Harmonisation of Valuation Standards Worldwide and Evolution of Different Interpretations of Market Value

• Autorzy: Krzysztof Grzesik , Sabina Źróbek
• Języki publikacji: EN

Abstrakty

EN

For many years, internationally recognised standard setting bodies have sought harmonise property valuation standards across the world. In this they have had some measure of success in standardising bases of value and definitions. In particular, there is now a universally accepted definition of Market Value as set out in International, European and RICS Valuation Standards and as also enshrined In EU Directive 2006/48/EC, known as the Capital Requirements Directive. Unfortunately the interpretation of the common definition of Market Value differs from country to country. Following the publication by The European Group of Valuers' Associations (TEGoVA) of a new edition of European Valuation Standards (EVS 2012), a clear difference has emerged between the interpretation of Market Value in North America and Europe. Valuers in the former are heavily dependant on highest and best use analysis whereas in Europe a less restrictive approach permitting the reflection of hope value is preferred. Such differences in the interpretation of market value will in turn impinge on the assessment of Fair Value for financial reporting purposes. Whereas in the case of property valuation, Fair Value is taken to be the same as Market Value for Highest and Best Use, under EVS 2012, the Fair Value of a property could differ substantially, from its Market Value. This paper seeks to explain the worldwide differences in the interpretation of the definitions of Market and Fair Value. In addition, it draws attention to two different meanings of the term Fair Value depending on whether the valuation is for financial reporting purposes or where there is a need to estimate the price that would be fair in a transaction between two specifically identified parties, where special value or synergistic value may influence the price agreed between them.The author concludes with lessons to be drawn by the valuation profession and property owners in Poland. In particular he suggests that the Polish Authorities should consider the wisdom of relying solely on "market value" in the disposal of state or municipal property assets. In the interests of maximising the proceeds from the sale of such assets Fair Value would seem to be a more appropriate basis of value as it would reflect any potential special or synergistic value, excluded from market value. (original abstract)

Słowa kluczowe

EN

Market value; Fair value; Valuation; Standards

PL

Wartość rynkowa; Wartość godziwa; Wycena; Standardy

• Czasopismo: Studia i Materiały Towarzystwa Naukowego Nieruchomości
• Rocznik: 2012
• Tom: Topical Issues in the Valuation and Application of Market Value
• Strony: 9--20

Twórcy

autor

Krzysztof Grzesik

• Polish Properties Sp. z o. o., TEGoVA

autor

Sabina Źróbek

• Uniwersytet Warmińsko-Mazurski w Olsztynie

Bibliografia

• IVSC (2007) -International Valuation Standards 8th Edition.
• IVSC (2012) - International Valuation Standards 2011.
• TEGoVA (2009) - European Valuation Standards 2009 (6th Edition).
• TEGoVA (2012) - European Valuation Standards 2012 (7th Edition).
• RICS (2009) - RICS Valuation Standards 6th Edition.
• RICS Valuation Standards - Global 2011 (7th Editio).
• RICS Leading Edge Series (2005) - A Vision for Valuation, Gilbertson and Preston.
• The Appraisal Foundation (2012-13) - Uniform Standards of Professional Appraisal Practice.
• Appraisal Institute (1997) - Real Estate Valuation in Global Markets, Gelbtuch, Mackmin and Milgrim.