise workflows across their networks to reflect the interconnected global marketplace.
As the volume of data increases and new ways of processing and analysing it are developed, valuation companies can provide more sophisticated advice. The development of platforms that efficiently collate and interpret data—as well as training professionals capable of operating such systems—will be critically important to deliver reliable appraisals.
COVID-19 restrictions have made it difficult for valuers in many global markets to physically inspect properties, creating a pressing need for automated technologies to assist them in conducting remote or “contactless” valuations. These include automated valuation models (AVMs) that estimate the value of real estate assets using property, transactional and socio-economic data; blockchain, which could potentially play an important role in tracking and providing a clear record of when a valuation is assigned, completed and provided to the client; and the use of drones or robots to conduct building inspections.
Growing interest in alternative asset classes will open new opportunities for valuation services and will require specialists. A deeper understanding of the key drivers, players and nuances within each alternative sector will be required, and those with the relevant knowledge and experience will be best able to take advantage of these new opportunities.
Real estate development and investment will continue a global scale as cities are transformed by urbanisation, technological innovation and the clustering of industries. As more investors reach beyond their traditional regions and build global property portfolios, valuation service providers must be able to service global clients with local data and detailed on-the-ground knowledge that is of consistent quality across borders.