Article in RealEstateReport 2021: The cake is being redistributed

“Small market, too many companies”, was the headline in the NZZ am Sonntag recently. Anyone taking a look at the advertising columns of the electronic media will recognize the new diversity that has emerged: broker and valuation portals in particular are coming onto the market almost on a weekly basis. This not only makesproperty owners who are willing to sell insecure, but alsotraditional estate agents, some of whom are being harshly attacked and theirexistence called into question. The advertising lines onare primarily aimed at homeowners, but advertisements such as “What is yourapartment building worth? Find out the market value online now for free” often appear without being asked when using Google, YouTube etc.  

Rising demand

“These favorable offers only strengthen the demand for valuation services. Just a few years ago,nobody knew the technical term hedonic valuation. Today,this is the epitome of free or low-costvaluation models,” says Gunnar Gärtner, President of theChamber of Valuation Experts of the SVIT. He is also the ownerand managing director of the consultancy firm COMRE AGbased in Zurich. In his view, these models are well suited to single-family homes, condominiums and, to a certain extent, small apartment buildings. “However, the real estate universe is significantly larger and more complex. Sound analysis is essential in real estate project development. Thehigh-priced real estate market requires both investors andvaluers to take a close look in order to be able to act in an economically competitive manner with maximum utilization of the property“, he adds. Institutional real estate assets have grown significantly and must be regularly validated by an independent valuation expert in accordance with regulatory requirements. As the newly created positions at all major valuation firms show, the demand for qualified real estate valuations has increased significantly in recent years.

But are these low-cost offers, which provide an estimate in just a few minutes, still serious? “The cheap offersfulfill their purpose for the provider and serve to establish new customer relationships. It only becomes dubious if a property is advertised for sale solely on the basis of a hedonic valuation, i.e. without studying the documents and without a viewing,” Gunnar Gärtner is convinced.

Digital processes required

The new online valuers often argue that digitized processes lead to cost savings. Havetraditional property valuers taken digitization less seriously than? Gunnar Gärtner: “Digitalization in the valuation process has long since taken place. The classic valuation models have been replaced by DCF systems. Valuation software is now database-based and allows cash flows to be calculated to the day. Real estate market data is already integrated into thevaluation reports as standard.” Only the data interfaceto the property management companies still leaves something to be desired.But here, too, professionalization has long since taken place at the majormanagement service providers and valuation companies. “Of course, there are still individual members in our association who prefer to work with paper and have few digitalized processes in their office.”  

Gärtner sees the industry, and in particular the accredited members of the SVIT Chamber of Valuation Experts, as extremely dynamic. However, it should be noted that real estate valuation is an empirical science. Even with a disproportionately high amount of market data, the interplay of building legislation, building condition analysis, market research, tenancy law and economics can only rarely be replicated in data models. “At the same time, I fully agree with the young PropTech entrepreneurs that the valuation industry is also challenged to position itself in the new market environment. Gone are the days in which a real estate valuer can remain in this profession by virtue of their office. We therefore rely on ISO certifications and a broad range of further training courses for our SVIT valuation experts,” says the valuation expert.

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