Is there a basis for a common real estate valuation syllabus? Ion Anghel & Richard Grover Section 2: The Role of Accreditation in Real Estate Education 4th Annual European Real Estate Society Education Seminar, Bucharest, 5-6 December 2008

The Project: Developing quality training approaches for effective property tax administration Lead partner: Centrul Regional de Formare Continua Pentru Administratia Publica Locala of Bucharest (CRFB) - project manager Virgil Pamfil Other partners: ANEVAR (Romania), the Technical University of Bucharest (Romania), CVT Georgiki Anaptixi (Greece), the University of West Hungary (Hungary), and Oxford Brookes University (UK)

The Project Countries Greece, Hungary, Romania, UK – all members of the EU, therefore:  Rule of law and security of property rights – environment in which valuers can behave ethically  Functioning market economies – basis for market value  Administrative infrastructure capable of supporting EU membership 2 from “old” EU (Greece, UK) and 2 New Member States (Hungary, Romania) – contrast between transitional and other economies Recent introduction of property tax changes in Greece, Hungary and Romania contrasts with established system in UK dating back to 1909 in modern form.

Different levels of property market development Jones Lang LaSalle Real Estate Transparency Index (56 countries, 5 tiers) –UK 5 th 1 st tier –Hungary 27 th, Greece 34 th 3 rd tier –Romania 48 th 4 th tier World Bank Doing Business 2007 (175 countries) –UK 6 th –Romania 49 th –Hungary 66 th –Greece 109 th

Valuation standards Have been developed since 1974 oil price and secondary banking crisis prompted question of why security proved inadequate when developers collapsed UK standards development from 1974 Development of European and International Valuation Standards means tendency towards harmonised approach Decision by EU to adopt International Financial Reporting Standards from 2005 means no real future for either national or European valuation standards International Valuation Standards – Greece, Romania, UK European Valuation Standards – Hungary National valuation standards only for matters that fall within strictly national competence

Qualifications and training of valuers No state regulation in any of 4 countries – some valuations in Greece and Romania reserved for approved valuers. UK client support gives RICS de facto near monopoly UK: RICS accredits degree courses, assesses through Assessment of Professional Competence after 2 years on-the-job training Romania: ANEVAR requires degree to enter its training and examination programme Greece & Hungary: Gap between high quality professional bodies and many practising as valuers with limited qualifications.

Codes of conduct : Hungary: European Code Romania & Greece: International Code UK: RICS Code that is compatible with International but makes extra demands eg professional indemnity insurance, handling of client moneys

Measurement standards UK and Romania: RICS and ANEVAR have produced codes Hungary: Use of European Code Greece: No universal system

Valuation methods Offices: UK & Greece – direct comparison; Hungary – dcf approach; Romania – use of comparison, dcf, capitalisation of net operating income, and depreciated replacement cost Retail: UK & Greece – direct comparison using zoning method for town centres; Hungary - dcf approach; Romania direct comparison, capitalisation of net operating income, and depreciated replacement cost Industrial: UK & Greece – direct comparison; Hungary - dcf approach; Romania – direct comparison and depreciated replacement cost Residential: UK, Greece, Hungary – direct comparison; Romania – direct comparison and depreciated replacement cost

Conclusions Influence of EU single capital market brings a degree of harmonisation in valuation approaches Influence of International and European Valuation Standards produces a degree of harmonisation in valuation approaches Differences in qualifications, including general educational qualifications. Could be due to countries with newer valuation professional bodies relying on transferable skills of those converting from other academic backgrounds. Challenge of how to produce a profession of young entrants without transferable skills from elsewhere