The current economic environment is characterised by geopolitical tensions, volatile capital markets, and rising financing costs. These developments lead to increased uncertainty regarding their impact on real estate values. The latest publication, 'Valuations in Phases of Uncertainty – Why Robust Values Require More Classification Today', by Avison Young Valuation analyses why sweeping value deductions are not an appropriate response in the current market situation and why a differentiated, object-specific valuation is indispensable.
The analysis clarifies that uncertainty in itself is not an independent value-influencing factor. Only when this uncertainty specifically impacts a property's financing costs, yield requirements, rental risks, investment needs, or market liquidity does it become relevant for valuation. The general market situation is therefore less decisive than its specific effect on the individual property.
The Importance of Object-Specific Analyses
Dmitry Stul MRICS, Managing Director of Avison Young Valuation Germany GmbH, emphasises that in phases of heightened uncertainty, there is a risk of prematurely transferring market sentiment to real estate values. He stresses that not every geopolitical or economic development automatically justifies a value markdown. What is crucial, rather, is whether and how the respective risks specifically affect a property's cash flows, financing, marketability, or investment requirements. A differentiated, object-specific analysis provides a robust foundation for informed decisions in this regard.
The publication categorises current economic developments, such as the effects of the Iran conflict, rising financing costs, and declining transaction dynamics, concerning their potential influence on real estate valuations. Furthermore, it demonstrates that professional valuations must go beyond the application of standardised valuation methods. Particularly with low market transparency and limited transaction evidence, the expert classification of market data as well as sensitivity and scenario analyses gain importance.
Transparency and Reliability as a Basis
Robert Becker, also Managing Director of Avison Young Valuation Germany GmbH, adds that the task is not to eliminate uncertainty, but to classify it comprehensibly. Especially in the current situation, owners, investors, and financiers require transparent valuations that integrate market data, object-specific risks, and robust valuation methods. This creates reliable decision-making foundations, even in dynamic market phases.
With this publication, Avison Young underscores its commitment to providing guidance to its clients, even in a challenging market environment. The combination of local market knowledge, sound data foundations, and extensive valuation expertise enables a differentiated assessment of individual properties and portfolios. This forms a solid basis for supporting financing, transaction, and investment decisions.
