The challenges facing estate surveying and valuation practice across the world,

especially in emerging economies, are enormous and the future of the profession
is being questioned. There are pressures for practitioners to secure instruction
s and at same time meet increasingly complex and stringent standards of professi
onal practice. This paper provides a perspective of issues confronting the profe
ssion across the globe, relying on a review of literature and professional pract
ice experience in selected countries to identify the challenges facing them whil
e solutions were suggested to ensure enduring practice that will ensure the surv
ival of the perceived extinction of the professions in the built-environment.
Introduction
The world is usually classified as developed, less developed or underdeveloped c
ountries. In the 1970s, less-developed countries was the common term for markets t
hat were less developed (by objective or subjective measures) than the developed c
ountries such as the United States, Western Europe, and Japan. These markets wer
e supposed to provide greater potential for profit and more risk from various fa
ctors. The term was felt by some people as not positive enough so the emerging ma
rket label was born (Crosby and Walkins, 2001).
Emerging economies are those regions of the world that are experiencing rapid in
formationalization under conditions of limited or partial industrialization. The
y consist of emerging markets that generally do not have the level of efficiency
and strict standards in accounting and securities regulation to be on par with
advanced or developed economies but will typically have physical financial infra
structure including banks, stock exchange and unified currency. Such markets are
sought by investors for the prospect of high returns, as they often experience
faster economic growth as measured by Gross Development Product. However, inves
tments in emerging markets come with much greater risk due to political instabil
ity, domestic infrastructure problems, currency volatility and limited equity op
portunities; many large companies may still be state-run , and local stock exchange
s may not offer liquid markets for outside investors (Investopia, 2010).
Emerging market characteristics are a young market with low level of capitalizat
ion; it is developing, turbulent, unregulated and non-transparent. The leading e
merging economies are increasingly dominant force in global economic, social and
environmental affairs and represent the world s largest potential markets, the so
urce of both much of the world s natural and human resources and of major sustaina
bility challenges. The challenges include massive poverty, weak social capital,
significant inequality of access, power and wealth, and weak governance and corr
uption (Jain, 2006; Raskovic, 2010).
Professional practices in emerging, advanced, or developing economies face diffe
rent challenges. This paper therefore provides a perspective of the issues confr
onting professionals in estate surveying and valuation at the global level and i
n Nigeria with a view to guiding them overcome and survive the perceived future
extinction of the various professions in the built environment. The perspective
from professional practice experience in Nigeria, considered as one of an emergi
ng economy, was carried out in comparison with challenges that professionals in
advanced countries face. Details of such challenges confronting the profession i
n New Zealand, Serbia, China, North America, Australia, and Nigeria were identif
ied from a review of literature while the paper concludes with suggestions for d
ealing with challenges to ensure that real estate professional practice endures
perceived extinction of the professions in the built environment.
2.0 Globalization of the Estate Surveying and Valuation Practice
The importance of establishing a truly global profession was identified as key p
art of the status agenda in the Harris report of 1998 and bodies on the global set
ting have taken positive steps towards actualizing the agenda. For instance, Arm
strong (2000) expected that by 2001 the status of the RICS qualifications worldw
ide would become more recognizably international. Also, the World Association of
Valuation Organizations (WAVO) was established in 2002 at the United States App
raisal Institute s Conference in Honolulu by delegates from Australia, Brazil, Can
ada, France, New Zealand, South Korea, Turkey, the United Kingdom, and the Unite
d States.
The aim of WAVO is to establish a global voice for the property valuation, consu
lting and advisory profession. The current member organizations of WAVO include
the American Society of Appraisal (ASA); American Institute (AI); Australian Pro
perty Institute (API); Appraisal Institute of Canada (AIC); International Valuat
ion Standards Committee (IVSC); Singapore Institute of Surveyors and Valuers (SI
SV); New Zealand Property Institute (NZPI); and Royal Institute of Chartered Sur
veyors. The objectives of WAVO include supporting the consistent application of
valuation standards and methodologies, encouraging standard terminology and worl
dwide transparency, improving educational and training opportunities, providing
quality assured WAVO accreditation to member organizations, working in parallel
with IVSC (Eades, 2002).
These examples attest to globalization of real estate practice with key strategi
c objectives being to increase the profession s influence and business potential w
orldwide, promote the qualification, attract top quality entrants, qualifying in
digenously, and create a global brand and opportunities on the global scale. It
is noteworthy that different professional bodies have accelerated work of identi
fying and adopting international best practices for benefit of their members, cl
ients and the communities they serve. However, different challenges confront the
profession of estate surveying and valuation across the world. The aim of this
paper is therefore to examine these challenges through a review of literature on
selected countries in relation to the subject matter. The selected countries ar
e New Zealand, Serbia, China, North America, Australia, and with emphasis on Nig
eria. 2.1 Situation in New Zealand
One of the challenges that practitioners face in New Zealand is that posed by le
gislation. In the country, The Valuers Act 1948 is the piece of legislation that
gives formal statutory recognition to valuers, and provides for the establishme
nt of the Valuers Registration Board, the body responsible for registering value
rs. However, many of the references made in the Act relate to the old New Zealan
d Institute of Valuers (NZIV) and with the merger of NZIV with PLEINZ and IPMV,
the future of this Act became questionable.
In the light of the new Institute, much debate ensued over the relevance of the
Act and the question of deregulation of the profession. There are pros and cons
for repealing the Act and for deregulation. The arguments advocated for repealin
g the Act and deregulation include: it is costly and inefficient to continue two
separate administrative bodies: NZPI and NZIV, it would allow for flexibility t
o change the rules and constitution without the constraint of the Act, it would
allow for internal restructuring to be fully implemented, it would provide volun
tary membership to NZPI and provide for seamless new institute with strong focus
and undivided interests. The arguments suggested against repealing the Act and
deregulation are that it provides legislative (State) protection of valuers and
the terms Registered Valuer and Public Valuer would go; public protection through st
atutory registration, compulsory professional membership and discipline would be
weakened. A major change to the tradition of rating valuations in New Zealand o
ccurred in 1998. The Rating Valuations Act 1998 repealed the Valuation of Land A
ct 1951 and amended the Rating Powers Act 1988. Under the previous legislation a
ll properties in New Zealand are to be valued for rating purposes by a quasi-gov
ernment body known as Valuation New Zealand (previously The Valuation Department
). The new Acts formalized the corporatization of VNZ and provided for the appoi
ntment of a Valuer-General within Land Information New Zealand (LINZ) and for th
e creation of a crown-owned company (Quotable Value NZ). The new Act also provid
ed for contestability of valuations - by 2002 all territorial authorities are ab
le to choose who provides their valuations that they use for rating purposes. Qu
otable Value NZ has had to compete with other valuation service providers. The o
nly requirement is that the valuation services provided must be carried out unde
r the authority of a registered valuer. Sending of notices of Valuation to ratep
ayers is the responsibility of Territorial authorities. The Valuer-General regul
ates provision of valuation services to local authorities to ensure national con
sistency (rather than provide these as previously).
This change has not only made the market for territorial valuations more competi
tive but also more contentious in terms of uniformity despite regulation by the
Valuer-General. Standardization of valuation methods and access to a central dat
abase are no longer possible when the rating valuation work and associated datab
ases are spread between various organizations. The quality and maintenance of th
ose databases is left to the discretion of each independent valuation provider.
This brings into question the quality and fairness of the valuations for rating
purposes where a level playing field is paramount.
Another challenge is the level of fees that professionals in New Zealand collect
. While the costs of doing business are rising, the charges for professional val
uation services are falling. The level of fees for valuation services has been d
ropping over recent years, partly due to the competition for valuation work from
non-traditional suppliers of valuation services: banks, accountants, lawyers et
c. These related disciplines are seen by many valuers to be encroaching and poac
hing on their area of specialization and they usually charge very low profession
al fees of $225NZ for a residential valuation (and in some instances, even less)
. These fees are very low and therefore compromise a reasonable duty of care.
According to a survey of 16 valuation firms in NZ conducted by Waikato Universit
y in 2001, the average annual turnover for a firm is $434,709NZ ($140,000NZ per
valuer) with net profit to the working owner of $72,241NZ p.a. (compared to $120
,000NZ p.a. in the accountancy profession) and is lower than the previous year a
nd has been reducing continuously. This shows that valuers are under-charging fo
r their services especially considering their exposure to risk, costs of operati
on and time taken to prepare valuation reports (Lawrence, 2002). In contrast, en
ormous pressure is placed on valuers by banks to provide greater level of detail
s in valuations particularly for commercial lending on proposed developments. Pr
essure to produce work involving greater details and exactness is also coming fr
om owners and tenants in rent-review valuations. In practice, an increase in val
uation details and accuracy is to be encouraged but it poses major challenge for
valuers as clients resist paying extra for the time necessary to achieve this.
2.2 Situation in Serbia
According to Raskovic (2010), one of the major challenges facing practitioners i
n Serbia is the bases for property tax (for properties other than agriculture la
nd). Property taxes are still normative values decided yearly but are significan
tly lower than market values. By law, the base for property tax is related to av
erage market value for square meter of certain type of property (apartment, sing
le family house, garage, commercial ) and changes in law are suggesting that prope
rty tax should be based on market value.
Individual valuation of properties in Serbia for different purposes is conducted
by non-valuation professionals who are court experts, mostly civil engineers or
architects. Valuation is based on the cost method and court experts opinion on m
arket value. Several Valuers Associations exist in Serbia and licenses are obtain
ed from the Ministry of Justice. It was not until December 2006 that the Nationa
l Association of Valuers in Serbia (NAVS) was established to represent and prote
ct the profession of valuers, set up standards in professional valuation and wor
k on education of Valuers all around Serbia, and having contact with internation
al valuation institutions and introducing international valuation methods and st
andards in the field of valuation. This challenge is further compounded by absen
ce of reliable sources of internationally recognized real estate market data and
valuation methods.
The situation in Serbia could be explained by the period of change from social s
ystem to a market economy that induced potential foreign investments and cross-b
order transactions along with the need for market-based valuation of real estate
s in areas such as privatization, mortgages, sales and taxation. Real estate mar
kets actually started operating in Serbia about fifteen years ago with the oppor
tunity to change from social ownership of apartments to private.
The real estate markets in Serbia are not regulated by law and do not have an ec
onomic and institutional framework. The real estate market is non-transparent an
d slow, and there is lack of Governmental intervention, and a lot of different r
egulations in preparation phase Some of them are Law on Property Rights, Law on
Notaries, and Law on Real Estate Agencies.
2.3 Situation in China
According to Wang (2007), despite Beijing s measures to temper the market, the rea
l estate sector continues to be a significant investment opportunity. However, a
mid the vast business and investment opportunities, the special characteristics
governing the accounting and taxation of China s property market pose a number of
challenges to investors. Deloitte China s Southern China Regional Managing Partner
, Kester Yuen, said the real estate market in the mainland is driven by the cont
inuous growth of the economy, rapid pace of urbanization, the aftermath of 2008
Olympic Games and 2010 Shanghai World Exposition.
In fact, the biggest and quickest price growth in China is seen in the southern
region, where prices in Shenzhen jumped 14.2 percent in May following a 12.8 per
cent increase in April. Beijing and Shanghai recorded increases of 9.6 percent a
nd 0.6 percent, respectively, in May. Domestic demand was spurred by rising inco
mes and influx of an estimated eight million people to the cities. Although dome
stic and Asia- based investors traditionally have been the dominant investors in
China real estate, US, European and, most recently, Middle Eastern investors ar
e emerging as active buyers.
Most existing and prospective investors know or at least have an idea that the r
egulatory framework of China s real estate market, though developing rapidly, is s
till very young compared to other developed markets such as North America or Wes
tern Europe. However, with many compelling reasons to invest in the mainland rea
l estate market, the challenge is to understand, anticipate and be able to navig
ate through the complexities, which more often hinder foreign investors in real
estate development in China. The challenges faced by foreign institutional inves
tors include the tightening measures and recent developments in the new Partners
hip Law, the new China Generally Accepted Accounting Principles, and tax reform.
According to Nancy Marsh, Deloitte real estate tax leader in China, taxation cer
tainly ranks as one of the major challenges facing institutional investors and r
eal estate practitioners. There are various taxes that China s real estate investo
rs are expected to pay, these are business tax, deed tax, urban real estate tax,
urban and township land use tax, stamp duty, and enterprise income tax. The big
gest challenge is presented by the land value appreciation tax (LAT), which is i
mposed on taxable gain derived by companies and individuals from the transfer of
real properties. The LAT is the most controversial tax in the real estate indus
try in China, not only because of its high rate but also due to inconsistencies
in local enforcement and calculation methodology.
2.4 Situation in North America
In Canada the body known as the Canadian Institute of Chartered Business Valuato
rs (CICBV) was formed in 1971 following the proposal in November 1969 to introdu
ce capital gains tax. Under the new regime, which came into force on 1 January 1
972, capital gains arising after Valuation Day (31 December 1971, known as V-Day ) ar
e assessable. The adjusted cost base of property owned on Valuation Day is its fair
market value . The legislation does not require a valuation to be undertaken unti
l the disposition of the property and neither is there a requirement that the va
luation be undertaken by a qualified valuer. However, many private company owner
s were of the view that it would be prudent to obtain an independent valuation e
arlier rather than later. The requirement for business valuations was increased
also by the introduction of minority shareholder dissent and oppression remedies
, the issue of various valuation related policy.
In the USA, there are four major bodies involved in the education, accreditation
and, to some extent, regulation of business valuers: the American Society of Ap
praisers (ASA); the National Association of Certified Valuation Analysts (NACAV)
; the Institute of Business Appraisers (IBA); and the American Institute of Cert
ified Practicing Accountants (AICPA). These four US organizations have formed a
Joint Business Valuation Task Force to make recommendations to the Appraisal Sta
ndards Board of the Appraisal Foundation in connection with USPAP11. The first t
hree of the bodies themselves publish business valuation standards (much more de
tailed than USPAP). Those published by the ASA are the most comprehensive. The f
our organizations, together with the CICBV, have promulgated a valuation glossary
and undertake other projects to attempt to make valuation practice.
Real estate agents face serious challenges in terms of meeting the needs of thei
r highly demanding customers that search real estate for sale properties. With t
he latest technologies and internet, real estate customers have access to a whol
e lot of real estate data that were only available to the real estate agents onc
e. Previously homebuyers were dependent just on local classifieds but today they
get most of the information they need online. By the time buyers or sellers rea
ch their local realtors, they have already made their searches online and kind o
f studied the market situation. In other words, customers are better informed to
day than they used to be. This trend makes realtors face serious challenge - the
y need to be well equipped so that they can project themselves to be an authorit
y in terms of real estate services. Winning customers trust has become all the mo
re difficult because their expectations are too high. Realtors are forced to tra
in themselves in the latest buying and selling strategies and acquire the right
realty tools. Every realtor is forced to have a website to promote their service
s as well as to give good exposure to the properties of the sellers that approac
h them. The challenge in this case is how to promote the websites so that it get
s good traffic as a website without the right kind of traffic is dead and one ca
nnot expect any business out of a dead website.
According to a survey conducted by RealSure (http://www.realsure.com/), publishe
rs of the Swanepoel Trends Report, the top five challenges facing real estate ag
ents in USA, based on percentage that ranked the options as important or extreme
ly important, are stated in Table 1:
Another survey carried out by RealSure in 2008, agents productivity is down. This
is as a result of declining housing market conditions and studies by the Nation
al Associations of Realtors, RealSure, and the Department of Justice, indicate t
hat the agents income ranged between $34,000 and $47,000 annually. This is before
expenses incurred on administration, promotion, technology, transportation or p
rofessional development. The operating expenses ranged between 30% and 50% of an
agent s gross income, thereby reducing their net income considerably.
2.5 Situation in Australia
In Australia, there are wide range of circumstances which call for valuations, t
hese are: prior to 1972, death duty and gift duty imposed by the State and Feder
al governments on the value of assets at the date of death; valuations are requi
red for several important areas in relation to the establishment of income tax l
iabilities, including those dealing with capital gains tax, employee share acqui
sition and tax consolidation; stamp duties have applied for many years in relati
on to documents (and later, transactions) involving sales of shares and business
es; valuations of the assets of the parties, including shares and business are r
outinely required in the context of division of property pursuant to the Family
Law Act and, to a lesser extent, the various State legislation relating to de fa
cto relationships; valuations are often required pursuant to private company con
stitutions when shareholders wish to transfer their shares; valuations of shares
and businesses are routinely called for in relation to business purchases and m
ergers; and valuations are needed in a wide range of commercial litigation, incl
uding shareholder and partner disputes.
Despite the significant and growing need for high quality valuation opinions, th
ere is neither specialized valuation body nor significant number of firms undert
aking mainly valuation jobs. Valuations for the purposes of mergers and acquisit
ions of relatively small number of merchant banks, the corporate services groups w
ithin the Big 4 accounting firms and a small number of mid-tier accounting firms. Va
luations that are carried out for small acquisitions and tax purposes appear to
be most commonly undertaken by the accounting advisers to the vendor and purchas
er clients.
There exists a body known as the Australian Institute of Valuers (AIV) whose foc
us is on the valuation of real estate, plant and equipment, and jewellery. The A
IV is a member of the International Valuation Standards Committee, which sees bu
siness valuation as within its purview. The Institute of Chartered Accountants i
n Australia (ICAA) and Chartered Public Accountants Australia organize ad hoc co
urses of up to one full day on valuation principles but have promulgated no tech
nical standards in the area. Some of the Accounting Standards touch upon valuati
on issues but none deal in any detail with methodology or valuation practice. Th
e ICAA promulgated a standard dealing with forensic accounting practice with no
specific reference to valuation assignments. It might be expected that either th
e ICAA or the CPA Australia might have before now taken the lead in developing s
tandards and accreditation in the valuation area. However, limited resources of
these bodies have been exacerbated by failure of several attempts to merge them;
more so, they do not have authority over all valuers.
In terms of education, the larger training organizations occasionally conduct se
minars of up to two days focusing on valuation topics. However, the courses do n
ot purport to deliver, and cannot deliver, rigorous formal education in the area
. Various university programmes include components relating to valuation but no
university or other body offers a formal course dealing with valuation in a comp
rehensive manner. There is no system of accreditation in Australia and, at least
in the context of advising on sales and purchases of unlisted companies or inte
rests therein, anyone can describe himself or herself as a business valuer . In gen
eral, there are no minimum education or experience qualifications required. A pe
rson obtaining valuation work on the strength of misrepresentation as to the abi
lity to carry it out, or simply failing to deliver a report of sufficient qualit
y (in accordance with generally accepted standards , established by reference to pr
actice rather than a body of rules promulgated by a regulatory body) risks legal
action from an aggrieved client and possibly third parties. However, the incent
ive for quality provided by the availability of such avenues for redress is a po
or substitute for the raising of standards by organization, accreditation, resea
rch and education.
Madew (2008) identified another major challenge facing valuers in Australia, whi
ch is how to value green buildings. In this case, Green building (also known as
green construction or sustainable building) is the practice of creating structur
es and using processes that are environmentally responsible and resource-efficie
nt throughout a building s life-cycle: from siting to design, construction, operat
ion, maintenance, renovation, and deconstruction.
This practice expands and complements the classical building design concerns of
economy, utility, durability, and comfort (USAP, 2009). Some of the valuers were
suspicious of calls for special valuations of Green Star buildings, seeing this
as another way for owners to argue higher building valuations. Valuers were kee
n to put the issue of Green Star buildings into perspective , by describing it as j
ust one of many issues considered when undertaking a valuation. However, most va
luers recognize that they have limited understanding of Green Star buildings, bo
th in technical terms and in appreciation of the impact on value.
Situation in Nigeria The challenges facing estate surveyors and valuers in Niger
ia are many, ranging from lack of partnership-practice to rampant competition fr
om quacks; perceived threat from EFCC and Money Laundering Acts; variances in op
inions of values; low salaries and lack of retirement benefits; lack of training
and re-training of estate surveyors; non-use and implementation of valuation st
andards; and falling standard of fresh graduates.