Developments Affecting the Valuation Profession in
Serbia and Proposed Transactions Database
Presentation at The Association of Serbian Banks
by
Krzysztof Grzesik FRICS REV
Belgrade 26th November 2013
The European Union Today’s New Influence on
Valuation
The financial crisis has
shifted Power to the EU and
made the EU regulator
nervous about financial and
real estate markets.
EU Directives Relevant Valuation (and mortgage
lending)
• Capital Requirements Directive (including definitions of
market value and mortgage lending value)
• Mortgage Credit Directive
Mortgage Credit Directive (2013)
• The most important and fundamental EU Law concerning
real estate valuation in Europe to date
• Concerns only residental property but will have major
repercussions in all other sectors
•A
charter for reliable National Standards reflecting
internationally recognised standards (IVS, EVS, RICS)
Mortgage Credit Directive (Cont’d)
Article 14 a: Property Valuation
1) „Member states shall ensure that reliable property valuation
standards for mortgage lending purposes are developed within
their territory…
Recital
“In order to be considered reliable, valuation standards should
take into account internationally recognised valuation standards, in
particular those developed by the International Valuation
Standards Committee, the European Group of Valuers’
Associations or the Royal Institution of Chartered Surveyors….”
Mortgage Credit Directive Cont’d
1a. Member states shall require that internal and external
appraisers
conducting
property
valuations
are
professionally competent and sufficiently independent
from the credit underwriting process so that they can
provide impartial and objective valuations which shall be
documented in a durable medium and a record of it kept
by the creditor
Internationally Recognised Valuation Standards
• International Valuation Standards 2011 - IVSC
• European Valuation Standards 2012 - TEGoVA
• Valuation - Professional Standards 2012 - RICS
• USPAP – Appraisal Foundation
Market Value Definition – The Common Thread
“The estimated amount for which a property should
exchange on the date of valuation between a willing buyer
and a willing seller in an arm’s-length transaction after
proper marketing wherein the parties have acted
knowledgeably, prudently and without compulsion.”
Reliable Property Valuation Standards for Serbia?
• In light of Mortgage Credit Directive and Chapter 9 EU
Negotiations it seems that main responsibility rests with the
National Bank of Serbia, the Banking Community and the
Serbian Valuation Profession
Just Published
• NAVS –Consultation Document setting out proposed Valuation
Standards for Serbia in line with International Valuation
Standards and European Valuation Standards
• AAS – Valuation Standards for Serbia in line with International
Valuation Standards and RICS Valuation Standards
Serbia EU membership?
Serbia is now a top candidate for EU accession having
applied in 2009.
EU has opened door to negotiations on each of the 35
'chapters' that must all be closed before the Commission can
recommend membership and Council and Parliament vote
on it.
Serbia EU membership – 35 Chapters
1.
2.
Free movement of goods
Freedom of movement for
workers
3. Right of establishment and
freedom to provide services
4. Free movement of capital
5. Public procurement
6. Company law
7. Intellectual property law
8. Competition policy
9. Financial services
10. Information
society
and
media
11. Agriculture
and
rural
development
12. Food safety, veterinary and
phytosanitary policy
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Fisheries
Transport policy
Energy
Taxation
Economic and monetary
policy
Statistics
Social
policy
and
employment
Enterprise and industrial
policy
Trans-European networks
Regional
policy
and
coordination of structural
instruments
Judiciary and fundamental
rights
24. Justice,
freedom
and
security
25. Science and research
26. Education and culture
27. Environment
28. Consumer
and
health
protection
29. Customs Union
30. External relations
31. Foreign,
security
and
defence policy
32. Financial control
33. Financial and budgetary
provisions
34. Institutions
35. Other issues
The Mortgage Credit Directive falls under chapter 9 Financial Services.
A „professionally competent” Valuation Profession
– Educational Requirements in Europe
A university degree, post graduate diploma or professional qualification relevant to real
estate valuation if it prepares the valuer to carry out valuation services on the basis of a
multidisciplinary knowledge that should be based on the following core areas of
knowledge:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
Principles of economic theory including those relating to the real estate market
Valuation principles, practice and standards including statutory valuations
Real estate finance, investment and statistical analysis
Real estate, planning and environmental law
Principles of constitutional, contract and civil law
Taxation of revenue,
Principles of accounting
Land and property rights register
Principles of building construction
Professional ethics
Proposed Transactions Database for Valuers
• A joint venture between The National Bank of Serbia, The
Association of Serbian Banks and Established Valuer
Associations
• Self Financing
• To benefit all stakeholders in the interests of greater
market transparency and improved valuation accuracy
Types of Database
• Residential Property Transactions – 1st stage (to assist in
valuations under Mortgage Credit Directive)
• Land Transactions – 2nd Stage
• Commercial Property Transactions – 3rd Stage
Database Template for Residential Transactions
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Location
Address (street, no)
Type: House, Flat/Apartment
Plot specification (number)
Type of ownership
Number of floors of the building
Construction (description)
Position on floor
Garage (yes/no)
Area (m2)
Price
Price per m2
Date
Purchaser (private individual/company)
Seller (private individual/company/developer)
Photographs, Google Map, Register Map and Zoning Plan
Database Template for Land Transactions
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Location
Adress (street, no)
Plot specification (number???)
Type of ownership
Zoning
Price
Price per m2
Date
Seller
Buyer
Photographs, Google Map, Register Map, Zoning Plan
Commercial (office/retail/warehouse) Transactions
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Type of the property
Location
Address (street, no)
Plot specification (number)
Type of ownership
Planning/Zoning
Yield
Rentable area
Construction (description)
Floor Areas (m2)
Price
Price per m2
Date
Seller
Buyer
Photographs, Google Map, Register Map and Zoning Plan
Who will source information for database
• Banks – Members of Association of Serbian Banks
• Valuer Associations – Executive Summary valuations?
• Market Analysis
• Secondary Source information gained by valuers
• Press Information, Internet, Publicly available market
reports
What is required?
• A small expert team of property analysts and IT specialists
employed by Association of Serbian Banks or a separate
Joint Venture Company
• Overseen by an Advisory/Supervisory Board made up of
representatives of all stakeholders
Residential Property Indices
Establish representative “beacon properties” to be valued by
appointed qualified experts throughout Serbia (or Valuer
Associations) on a quarterly basis
• Thank you!