Property market index maker Investment Property Databank (IPD) wants to establish a pan-European index standard to improve the quality of property valuations. At a seminar hosted by Reuters on Friday, IPD's managing director in Germany, Matthias Thomas, said the move was designed to define best practice within European property valuations.
Property market index maker Investment Property Databank (IPD) wants to establish a pan-European index standard to improve the quality of property valuations. At a seminar hosted by Reuters on Friday, IPD's managing director in Germany, Matthias Thomas, said the move was designed to define best practice within European property valuations.
IPD produces benchmark indices for property investors that are used by the emerging property derivatives market in Europe. Thomas said that IPD would be conducting a comprehensive study to aid the development of these markets. The initiative comes in response to concerns over the merit of indices based on valuations as against alternatives based on transactions.
Most of the real estate derivatives activity is in the UK, but it has been growing in France and Germany. There have been concerns about the credibility of German property valuations for the last two years however, as some German property funds had admitted that their holdings had been overvalued. IPD expects to report its findings in about six months. If they demonstrate that valuation techniques are improving, the study is likely to further the development of an IPD-based German property derivatives market.