Geopolitical tensions, volatile capital markets and rising financing costs are currently shaping the economic environment. At the same time, there is growing uncertainty about the impact these developments will have on real estate values. With the publication "Valuations in Phases of Uncertainty – Why Resilient Stocks Need More Classification Today", Avison Young Valuation shows why blanket value discounts fall short in the current market situation and why a differentiated, property-specific valuation is required instead.
The analysis makes it clear that uncertainty is not an independent value-influencing factor. It only becomes relevant for valuation if it has a concrete impact on financing costs, yield requirements, rental risks, investment needs or the market liquidity of a property. Therefore, it is not the general market situation that is decisive, but the actual effect on the individual property.
"Especially in phases of increased uncertainty, there is a risk of prematurely transferring market sentiment to real estate values. However, this does not do justice to reality. Not every geopolitical or economic development automatically justifies a discount in value. Rather, the decisive factor is whether and how the respective risks have a concrete impact on cash flows, financing, rentability or investment requirements of a property. Only a differentiated, property-specific analysis creates the reliable basis for well-founded decisions," says Dmitry Stul MRICS, Managing Director of Avison Young Valuation Germany GmbH.
The publication classifies current economic developments, such as the effects of the Iran conflict, rising financing costs or declining transaction dynamics, in terms of their possible influence on real estate valuations. At the same time, it shows why professional valuations today have to go far beyond the application of standardised valuation procedures. Especially with low market transparency and limited transaction evidence, the technical classification of market data as well as sensitivity and scenario analyses are becoming increasingly important.
"Our task is not to eliminate uncertainty, but to classify it in a comprehensible way. Right now, owners, investors and financiers need transparent valuations that bring together market data, property-specific risks and reliable valuation methods. This is the only way to create a reliable basis for decision-making, even in dynamic market phases," adds Robert Becker, Managing Director of Avison Young Valuation Germany GmbH.
With this publication, Avison Young underlines its claim to offer customers orientation even in a challenging market environment. Local market knowledge, sound data bases and many years of valuation expertise enable a differentiated assessment of individual properties and portfolios as well as reliable support for financing, transaction and investment decisions.
