29/07/2010 - 00:00

Property valuers point to 2011 recovery

29/07/2010 - 00:00

Bookmark

Save articles for future reference.

RESIDENTIAL and commercial valuers are looking towards next year for a recovery in the property sector, as the industry endures criticism that overly optimistic valuations contributed to the global financial crisis.

Property valuers point to 2011 recovery

RESIDENTIAL and commercial valuers are looking towards next year for a recovery in the property sector, as the industry endures criticism that overly optimistic valuations contributed to the global financial crisis.

Hegney Property Group managing director Nathan King said the valuation market, both commercial and residential, had stalled in recent months due to the federal election, speculation over the Gillard government’s proposed mining tax and rising interest rates.

“The market quite often drives on sentiment, and that’s just sort of taken the wind out of the sails,” Mr King told WA Business News.

“The forecasters were saying that 2010 was going to be a patchy year, and the proof in the pudding shows that it has been a bit of a patchy year, but I think things will settle down to a traditional sort of pattern over the next couple of years.”

The valuation market in Western Australia has largely been cornered in recent times by five large firms: Herron Todd White; Hegney Property Group; Propell; CB Richard Ellis; and Quantia.

Some consolidation has taken place during the past two years, with Herron Todd White absorbing Sullivans, while Quantia was formed from the merger of Christie Whyte Moore and Valuation Partners, which were previously two of WA’s most experienced and largest independent property valuation consultancies.

Herron Todd White managing director Brendon Ptolomey said the firm was responding to declining demand for residential valuations by building its commercial valuations team.

Former ANZ property risk manager Matt Tanner has been appointed commercial director alongside fellow commercial director Ray Gourley to enable HTW to take on larger commercial valuations than its traditional $5 million to $15 million base market.

“There is a bit of pent up demand out there, but we’re a bit quieter than we’d like to be but that’s just market forces at the moment and the economic cycle,” Mr Ptolomey said.

“Really the expansion is to build on the basis of a very strong residential offering to move into that commercial space.

“On the commercial side of things I suppose we’re pretty realistic that we’re in a recovery cycle at the moment and we’re probably a couple of years into that recovery cycle.

“We’re hoping that the market can work its way through that relatively quickly, but I suppose the bottom line is that these things don’t happen overnight with commercial, retail and industrial property.”

Recently, property valuers have come under fire from banks threatening legal action in attempts to recoup losses made on valuations done at the height of the property boom.

“Valuers are coming under attack because, at the same time as financial institutions are seeking recompense for shortfalls in mortgagee sales, there are reports that valuations are eroding large sections of portfolios in property trusts,” multinational property industry professional standards qualification firm RICS’ chairman, Stephen Ellis, said.

“Valuers must adhere to a strict code of ethics and processes when undertaking a client brief. It is erroneous to assume negligence applies merely because a mortgagee sale does not cover a lending position based on a valuation written prior to the GFC.

“All of us need to look at the industry through the windshield not through the rear-view mirror

Mr Ptolomey said that because valuation was just one step in receiving finance from a bank, it was unfair to blame property valuers for a loss in value over time.

“There are lots of other factors the banks and the property risk guys are considering in terms of handing out approvals,” Mr Ptolomey said.

“That could be things like income, it could be the risk of value in that property decreasing in the future, it could be where the income’s being derived from, developer track record is a huge thing at the moment, and certainly with residential en globo land it has been a massive thing.”

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options