The Appraisal Institute joined some of the world’s leading professional organizations on May 2 in forming the International Property Management Standards Coalition. The two-day meeting at the World Bank in Washington, D.C., focused on developing and embedding a single standard for the way property is measured worldwide.
“Given the variances in how property assets are measured from country to country, this is an important effort with wide ramifications for the future,” said Appraisal Institute President Richard L. Borges II, MAI, SRA. “In joining this prestigious coalition, the Appraisal Institute continues to serve as the premier international real estate valuation leader.”
The signed document forming the IPMSC said: “Representative bodies of the international property profession, having agreed with the goal of addressing property measurement fragmentation to increase public trust while supporting financial reporting and sound economic information, we commit in principle to the development and implementation of international property measurement standards.”
The declaration to signify the organizations’ active support in developing and embedding an international property measurement standard focused on four objectives: standards, ethics, measurement and implementation. Chief Executive Officer Frederick H. Grubbe, CAE, signed the agreement on behalf of the Appraisal Institute. President-Elect Ken P. Wilson, MAI, SRA, represented AI at the meeting.
Besides the Appraisal Institute, organizations signing the document to form the IPMSC, a coalition of organizations operating across global property markets, include:
► Australian Property Institute (API),
► Building Owners and Managers Association (BOMA),
► Council of European Geodetic Surveyors (CLGE),
► International Monetary Fund (IMF) and
► Royal Institution of Chartered Surveyors (RICS).
At present, the way property assets – such as a housing development or an office block – are measured varies widely from country to country. With so many different methods of measurement in use, it makes it difficult for global investors and occupiers to compare space measurements accurately. This confusion can affect property values, lead to errors in financial reporting and, consequently, undermine market confidence and economic stability.
At the meeting, representatives of the organizations agreed on the next steps, which include the setting up of an independent standards development committee and a program of wider industry and stakeholder engagement.
The Appraisal of Real Estate, 13th edition (Appraisal Institute, 2008) says:
“Determining the size of a building may seem like the easiest step in preparing a building description, but it can be a formidable task for an appraiser who is not prepared for its inherent difficulties. The methods and techniques used to calculate building size vary regionally, differ among property types, and may reflect biases that significantly affect opinions of value. The appraiser must know the measurement techniques used in the area where the building is located as well as those used to describe properties elsewhere. Failure to apply measurement techniques and report building dimensions consistently within an assignment can impair the quality of the appraisal report.”