The theme of this year's annual conference of The European Group of Valuers Association (TEGoVA) held last week in Paris, France, was asset finance and securitization. One topic generating a buzz at the conference was the new guidance for European real estate valuation set to be unleashed next year that will put real estate valuers on equal footing, and could lead to increased issuance of European mortgage backed securitizations.
"The target is to make sure there is a real understanding of the securitization process among European valuers, as well as the development of more innovative financial instruments providing opportunities for debt, mezzanine and equity providers to generate profit," said a spokesman with the group. "Demands relevant to property valuation are growing and can differ according to property. As long as you have a long-term commitment you will need to have details on the property."
The association's focus this year is driven in part by an acknowledgement that many European valuers are not up to par with the process of securitization. Ongoing change within the sector means that valuers have to facilitate their clients' understanding of types of property finance, risk assessment, and the role of rating agencies. TEGoVA plans to distribute an educational guide that should bring valuers up to speed with the importance of MBS in European real estate.
This guide is a precursor to the publication of the new guidance note on Valuation for Securitization purposes that is expected to be unleashed on the market next spring. The guidance note is presently being consulted on the group's web site, said the spokesman. The finished result is expected to offer market players a reference point consistent throughout the European jurisdictions. The idea is that it will create greater confidence on behalf of investors and presumably greater faith in market real estate valuations.
"Securitization based on real estate property outside of the UK is in its infancy," said the spokesman. "In the next few years, our clients - from financial institutions to corporate end users - will be thinking of new solutions to outsource their property portfolios. What we have seen so far is just the tip of the iceberg in the property profession."
