UK valuations score best for accuracy

UK commercial property valuations are the most accurate of the four largest property investment markets in Europe, with the majority of valuations falling within 10 percent of sale prices, according to the RICS Valuation and Sale Price Report.

60.4 percent of UK valuations in 2007 were within 10 percent of sale prices and 84.5 percent within 20 percent. In comparison Netherlands valued 50 percent of properties within 10 percent of sale prices followed by Germany (47.6%), and France (40.2%).

This level of accuracy was achieved despite growing market uncertainty due to the severe lack of liquidity in the commercial property market brought about by the global credit crunch.

The UK market witnessed a marked reversal in investment performance in 2007 with the number of properties sold below valuation from September to December almost doubling compared to those sold earlier in the year - a clear reaction to the onset of the financial crisis.

Sales dropped to a yearly low in October only to rise significantly in November and a year high in December with investors being forced to accept lower sale prices in order to free up much needed capital.

RICS spokesperson Luay Al-Khatib comments: "Business demand in the UK was hit almost immediately following the onset of the credit crunch with tenants having to re-assess risk in the latter part of 2007. With banks choking on the credit stranglehold, many investors were forced to sell below the valuation price as opportunists circled for a bargain.

"This annual report is a vital measure of valuations, ensuring that the relationship between valuation and selling price are closely monitored. In the current challenging and rapidly changing market it is more important than ever that investors have faith in their valuations, and this report demonstrates that the robust standards RICS has in place are translating into accurate valuations."