RICS’ move to regain any lost public trust in the chartered surveying profession is of course to be warmly welcomed. However, in focusing only on public trust, RICS is at risk of ignoring (and losing) the trust of the wider property industry.
That’s because the professional body is yet to fully address the flaws in its valuation methods.
This is causing frustration for many property owners, operators and investors that have seen deals fall through because certain sections of the property sector have not yet been given the recognition they need from RICS.
As the owner of a flexible workspace operator myself, the lack of a standardised formula for my industry is worrying. While we have secured funding on the back of strong relationships and transactional evidence, to enable a more competitive sector and new entrants to market, a standardised valuation model is clearly needed.
I have called upon RICS on multiple occasions to review its valuation methodology. While there seems to have been lots of thinking going on, now is the time for RICS to put thought into action.
The good news is that a lot of the legwork has already been done, with a variety of alternative valuation formulas having been proposed. My very own Fuchs Formula would split the annual income generated by the flexible workspace centre into two or more tranches, applying a market yield to the first tranche up to ERV and then discount the yields applied to the outstanding income based on its variable nature.
The bottom line is that across the property world, new types of assets, spaces and services have emerged, but RICS has not yet been able to keep pace.
It is therefore essential that it updates its methodology to meet the requirements of the new world we live in.
It will undoubtedly improve trust in its profession as a consequence.
Giles Fuchs, chief executive, Office Space in Town