HONG KONG, May 9 /Xinhua-PRNewswire/ -- The way valuers communicate investment risk to clients should be standardised using techniques borrowed from credit rating agencies, according to research released by RICS (Royal Institution of Chartered Surveyors).
The key aim of the research was to apply existing techniques in order to develop a system for scoring property investment risk -- Property Risk Scoring (PRS).
The proposed new method, based on techniques used in risk scoring by credit rating agencies, identifies the key risk factors for property investment as being lease length, yield movement, rental movement and changes in occupier demand.
Joint author Norman Hutchison says, "The risk score (a number on a 1-5 scale) could be reported to the client at the same time as the valuation, enabling a more detailed understanding of the property investment. PRS provides a more transparent measure of the risks of the investment, at the date of valuation, thus assisting the client in making their investment decision. It's similar to the widely accepted D&B credit rating technique, thus aiding market acceptance."
RICS spokesperson Luay Al-Khatib says, "This research raises the important question of whether a standard model for risk assessment could be implemented by the property valuation sector. Further debate is necessary on the merits of the application of such a system as the industry moves forward to provide clients with accurate risk assessment."
RICS spokesperson Mr. David Faulkner says, "Developing accurate methods of risk assessment is becoming more important for valuers in Asia as investors enter an increasing number of new markets with different risk profiles, such as China, India and Vietnam. A comparison of risk among different sectors and even buildings will greatly enhance the transparency of markets in the region by increasing the consistency and quality of information available. This will be particularly important in China where investors are moving into second and third tier cities and yet require the same level of information as they are used to in the more established markets."
For more information:
*Property Risk Scoring: the reporting of investment risk to clients by Norman Hutchison of the University of Aberdeen, Alastair Adair of the University of Ulster and Ian Leheny of Culverwell.
The research was published as part of the RICS FiBRE (Findings in Built and Rural Environments) series. The series aims to provide clear and concise findings of research, with the emphasis on the key messages and implications of new research in the property, land and built environment.
The research is available free as a PDF from the RICS website at: http://www.rics.org/research .
About RICS & RICS Asia Pacific
RICS (Royal Institution of Chartered Surveyors) is the mark of property professionalism worldwide. It covers all aspects of property, construction and associated environmental issues. RICS has 130,000 members globally and represents, regulates and promotes the work of property professionals throughout 121 countries.
The RICS Asia Pacific supports a network of over 8,000 individual professionals across the Asia Pacific region with an objective to help develop the property and construction markets in these countries, by introducing professional standards, best practice and international experience. It promotes RICS and its members as the natural advisors on all property matters. It also ensures that services and career development opportunities are provided to members. The RICS Asia Pacific region covers national associations and local groups locating in Brunei, Malaysia, Singapore, Sri-Lanka, Thailand, The People's Republic of China and the SAR Hong Kong. It also has members working across the region such as India, Indonesia, Japan, South Korea, The Maldives, Mauritius, Pakistan, The Philippines and Vietnam.
Media enquiry, please contact:
RICS Asia Pacific Public Relations Representative
Ms Belinda Chan / Ms Katherine Chow
Tel: +852-2372-0090
Fax: +852-2372-0490
Mobile: +852-9379-3045 / +852-9256-3223
Email: belinda@creativegp.com / kat@creativegp.com
