Launch of European Valuation Standards (EVS) 2020

Interviewof Krzysztof Grzesik, Chairman of TEGOVA, and Michael Reinberg, Chairman of theEuropean Valuation Standards Board


Interviewer    You’ve issued these standards eight monthsinto pandemic-led economic free-fall. Did it have an influence?

KG   Ithasn’t so much influenced the drafting of the Standards as the focus andinterest of the reader, because our profession and the standards that underpinit are never more vitally relevant than when theeconomy and real estate are in free-fall. Gone are the false certainties aboutvalue. Vanished, the faith in algorithms crunching out-of-date data. Badlyshaken, the confidence of so many that they could gauge the market forthemselves. In crisis, valuers come into their own, relying on theirexperience, intuition and intimate local market knowledge to ascertain value.


Interviewer    There’sa strong sense that the crisis is twofold: viral and climatic, with some evenmaking a link. Has climate warming impacted your standards in any significantway?

KG  Yes, because EVS are developed in lock-step with the EU legalorder and 2020 was the year that the Union set itself the goals of carbonneutrality by 2050 and a 55% reduction in GHG emissions by 2030. The fact thatbuildings account for 36% of EU GHG emissions led to EU-mandated nationalLong-term Renovation Strat­egies, several of which contain legal obligations torenovate a building to a higher level of energy efficiency by a fixed date orat a certain inflection point (e.g. rental, sale) creating an unavoidable majorcost impacting value.


Accordingly,EVS 2020 upgrades energy efficiency valuation to Standard status and advisesvaluers to integrate these clear regulatory costs into their determi­nation ofMarket Value. It’s only the beginning of a complex valuation process, but it’sa sea change for a necessarily conservative profession. It is our duty to notpoliticise the process of determining value, but if three years from now yourbuilding’s energy rating literally takes it off the market, you have avaluation issue.



Interviewer   A lot of people, even in the propertyindustry, don’t always ‘get’ the point of valuation or understand how valuersreach their conclusions. Have the new standards addressed this issue?

MR   That concern permeated four years of workwith the prime objective of providing standards thatare relevant and easily comprehensible to valuers, clients and the publicauthorities. All sections were reviewed in that light, and all new parts passedthrough that filter including:


·       Greater clarity on the key conceptof Market Value, compensating flaws that have crept into various languageversions of EU law;


·       A common European Valuation Reportfor Residential Property;


·       New Guidance Notes and InformationPapers on subjects of real interest to practicing valuers;


·       Clarification of the role ofadvanced statistical models in line with the new Guidelines of the EuropeanBanking Authority;


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