The accuracy of commercial property valuations increased in three of largest property investment markets in Europe, with the majority of valuations falling within 10% of sale prices. UK Valuations were only slightly down on previous years despite unprecedented circumstances according to the RICS Valuation and Sale Price Report, published yesterday (November 3, 2009).
62.4% of valuations in the Netherlands during 2008 were within 10% of sale prices (up from 50% in 2007) and 85.3% within 20%. In comparison, Germany valued 60% of properties within 10% of sale prices (up from 47.6%) followed by the UK (59.5% - down from 60.4%), and France (49.3% - up from 40.2%).
This level of accuracy was achieved despite growing market uncertainty due to the severe lack of liquidity in the commercial property market brought about by the global credit crunch.
Capital values fell across the four major European real estate markets with some countries experiencing a more severe correction. None more so than the UK which saw the sharpest decline of -26.3%, followed by France where capital growth of -6.0% was recorded. The falls experienced by the Netherlands and Germany were more subdued at -1.7% and -1.4% respectively.
RICS spokesperson Luay Al-Khatib comments: "Despite a challenging economic environment, the gap between the sale price of an asset and its preceding valuation has tightened. The dearth of global finance impeded investment activity with the number of transactions declining in most markets. However, rising yields attracted greater interest, particularly in the UK where capital values fell sharply. Despite unprecedented market volatility and uncertainty, the evidence suggests that the valuation profession has kept pace with the curve and performed to exceptional standards."