An investigation of the nature of the valuation service offered to business occupiers
| Date | 01 April 2001 |
| DOI | https://doi.org/10.1108/14635780110383668 |
| Published date | 01 April 2001 |
| Pages | 100-127 |
| Author | Peter Wyatt |
| Subject Matter | Property management & built environment |
JPIF
19,2
100
Journal of Property Investment &
Finance, Vol. 19 No. 2, 2001,
pp. 100-126. #MCB University
Press, 1463-578X
Received September 2000
ACADEMIC PAPERS
An investigation of the nature
of the valuation service offered
to business occupiers
Peter Wyatt
Faculty of the Built Environment, University of the West of England,
Bristol, UK
Keywords Valuations, Corporate strategy, Property
Abstract Publishes some of the findings of a research project that examined whether valuers
and valuations have a role in the provision of more strategic property advice to business occupiers.
The research consisted of a postal questionnaire survey of over 250 businesses that examined the
role of property and the use of valuations in strategic business decisions. The survey was
supported by the findings from 18 structured interviews and an analysis of over 70 sets of
company accounts. The results revealed that, despite valuers becoming increasingly involved in
measuring corporate efficiency and valuations being used for this purpose, business occupiers do
not recognise valuers in a strategic role. Instead, many firms see valuers as providing a single
valuation service, the estimation of market value for purchase/sale decisions and corporate
disclosure. The research suggests that valuations do have a role to play in the provision of more
strategic business advice but the valuer will need to understand the client's wider business needs
and how property plays a part in the client's business. Valuers need to convince clients that they
are not overly technical in their outlook, have broad business skills that include strategic thinking
and an awareness of business issues.
Introduction
Businesses are continually seeking to employ their financial resources in ``core''
activities (Varcoe, 1993). Non-core support services and the management of
certain factors of production, including property, are subject to increasing
scrutiny in terms of cost, value and performance. Property advice to business
occupiers needs to be linked to the core functions of the business and valuers need
to appreciate the implications that property has for business processes. There is a
growing perception amongst business occupiers that valuations do not provide
the right information to business occupiers. There is a danger that valuations will
only be required for specific business decisions or for statutory reasons. At the
same time the valuation profession faces growing competition, particularly for
high value instructions, from other professions that have a pedigree of servicing
the wider needs of business occupiers (Adair et al., 1996; Whipple, 1990).
As a client of valuation services the business occupier may be less interested
in the content of formal valuation reports and more interested in receiving
This paper won the Society of Property Researchers (SPR) award for best paper at the Cutting
Edge Research Conference held by the Royal Institution of Chartered Surveyors (RICS) in
London in September 2000.
The research register for this journal is available at
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Academic
papers:
Valuation service
101
strategic real estate advice, of which valuations form an integral part. Such
advice might include a review of the real estate portfolio of a newly acquired
subsidiary or a development feasibility study for surplus land. Valuations are a
key element of the advice but the delivery requires a consultancy approach
rather than one based on traditional property services.
This paper reports the findings of a research project commissioned by the
former Incorporated Society of Valuers and Auctioneers (since merged with
the Royal Institution of Chartered Surveyors) and funded by the Pat Allsop
Trust. The research examined the nature of professional services offered by
valuers to business occupiers and investigated the extent to which valuations
perform a useful function in this regard. The objectives of the research project
were to:
.identify the decisions of business occupiers that require information and
advice on real estate;
.ascertain whether current valuation practice satisfies the requirements
of these business decisions and, if not, identify the shortcomings;
.determine whether current valuations satisfy the requirements of the
client in terms of the specific valuation instruction; and
.make recommendations for changes to valuation practice that could
accommodate the demands of business occupiers.
The paper is structured as follows. The next section reviews literature and
previous empirical research into the type of property advice that is demanded
by business occupiers and the extent to which property forms a strategic and
operational issue for businesses. The following section reports the findings of a
questionnaire survey of business occupiers. The survey sought to:
.determine the relevance of property as an operational cost and as an
asset to various types of business;
.elicit the business activities for which property advice in general and
valuations in particular were commissioned; and
.ascertain whether the output of valuations met the requirements of
business occupiers.
The penultimate section considers ways in which the current valuation service,
which is concerned with estimating market value, might be used as a
foundation for the development of appraisal of occupation worth for business
property. This is followed by some concluding comments.
Property advice for business occupiers
Real estate markets are no longer defined by national borders. Businesses are
now footloose on a global scale and choose locations for their enterprises at an
international level. The need for international real estate advice is increasing
and the requirement to value without national boundaries is becoming implicit
in international accounts and corporate real estate decisions of pan-European
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