The Valuation Process in Luxembourg

This entry was posted in Asset Mgmt, Real Estate Expertise, Valuations and tagged , . Bookmark the permalink. | Comments

Luxembourg spire and rooftops

When you need, or think you may need, a valuation of commercial property for any purpose (see Do you need a valuation?), the first step is to find a suitably qualified Valuer.

Find a Valuer

The UK-based Royal Institution of Chartered Surveyors (RICS) provides the gold standard in property valuation expertise across Europe.

Although few people in Luxembourg have this qualification, it is worth looking for, because the designations Member (MRICS) and Fellow (FRICS) offer a worldwide standard of quality.

The more recently established Valuer Registration Scheme (VRS), also administered by RICS, offers further reassurance as to the experience and expertise of the Valuer/valuation team.

Clarify your purpose

Having located your service provider, you need to clarify the object and the purpose of the valuation, and any related parameters. If you are locally based, this is usually done in a face-to-face meeting. Alternatively, video conferencing, telephone or email are possible.

Once you have agreed the specific real estate to be valued, your goals, and the terms of the instruction, you will receive a confirmation in writing from the Valuer, usually accompanied by a Non-Disclosure Agreement, for your review and signature.

Prepare for valuation

After this, the Valuer requests from the relevant landlord or asset manager various documents to help him develop an understanding of the property in question. These may include:

  • Tenancy schedule
  • Technical surveys
  • Measurements
  • Land registry information, including planning permissions
  • Floor plans
  • Photographs
  • The last valuation report
  • Any other documentation that may have a bearing on the property’s value

Armed with this information, the Valuer prepares for a site visit by noting any information that has not been provided or which may need clarification, and by reviewing similar information on similar properties in the market.

Obtain fresh data via a site visit

A person writing on a notepad, as a commercial real estate valuer notes down his observations before calculating a valueThe Valuer then visits the property and assesses it, bearing in mind the specific purpose/s for which you have requested the valuation.

During the visit, or after it, the Valuer may ask further questions of the landlord or asset manager to fill in any gaps in comprehension.

It is always the Valuer’s aim to maximise the potential value of any investment.

So if, for instance, you are considering refurbishing a building, or applying to rezone it, or applying to change or expand its function, he will seek to understand whatever obstacles or opportunities are innate in the property or its location and suggest how these may be overcome or used to further your aims.

After the site visit, the Valuer will compare his findings on the specific property with statistics and observations on other similar properties the company has valued, and on similar properties in the wider market, when these data are available.

The Valuation Report

The Valuer will then prepare a Valuation Report that summarises his findings and, where appropriate, provide examples of other relevant property values as comparables. If no such market evidence can be found (for instance, if the valuation were for something less common, such as the freehold interest of an hospital), then the Valuer uses other accepted valuation methods instead of the “comparable” method.

This report should always acknowledge the Valuer’s assumptions (a blend of the goals of your original instruction and his own experience in the type, location and potential of similar properties in the current market).

Your final outcome is a valuation figure (calculated and checked via at least two of the five accepted methods specified in the Red Book of the RICS). This figure equips you to decide whether to buy, sell, or hold the property.

For further information on RICS-qualified valuation in Luxembourg, please contact Managing Director Michael Chidiac MRICS or Asset Manager Erwan Varron MRICS.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.