4 May 2013
RICS joins International Property Measurement Standards Coalition
RICS and other leading property institutions from around the world met this week at the World Bank in Washington DC to launch an initiative aimed at developing a consistent international property measurement standard.
Already three key areas have been agreed: the governance model, the standard setting process and the declaration document.
The coalition, which represents more than a quarter of a million professionals around the world, is coming together to address the challenge of inconsistent global property measurement standards, which result in low investor confidence in property, inconsistent financial data and, ultimately, global economic instability.
At present, the way property assets – such as a housing development, office block or shopping centre – are measured varies wildly from country to country.
An example of current inconsistency is the way in which floor space is calculated. For example, in Spain, floor areas have been measured to include outdoor swimming pools; in parts of the Middle East they can include the hypothetical maximum number of floors that could be built on the existing foundations; and in Australia, measurements have included outdoor parking spaces, even when they are not physically adjoined to the property itself.
With so many different methods of measurement available, it makes it difficult for those looking to invest in these developments to compare like with like. This confusion can affect property values, lead to errors in financial reporting and, consequentially, undermine market confidence and economic stability.
The introduction of a universal standard for property measurement would ensure global consistency, leading to fewer instances of fraud, a more transparent market, greater public trust and increased economic security.
Convened by RICS, this initial meeting of the International Property Measurement Standards Coalition (IPMSC) is the first step to delivering this consistency which will provide:
- greater global financial stability
- more accurate and consistent financial reporting
- stronger investor confidence
- greater transparency of data
- reduced risk of fraud.
The IPMSC aims to resolve disparities by developing and implementing international property measurement standards: a set of standards for measurement that are principles based and internationally applicable, to be adopted by all nations across the globe.
This is a groundbreaking initiative which has the potential to deliver huge benefits, both to real estate markets and to the economies and the populations they support around the world, by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements.
Working with international portfolios inevitably brings real difficulties of comparison when every market has at least one different way of measuring space. It is bad enough that we do not all use the same conversion factor between square feet and square metres! I, and my peers from other major global businesses, either have to convert all space into our own individual basis of common measurement or suffer the inadequacy of comparing apples and pears – which negatively impacts on a company’s ability to make sound business decisions. I welcome an initiate that will bring portfolio-wide, global consistency to space measurement and which, for the first time, will allow the industry to benchmark good space-use practice from wherever in the world it may be.
Julian Lyon FRICS, Manager, European Real Estate, General Motors
The accurate recording of land, building and floor area measurements is fundamental to market transparency. Transparency in turn is a catalyst to the global capital flows that underpin the provision of adequate shelter, food and clothing to the world’s growing urban populations.
With the exception of language, it would not be an exaggeration to characterise global measurement protocols as the most urgent outstanding issue in the pursuit of global market transparency and performance comparability.
Steve Williams FRICS, Executive Managing Director, Real Capital Analytics, New York
The inconsistencies in the commercial real estate measurement standards in Brazil have been responsible for confusion in the mind of space users, developers and investors. The discrepancies as to how space is measured can only further the distortions in values and overall definition of space. There is no doubt that unless there is an internationally recognized measurement standard, there can be no real internationally homogeneous standard of value.
Ramsey Trados FRICS, Westfields Consultoria Empresarial Ltda, São Paulo, Brazil
The organisations involved in the IPMS include:
- Appraisal Foundation – North America
- Appraisal Institute – North America
- Asia Pacific Real Estate Association (APREA) – Asia
- Associação Brasileira de Normas Técnicas (ABNT) – Brazil
- Australian Property Institute – Australia
- Building Owners and Managers Association International (BOMA) – Global
- China Institute of Real Estate Appraisers and Agents (CIREA) – China
- CLGE – Europe
- CREDI – India
- Commonwealth Association of Surveying and Land Economy – Commonwealth nations
- CoreNet – Global
- Counsellors of Real Estate (CRE) – North America
- FIABCI – Global
- Global FM – Global
- International Consortium of Real Estate Associations (ICREA) – Global
- International Facility Managers Association (IFMA) – Global
- International Federation of Surveyors (FIG) – Global
- International Monetary Fund (IMF) – Global
- International Valuation Standards Council (IVSC) – Global
- Royal Institution of Chartered Surveyors (RICS) – Global