GLOBAL - More than a third of investors believe valuers "could do better", according to an unpublished survey of 63 fund managers active in a number of markets.

The report from CB Richard Ellis attributed perceptions of inaccuracy to a paucity of transactions, lack of market transparency, and a valuation lag estimated at an average of 4.2 months. The lag was especially pronounced in the UK, although fund managers in this market underestimated the lag at an average 2.3 months.

Although the questionnaire did not ask respondents why they were unhappy with valuations, Haddock attributed the surprise finding to the turbulent nature of the markets over the last couple of years.

"Clearly, this can be frustrating if they are being prevented from doing deals that they think are in the best interests of the fund, by valuers they feel are being either overly optimistic or overly pessimistic," he said.

"An over-valued property can be impossible to sell, but if a valuer thinks a property is not worth what is being paid that can equally frustrate the deal."

The report found that UK fund managers are marginally more likely to believe that valuations were inaccurate, although Haddock was keen to point out that the difference was not statistically significant.

"The profile from the UK is actually what we would have expected for the whole survey - that the fall off in the number of transactions since the peak of the market would reduce the accuracy of valuations," he said.

"Maybe in the UK the transformation from a liquid market, with a wide variety of transactions, to a narrow market, with little evidence, was more marked because they had got used to a more liquid market."

In fact, the impact of perceived inaccuracies in valuations may be relatively small. Only a small number of respondents believed the inaccuracy of valuations resulted in lower allocations to real estate, although cross-border investors were more likely to believe that property lost out as a result of inaccuracy.

However, the failure to share information within markets came in for criticism because it was a negative contribution to market transparency. Client confidentiality was one factor, but equally important, said Haddock, was the absence of a tradition of sharing information in some markets.

"Access to lots of comparable information can be seen as a competitive advantage for some valuers and therefore not something to be given away lightly," he said.

Many fund managers surveyed said they wanted sentiment indicators included. However, Haddock pointed out that valuers themselves believe they are taking into account sentiment indicators into the valuations. "Perhaps the issue is that they are not communicating this to their clients as well as they could be," he said.

"Sentiment indicators ought to make valuations more reactive to the changes in the market, meaning that valuers do not need to wait to see if a trend is confirmed in the market evidence before reflecting it in their valuations."