Valuation Conference 2020 round-up: investment assets to watch

Delegates from all areas of valuation met in London at the RICS Valuation Conference 2020 to hear keynote speeches and attend specialist breakout sessions.

The event opened with an economic overview from RICS Chief Economist Simon Rubinsohn focusing on current events and how they might impact markets, as well as the importance of members contributing to the organisation’s regular market surveys. Alternative investments such as hotels, student housing and industrial remain the assets to watch, he said.

Insurance and the future of risk

The focus then moved to risk, liability and insurance. Greg Harrison of Howden advised on how to prepare for PII insurance renewal in an increasingly challenging market – it needs plenty of time, and the right questions to insurers, especially as things may have changed significantly since the current policy was taken out. Giving a legal update, liability disputes specialist Tom White of Clyde & Co explained that, fortunately for valuers, there were no recent cases of valuation disputes – and when they return, valuers will be better protected from the ‘confetti letter’ litigation of the global financial crisis by legal changes introduced in the interim. He also looked to the future of risk – Automated Valuation Models, technology inadvertently multiplying errors and climate change are all likely to change the risk picture for valuers.

Red Book update

David Tretton gave an update on the Red Book, reminding delegates to ensure that they didn’t just own a copy, but read it and keep up to date, and updated them on the latest changes as well as some of the common problems RICS Regulation encounters when reviewing registered valuers. The recording of information and understanding the limits of competence remain areas that require improvement for many firms.

Valuing sustainability

A panel on environmental sustainability and valuation agreed with the view that while there is as yet no clear ‘green premium’, the ‘brown discount’ for inefficient buildings is becoming increasingly noticeable. Energy performance certificates are looked on with gathering scepticism as poor measurement and wildly differing performance within the same category has become apparent. Relations with occupiers need to change as buildings move toward net zero carbon – asset managers need to talk with them about behaviours and how they use the tools to make buildings greener so they maintain common goals.

Challenges going forward include the wide variety of sustainability/valuation models in different regions, the sheer volume of buildings requiring refurbishment, and a perception that valuers don’t understand sustainability. But there are opportunities too, in lower-carbon building materials, greater re-use in refurbishment and in valuers being equipped to provide better advice around sustainability.

The many skills of valuers

The popularity of the afternoon breakout on alternative asset markets showed the increasing profile of this area – delegates learned about the hotel, food and beverage, leisure, and care home markets. The latter in particular is in great demand from investors looking for a long-term asset in a market that can only grow alongside the aging demographic but is impeded at present by planning difficulties. Leisure meanwhile is taking over space from beleaguered retail as ‘competitive socialising’ and ‘Instagrammable leisure’ take off for people looking for new experiences. Reinvention will be central for these to keep interest after their initial surge – and they will be a challenge for valuers as novel concepts emerge.

Meanwhile, those who attended the machinery and business assets stream heard from John Fletcher, ADR Product Group Director at RICS, who outlined some of the key dispute resources available to valuers, including the new RICS Foundation Certificate in Alternative Dispute Resolution and Conflict Avoidance course which covers mandatory competency requirements. Deborah Bailey of EY, then explained valuation approaches to assets and machinery and the reasons for choosing these, and the ways in which these assets may depreciate. These are important to understand in cases where there may be no market due to the bespoke nature of some such assets.

During the final session of the day on personal property, Emily Gould of the Institute of Art and Law provided a history of legislation around important artworks and historical objects, from the 1945 Hague Convention to modern import and money laundering directives designed to prevent terrorist funding and other crimes.

These were just some of the sessions of a packed and varied day reflecting the many skills of valuers and the vital role they play in the built environment.

Claudia is senior journals and content editor at RICS. She edits the RICS Property Journal