Buyside sceptical on Continental valuations: JP Morgan

Listed real estate companies in Europe need to increase their focus on property appraisals and their disclosure as a new survey shows widespread scepticism on property valuations, according to JP Morgan. The survey carried out by property analysts Harm Meijer and Osmann Malik at JP Morgan's European Equity Research division found that overall confidence in property valuations is poor with only 16.7% of buyside respondents having high or very high confidence.

This contrasts starkly with the view of respondents at management level, as 76% have high or very high confidence. Buyside versus management differ particularly on their faith in property valuations in Austria, Italy and Spain. Meijer and Malik said the survey responses seemed to indicate that companies need to increase their focus on property appraisals and their disclosure. But they found that UK firms are ahead of their peers on the Continent in this regard.

There was high confidence in UK valuations, as 67% responded with high or very high ratings, followed by Netherlands (44%), Sweden (39%) and France (29%). But a striking 97% have low or very low faith in appraisals in Russia, Austria (86%), Spain (85%), Italy (78%) and Germany (67%). Some 69% of respondents believe that the low confidence in valuations is the result of both management and valuer (appraiser).

Two-thirds believe that the disclosure of valuation statistics by Continental companies is poor versus only 18% in the UK. Some 56% of respondents regard the UK disclosure above average versus 4% for the Continent.

Some 96 investors - including almost all major players - in listed property stocks participated in the survey, with 58.3% being based in the UK and 29.2% on the Continent.

JP Morgan will present the survey results in at the EPRA Reporting & Accounting Summit on 19-20 November and highlight which areas could help to lift confidence levels.