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How big is an office of 150m²?

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Presentation on theme: "How big is an office of 150m²?"— Presentation transcript:

1 International Property Measurement: One Standard for All PRODEXPO 2014 - Athens Liana Toumazou- RICS

2 How big is an office of 150m²?
Question: How big is an office of 150m²? TAF stakeholders are encouraged to: Help raise awareness of the project Sign up as Partner organisations and find out how to use IPMS Sign up as Coalition member organisations (if they fit the criteria) Ask questions of the Coalition! Through TAF representative

3 Why is property measurement so important?
Sound measurement is fundamental to property markets It underpins decisions made by all property users It provides a tool for comparison The importance of measurement: Space measurement is vital. It acts as a basis for: - Valuation - Occupation / building use - Investment - Financial reporting - Public confidence Not referring to units of measurement (feet/meters) but to the standard or methodology used to conduct a space measurement. What is included in a measurement. Measurements of space provides a use with a tool for comparison and enabled us to use space (as an occupier or an investor, for example) appropriately.

4 Today, measurement standards are not consistent.
Property is measured in many different ways around the world. Depending on the standard used, the floor area measurement can vary dramatically… Unfortunately, we live in a very confusing world. The world is getting “smaller” and more global in nature. So are real estate markets. However, currently there are many different standards to measuring property space. Depending on where you are in the world, property measurements will be calculated in different ways. This can mean that two identical properties in two different countries could have very different “measurements”.

5 In the U.S. sometimes the air-conditioned space is used instead.
In Spain, floor area measurements often include outdoor swimming pools. In parts of the Middle East, floor measurements can include hypothetical areas. In the U.S. sometimes the air-conditioned space is used instead. In India, floor measurements can include off-site car parks as well as common areas. What is included in a floor area measurement can vary significantly around the world. In Spain, residential property measurements often include swimming pools; In parts of the Middle East it is not uncommon for floor area measurements to include hypothetical floors In India, car parks can be included as well as common (shared) areas. In some parts of the U.S. property measurements are actually measurements of air-conditioned space and not floor areas.

6 This infographic shows how different measurement methodologies can lead to very different floor area measurements of the same space.

7 “Multiple standards equals no standard at all”. The Existing Challenge
Different measurement standards, different outcomes (>24%) Difficult to compare like-with-like Lack of transparency Difficult to compare cross-border transactions Huge impact on Financial Reporting Can lead to inaccuracies poor measurement This poses many challenges, some obvious; other less so but arguably even more severe. - One problem is that, fundamentally, it is extremely difficult to compare like for like It means that the property market lacks transparency (e.g. buyers/sellers not necessarily clear about the standard used) Investing across boarders is extremely difficult and makes the accurate assessment of international property portfolios very challenging A less obvious but critical issue is the impact that inconsistency in measurement has on financial markets in general. Real estate makes up a huge proportion of a companies balance sheet; it is also one of the biggest asset classes and facilitates flows of capital around the world. Inconsistent measurement practices makes it very difficult to understand exactly what space is owned across international property portfolios. It can (and probably does) lead to malpractice in certain situations and there is plenty of anecdotal evidence to suggest that property measurements can be manipulated using different approaches to achieve a pre-determined figure.

8 International Property Measurement Standards are the missing link
IFRS IVS IPMS IFRS is used and required by governments and companies around the world. IVS provides for a common approach to valuing assets around the world. This information feeds into IFRS. However, the measurement data that feeds into valuations is currently not standardised. As a result it undermines IVS and IFRS. An International Property Measurement Standard (IPMS) is a fundamental component that is currently missing.

9 Answer: IPMS TAF stakeholders are encouraged to:
Help raise awareness of the project Sign up as Partner organisations and find out how to use IPMS Sign up as Coalition member organisations (if they fit the criteria) Ask questions of the Coalition! Through TAF representative

10 Washington 2013: The birth of IPMS
The meeting was held over two days. The World Bank provide the venue and communicated their support for the initiative As a group, we agreed to form as a coalition to create a standard which we would all implement Set ambitious timeframe of delivery of 2014 Agreed that an independent standard setting committee would be formed to draft the standard Committed to widespread consultation and market engagement

11 BUT this is something that we are looking to address.
In May, a group of 13 professional organisations from around the world met for a meeting at the World Bank in Washington. The issue: inconsistent measurement standards. The solution: a shared, internationally adopted method that professional institutions would implement, together, for the benefit of not just our members who carry out property measurements, but to the millions of people around that world that are currently affected by the inconsistent practices.

12 International Property Measurement Standards Coalition (IPMSC):
By the profession; for the profession Professional members in more than 150 countries Public interest mandate Standards Setting Committee Guardians of IPMS In Washington, the IPMSC was established by 13 organisations. They agreed to develop and implement a common international standard for measuring property, starting with offices. Invited others to come onboard 12

13 Since the Washington meeting the Coalition has grown to 44 organisations (at June 2014)
More are joining all the time and all have committed to implement IPMS within their organisation when it launches later this year

14 IPMS ‘Partners’ Sign up to support implementation of IPMS
Voluntary designation Aimed at users and suppliers of property measurement information Identifies sector leaders in the implementation of international standards Opportunity to align with IPMSC and industry best practice Adoption is critical. The Coalition has created a ‘Partner’ category to give commercial entities the opportunity to get more involved. The status is free and not legally binding but requires firms to signal their support for the development and implementation of the standard. - Aim is to ensure the market understands and is ready for the launch of the standard. Will include:

15 IPMS Partners include:
Real estate consultancy firms; occupiers; developers; measurement firms; investors IPMS Partners are signing a declaration to support IPMS and committee to supporting their implementation. Include: Corporate occupier tenants Investors Real estate advisory firms Developers Academic institutions Measurement companies

16 IPMS Partners (August 2014):
Advisors/Consultancies Asteco Property Management Newsec Baltics Binswanger GImenez Zapiola British Arabian Bulgarian Properties Ltd CBRE (Brazil) CBRE (Middle East) Chestertons Cluttons (Middle East) Colliers International (Asia) Colliers International (Japan) Cushman & Wakefield (Asia) Cushman & Wakefield (Brazil) Cushman & Wakefield (Russia) DTZ (Italia) DTZ (Middle East) Expertises Galtier Guangdong Huayou Auction Co Ltd (China) Indonesian Society of Appraisers - MAPPI JLL (Hungary) JLL (MENEA) Jones Lang Wootton Khong & Jaafar Group (Malaysia) Knight Frank (China) Knight Frank (Middle East) LLJ Property (Dubai) Miami Realtors Ping An Real Estate Company Ltd (China) Prelios (Agency, Integra and Valuations) (Italy) REAG (Italy) REESCO (Poland) Renda Real Estate Company (China) Shenzhen Sogar Engineering Consultants Ltd (China) Trigránit (Hungary) Urban Splash (Cyprus) Veritas Brown|Cushman & Wakefield Wilchesycia Your Care Consult (France) Investors Benson Elliot Deutsche Asset & Wealth Management (RREEF) Expert Invest (Bulgaria) Measurement Companies Extreme Measures Inc. Lasertech Floorplans Pace Compumetrics Inc Plowman Craven Michael Gallie & Partners Measure Masters Solid Tech LLC Corporate Occupiers Vodafone Data Providers Reidin Universities & Institutions Universitat Politècnica de València (Spain) IE Business School (Madrid, Spain) Singapore Institute of Building Ltd (SIBL) Universidad Europea Madrid (Spain) Lisboa School of Economics and Management (Portugal) Neapolis University Paphos (Cyprus) Politecnico Milano (Italy) SDA Bocconi (Italy) Vienna University of Technology, Continuing Education Center (Austria) Developers/Construction China Harbour Engineering Company Ltd Hip Hing Construction (Hong Kong) Hong Kong Jockey Club Iacovou Construction (Cyprus) LangdonSeah (Beijing) LangdonSeah (Hong Kong) Rider Levett Bucknall Shui On Properties Management Ltd (Hong Kong) Government Auckland Council Property Ltd Housing New Zealand Other Microtop C.L.I. s.a. IPMS Partners to date….

17 How big is an office of 150m²?

18 Next steps Coalition will review before it is launched
IPMS will be adopted and implemented by Coalition organisations The standard will be published on the IPMS Coalition’s website Next: Residential, industry, retail and mixed-use IPMS for Offices currently out for a second round of consultation which will run until 15 September 2014 Coalition aims to publish the final standard before the end of the year. Expected to be used alongside existing standards at first but emerge as market best practice over time, providing a common language for property measurement throughout the world.

19 Thank you & Questions Liana Toumazou –
TAF stakeholders are encouraged to: Help raise awareness of the project Sign up as Partner organisations and find out how to use IPMS Sign up as Coalition member organisations (if they fit the criteria) Ask questions of the Coalition! Through TAF representative

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