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Valuation in unprecedented times
- Author: Andy Hellier
- Date: 20th November 2020
Since the Global Pandemic was declared in early March 2020 the commercial property market has seen disruption similar to and potentially worse than the Banking Crisis of 2008.
The impact of COVID-19 on the valuation market
When the national lockdown was enforced on 23 March it created a unique set of circumstances which caused significant uncertainty for those that rely on and carry out commercial property valuations.
The lack of understanding of the virus, the ambiguity over how long the lockdown period would last and how far-reaching the consequences of the virus would be, made this a uniquely challenging time for the valuation community.
Valuation of commercial land and buildings for the main property sectors relies on dependable information driven by arm’s length transactions to guide the process of determining Market Value and Market Rent.
By introducing a variable such as the virus, the data sets or comparables used by valuers had the potential to become skewed in a dynamically-changing environment. In simple terms it was unclear how each sector would react and if there was the possibility of a two-tier system of pre and post COVID-19. As the impact of the virus continues to play out, this challenge is still ongoing and is likely to be so for some time as the various markets continue to react to these changes.
An industry solution
To combat this uncertainty, the RICS created the Material Valuation Uncertainty Leaders Forum in March to consider the unique events relating to COVID-19 and its impact on valuation assignments. The Forum, which comprises a group of expert valuers covering a wide range of asset classes and specialisms, focused on financial reporting and measures for the accurate and consistent reporting of material uncertainty.
As a result of this they introduced the Material Uncertainty Clause, which attached a higher degree of caution to valuations than would normally be the case. The Clause has been removed for some sectors and remains in place for others as the market continues to react to the ongoing situation created by the pandemic.
Hellier Langston’s reaction
Between March and May when the strictest lockdown measures were in place, Hellier Langston endeavoured to maintain as professional and fluid a service as possible for their clients, and we continue to do so. For example, we’ve used innovative ways to carry out inspections such as via client-produced virtual tours where premises continued to be occupied by staff. The safety of our staff and clients is paramount, and from the earliest point when we were able to resume inspections, we have put protocols in place to ensure the safety of all those involved.
Not all sectors have reacted or been impacted in the same way. While the retail and to a lesser extent the office sector have been negatively affected, Hellier Langston has continued to see strong demand from both occupiers and investors in the industrial and logistics sector along the central south coast, reflecting national patterns.
Knowing both the macro and micro markets, and the specific nuances of each location and sector is now more important than ever to ensure valuation advice being provided to clients is reflective of a potentially changing and challenging market. With over 25 years’ experience providing valuation advice to a variety of clients, Hellier Langston is well-placed to meet the valuation needs of any client.
Let us help
Our valuation team offers a comprehensive service providing clients with up-to-date valuation advice on all types of commercial property. We will provide you with an unrivalled service and obtain an in-depth understanding of your assets to enable you to make decisions with confidence.
Get in touch to discuss your options with us and find out more.
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