Education and the chartered surveyor

Citation

French, N. (1999), "Education and the chartered surveyor", Journal of Property Investment & Finance, Vol. 17 No. 2. https://doi.org/10.1108/jpif.1999.11217baa.001

Education and the chartered surveyor

Education and the chartered surveyor

Welcome to the second issue of the newly titled Journal of Property Investment & Finance. In this issue, we continue to bring you academic papers and briefings at the cutting edge of our industry.

This year, I will be celebrating 20 years of involvement in the Royal Institution of Chartered Surveyors (RICS), initially as a student and latterly as a full member acting on various committees. Throughout that time, I have been committed to making a small contribution to the process of ensuring that our profession maintains its status in the business community. I am proud to be a Chartered Surveyor and I strongly believe that we have skills and knowledge relating to property that is second to none both nationally and internationally.

But, when I look back on the way the world was when I entered the profession and how it is today, I sometimes despair about the membership's reluctance to embrace change. We are in a very different business environment to the one that existed in 1979. We have gone through "boom and bust"; changes in government; changes in attitude; changes in technology and massive changes in the way that we work. Yet, when I go round the country presenting papers to colleagues in provincial practice, I am constantly amazed at how reluctant they are to embrace these changes. In London, the large firms have gone through unprecedented change in their practices and their business relationships. But outside the big 15 firms, there is a vast gulf in attitude and ability. I åappreciate that the nature of work outside London is different, but all clients should expect the best advice available, based on the most appropriate up-to-date techniques.

It is only an indicative statistic, but out of the 2,000 or so valuers to whom I have spoken in the last couple of years, only 20-30 of them said that they do their valuations on computers and make all their "growth" assumptions explicit in Discounted Cash Flow models. If that figure is true for all the profession, then it means that less than 2 per cent of valuers are providing their clients with any quantitative advice other than "price".

This would seem to be borne out from my discussions with clients in the banking and corporate sectors who are beginning to view valuers as purely the providers of price information or "Market Value" (MV). Corporate clients then use this information internally, or via external consultants (often accountants), to make their strategic property decisions. Similarly, having acquired the MV from an external valuer, many banks then use internal auditing teams to review their lending decisions. At this point, other property related advice is considered, but generally this does not come with the valuation. In other words, valuers are being marginalised in the property profession. "Value" should be the lynch pin in all property decisions, but unless all valuers start updating and changing their practices, then they will simply become technicians. All strategic advice will become the domain of the large London firms, the accountants, the lawyers and the small band of surveyors who have been sufficiently insightful to set up specialised property consultancies. The bulk of the profession must realise that they are moving into a world where the provision of (price) information is no longer sufficient; clients need that number placed in context.

The profession needs to address the way in which data is collated and analysed. The role of research in real estate markets is becoming increasingly important. As information availability increases, the role of the surveyor needs to change to provide the client with more analysis, interpretation and professional judgement. To be able to do this effectively, the profession needs to adopt new appraisal and valuation techniques to utilise better the information available through better property research, econometric based property market forecasts and computerised databases.

These changes are happening slowly, but too few valuers are embracing the urgency of the situation. It should be stressed that I am not advocating the revocation of traditional techniques; indeed in many circumstances they will be the appropriate method. Rather, I wish to see the valuation profession extend the use of explicit models which may be more appropriate in a market where the cash flows produced no longer conform to the long term, secure and growing cash flows experienced previously. All valuers need to develop and extend the range of methods that they adopt. Only by doing so can the profession begin to add value to the appraisal advice they provide to the client and thus increase the credibility and reliability of the valuations they provide.

Nick French