Property Valuation Amid Growing Real Estate Sophistication

Training, nous, judgment, and affiliation with SISV enable licensed property valuers to extend their role beyond the layman's approach of interpolating or extrapolating publicly available data on property prices.

- Tay Kah Poh

The SG60 Singapore real estate market is a mature one, marked by a large number of buyers and sellers, landlords and tenants, financiers, lawyers, appraisers and brokers; considerable data transparency; and a breadth of options across all real estate types.

Reflecting growing sophistication, public housing now includes standard, plus and prime, and the public-private hybrid executive condo. Similarly, private housing covers apartments and condominiums, landed terrace, semi-detached, detached, bungalows and the hybrid strata landed.

New asset types emerge from time to time: real estate investment trusts (REITs) where real estate and financial markets intersect, fractionalized real estate using cryptocurrency, data centres to support the new economy, high-specification buildings for biotech companies, student housing, foreign workers' dormitories, co-living, co-working spaces, and so on.

Against such a backdrop, valuing this array of real estate assets becomes increasingly complex.

Property valuations underpin many household and commercial transactions, such as how much banks lend money for a house purchase and the extent to which CPF Ordinary Account balances can be used. They are the basis for gauging a chunk of a company's net asset value (NAV). Valuations also act as a "check" against overpaying for corporate real estate acquisitions.

For example, a REIT buying an asset often uses the formal valuation of the asset as the benchmark to determine the acquisition price and secure shareholder approval. Likewise, a valuation provides a guide to the "right" price for the disposal of an asset in the books.

"OPEN SOURCE" POLICY

Singapore has an "open source" policy when it comes to property transactions. There is a free public database of prices from public agencies such as the Housing and Development Board (HDB) and the Urban Redevelopment Authority (URA).