RICS launches key practice information for discounted cash flow (DCF)

In anticipation of a Global Red Book update in 2024, and following its Review of Real Estate Investment Valuations, the Royal Institution of Chartered Surveyors (RICS) has released new practice information for using the method of discounted cash flow (DCF) in the valuation industry.

The new practice information does not impose specific requirements to use the methodology. While RICS encourages DCF use where suitable, it is committed to the valuer's autonomy when selecting an appropriate valuation method, or methods and models.

DCF is a method of assessment which considers the expected accumulation of interest and, in this context, is applied to valuation. Widely used in modern professional services, and while not mandatory, valuation professionals increasingly use the DCF method in their businesses. As such, RICS is providing up-to-date information for the latest methods that the industry chooses to use, supporting the industry it represents in upskilling, and ultimately supporting markets and serving the public good.

RICS is launching an online web hub to support the practice information. DCF Hub is a dynamic resource which will empower valuers with knowledge and tools for the practical application of the discounted cash flow method.

RICS International Head of Valuation, Ben Elder, said: “DCF is an important tool for valuers, but it also has applications across many areas where analytics are crucial to providing strategic investment advice. It is increasingly essential for surveyors, clients, regulators, and other stakeholders to understand DCF and explicit valuation techniques more widely.

"RICS has today launched an online DCF web hub that offers a practical learning experience going beyond the theory. These tools and resources improve knowledge and standards in the valuation industry, which ultimately serves the public interest.

"I would like to thank RICS' members, staff and the countless vital stakeholders both within and outside the valuation industry who have made this practice information and its accompanying learning hub a reality. Their work is crucial for keeping RICS' guidance at the cutting edge of industry demands, and we look forward to witnessing the improvements that this information and education will bring to the industry."

-ENDS-

Notes for editors:

The new practice guidance will go live at this link on the morning of 9 November.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

For more information:

Kris Hicks - Khicks@rics.org

press@rics.org