This will aim to tackle the problem of low investor confidence in property and its negative impact on financial markets.
Global coalition to tackle property market uncertainty
At present, the way property assets - such as a housing development or shopping centre - are measured varies wildly from country to country. With so many different methods of measurement available, it makes it difficult for those looking to invest in these developments to compare like with like. This confusion can affect property values, lead to errors in financial reporting and, consequentially, undermine market confidence.
Today (1 May), some of the world's leading property institutions, including the Royal Institution of Chartered Surveyors (RICS), will meet at the World Bank, Washington DC, to address this issue through the proposed implementation of a universal standard of property measurement. Such standards will ensure global consistency which will lead to fewer instances of fraud, a more transparent market, greater public trust and increased economic stability for investors.
Headed by RICS, this initial meeting of the International Property Measurement Standards Coalition (IPMSC) is the first step to delivering this consistency which will provide greater global financial stability more accurate and consistent financial reporting stronger investor confidence greater transparency of data reduced risk of fraud
An example of this inconsistency is the way in which floor space is calculated. For example, in Spain, floor areas have been measured to include outdoor swimming pools; in parts of the Middle East they can include the hypothetical maximum number of floors that could be built on the existing foundations; and in Australia, measurements have included outdoor parking spaces, even when they are not physically adjoined to the property itself.
The IPMSC aim is to resolve disparities by developing and implementing International Property Measurement Standards, a set of standards for measurement that are principles based and internationally applicable, to be adopted by all nations across the globe.
Ken Creighton, RICS Director of Professional Standards:
"This is a groundbreaking initiative which has the potential to deliver huge benefits, both to real estate markets and to the economies and the populations they support around the world, by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements."
Steve Williams FRICS, Executive Managing Director, Real Capital Analytics, New York:
"The accurate recording of land, building and floor area measurements is fundamental to market transparency. Transparency in turn is a catalyst to the global capital flows that underpin the provision of adequate shelter, food and clothing to the world's growing urban populations."
With the exception of language, it would not be an exaggeration to characterise global measurement protocols as the most urgent outstanding issue in the pursuit of global market transparency and performance comparability."
Ramsey Trados FRICS, Westfields Consultoria Empresarial Ltda, São Paulo, Brazil:
"The inconsistencies in the commercial real estate measurement standards in Brazil have been responsible for confusion in the mind of space users, developers and investors. The discrepancies as to how space is measured can only further the distortions in values and overall definition of space. There is no doubt that unless there is an internationally recognized measurement standard, there can be no real internationally homogeneous standard of value"
