Sep 29, 2019 / 16:45

Savills sees valuation professionalism growing across Asia & in Vietnam

The Hanoitimes - Nguyen Hong Son, associate director, head of Advisory Services, Hanoi, FS & Valuation, talks about the outlook of the property valuation industry in Asia and Vietnam.

How do you evaluate the valuation sector in Vietnam? As an emerging economy and a young real estate market, what are the challenges for the valuation practices in our country?

The property valuation industry in Vietnam is still young but is gradually aligning with international valuation standards. Currently, the biggest challenges are quality control and inconsistent, ineffective and non-transparent market information.
 
Nguyen Hong Son, associate director, head of Advisory Services, Hanoi, FS & Valuation, Savills Vietnam.
Nguyen Hong Son, associate director, head of Advisory Services, Hanoi, FS & Valuation, Savills Vietnam.

Recently, the Vietnamese government has worked hard to improved land governance and database through a project funded by the World Bank that lasts until 2021 with an aim to improve the efficiency and transparency of land administration services, through the development and implementation of the national Multipurpose Land Information System (MPLIS). The project includes establishment and development of MPLIS and land database will provide technical assistance for the development of MPLIS and land database, finance digitization of existing maps and records on land use rights; updating and integration of cadaster data, land price data, land use plan data, and land statistics and inventory, etc. This system, however, remains ineffective for flexible transaction structure or unofficial transaction value.

Another interesting factor influencing property value and real estate market is land planning. All projects’ land uses should follow the high-level land planning; however, inefficiency in land planning management results in market values fluctuation thus showing inconsistent market information. This is more important since the land uses planning are not publicly approached and nowadays provincial governments have re-enforced all projects master plan to go public.

Last but not least, the valuation market practice was inconsistent for difference purposes then inconsistent information and data introduced. There are different property pricing systems and levels. For example, there is different land price for state compensation purpose, for land financial obligation calculation purpose and different market values following International Valuation Standards Council (IVSC).

For those discussed above, property valuation in Vietnam is now facing difficulties and challenges. However, there will be big potential since the market is growing and the narrowing gap with the region brings a lot of demand for market valuations.

How do you see the valuation sector growing in professionalism in Asia and Vietnam?

The real estate valuation industry is regulated by professional bodies on both a global basis by the Royal Institution of Chartered Surveyors (RICS) and local bodies - for example, Singapore Institute of Surveyors and Valuers (SISV). All have their own professional standards and guidelines, and both contribute to the betterment of the industry as a whole.

In Vietnam, Savills always ensures all its valuations comply with RICS and International Valuation Standards Council (IVSC) (which have been recognized by financial institutions, developers, and investors) whilst adapting market practices in Vietnam.

Similar development exists within the business valuation industry. The establishment of the Institute of Valuers and Appraisers of Singapore (IVAS) in Singapore is a good example. IVAS was founded in 2013 under the auspices of the Singapore Accountancy Commission (SAC), a statutory body of the Ministry of Finance, Singapore.

IVAS was established to advance the business valuation profession. It seeks to broaden the talent pool, deepen the expertise of business valuers, and to ensure quality in the delivery of work. The objective is to ensure that the business valuers are competent, trained, developed and adhere to the professional standards set by the industry. This initiative resulted in a certification program launched by the institute which led to qualified and experienced business valuers being awarded the designation of Chartered Valuer and Appraiser (CVA).

Both the SISV and IVAS are members of the IVSC, the global organization that sets the International Valuation Standards (IVS) and Professional Membership Obligations.

At Savills, our business valuers are CVAs and our real estate valuers consist of members of SISV and RICS. The RICS has recently included business valuation as a regulated service. We have also implemented a global procedures document which governs our internal policies and reporting standards across both real estate and business valuation. It is important that our team at Savills maintains strict adherence to the professional standards of SISV, RICS and the Professional Membership Obligations of the IVSC when delivering quality valuation in the marketplace.

The valuation profession is likely to face a period of significant change in the coming years, in terms of how the process is managed, the role of the valuer and the benefits they can offer to clients. How is the evolution in technology, for example, likely to impact real estate valuation?

Valuation is seen by many in the real estate industry as a tedious task; but for good reason. There is undoubtedly a number of our processes which could have easily been automated many years ago, albeit at the sacrifice of the detail and professional experience required to conclude a qualified opinion.

The key is to find a balance between automation and trusted advice. Savills is constantly exploring new automation initiatives and will be a leader in this global evolution. We have recently invested in numerous PropTech startup companies in both Singapore and abroad, with this in mind.
Real estate tech startups are changing property valuation, what are your thoughts on this?

The introduction of AI has certainly assisted valuers by eliminating the more mundane aspects of the process. It will more than likely separate the industry by providing valuation solutions for least complex real estate asset classes. Conversely, the more sophisticated assets will still require human interaction and specialized expertise.