The COVID-19 pandemic and resulting recession had a significant impact on the property market in 2020 – one which will continue to be felt for some time.
Whilst now officially out of recession, property values have changed considerably, both up and down depending where you are and what type of asset or portfolio you have, all in just a few short months.
Wider property market indicators can no longer be relied on when carrying out property valuations. The market has changed so much and for so many reasons, including recent changes to planning use classes.
What’s changed?
Finance directors are having to keep up with regular changes to accounting standards in relation to property valuation for company accounts, and need increasing property valuation support.
Where once businesses could carry out an “in-house review” of their property assets which allowed market adjustments to be made or values to be held between formal revaluation by RICS-registered property valuers, this trend is now changing with the arrival of COVID-19.
Finance directors now want more external validation of property asset values when completing company accounts, to provide more certainty.
There can be several reasons for this, but it is predominantly about due diligence and corporate risk, as well as ensuring an up to date assessment of the business’ overall market.
Why finance directors might consider external valuation:
- Accurate valuation of the overall business
Now, more than ever, shareholders want external confirmation of property asset values, so they can understand overall business value or potential risks. The same is true of development appraisals, to better inform overall asset value for the purposes of company accounts. - Market validation of asset value
For assets in the industrial and logistics sector where demand has rocketed in recent months, valuation requests help to validate the strengthening values in this sector. - Historic consolidation
It can also be important for updating or consolidating historic values proven to be inaccurate on the back of property rationalisation projects like the subletting of surplus space or selling of property which may call into question other asset values within a portfolio – something which will also be of interest to anyone auditing the business. - Standardisation of processes
We have been approached by several multi-national companies over the last six months, to revalue their UK-based properties to achieve a common standard across their global portfolios for consistency.
Act now to gain an accurate valuation for company accounts
With the financial end of year reporting season fast approaching, and with the property market having evolved so much in 2020, it is worth seeking an up to date property valuation for the purpose of company accounts.
This could be to validate past assumptions, to help convert the methodology of reporting or even to undertake a wider portfolio review.
If you would like to request a valuation, our team of over 20- RICS Registered Valuers can provide a professional third-party valuation of your property assets to inform this year’s accounts.
