Some of the world’s leading property institutions, including the International Facility Management Association (IFMA), Global FM, Corenet and the Royal Institution of Chartered Surveyors (RICS), came together at the World Bank in Washington DC to address the creation of international property measurement standards. The meeting marks the formation of the first International Property Measurement Standards Coalition (IPMSC).
Currently, the way property assets are measured vary wildly from country to country. With so many different methods in place, it makes it difficult for global investors to compare space measurements accurately. This confusion can affect property values, lead to errors in financial reporting and, consequentially, undermine market confidence and economic stability.
The aim of the IPMSC is to resolve disparities by developing and implementing International Property Measurement Standards, a set of measurement standards that are principle-based and internationally applicable, and would be adopted by all nations across the globe. This proposed implementation of a universal method of measuring property assets will tackle the problem of low investor confidence in property assets, its negative impact on financial markets, and ultimately global economic instability.
Convened by RICS, this initial meeting of the International Property Measurement Standards Coalition (IPMSC) was the first step to delivering this consistency, which the property industry organisations hope will provide greater global financial stability, more accurate and consistent financial reporting, stronger investor confidence, greater transparency of data and reduced risk of fraud.
An example of current inconsistency is the way in which floor space is calculated. For example, in Spain, floor areas have been measured to include outdoor swimming pools; in parts of the Middle East they can include the hypothetical maximum number of floors that could be built on the existing foundations; and in Australia, measurements have included outdoor parking spaces, even when they are not physically adjoined to the property itself.
The establishment of International Property Measurement Standards would ensure global consistency, leading to fewer instances of fraud, a more transparent market, greater public trust and increased economic stability.
Ken Creighton, RICS director of professional standards, said:
This is a groundbreaking initiative which has the potential to deliver huge benefits, both to real estate markets and to the economies and the populations they support around the world, by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements.
Julian Lyon FRICS, manager, European real estate, General Motors, added:
“Working with international portfolios inevitably brings real difficulties of comparison when every market has at least one different way of measuring space. I welcome an initiative that will bring portfolio-wide, global consistency to space measurement and which, for the first time, will allow the industry to benchmark good space-use practice from wherever in the world it may be.”
Steve Williams FRICS, executive MD, Real Capital Analytics, New York
With the exception of language, it would not be an exaggeration to characterise global measurement protocols as the most urgent outstanding issue in the pursuit of global market transparency and performance comparability.
The organisations involved in the IPMS are:
- American Society of Farm Managers and Rural Appraisers (ASFMRA) – North America
- Appraisal Foundation – North America
- Appraisal Institute – North America
- Asia Pacific Real Estate Association (APREA) – Asia
- Associação Brasileira de Normas Técnicas (ABNT) – Brazil
- Australian Property Institute – Australia
- Building Owners and Managers Association International (BOMA) – Global
- China Institute of Real Estate Appraisers and Agents (CIREA) – China
- CLGE – Europe
- CREDAI – India
- Commonwealth Association of Surveying and Land Economy (CASLE) – Commonwealth nations
- CoreNet – Global
- Counselors of Real Estate (CRE) – North America
- FIABCI – Global
- Global FM – Global
- International Consortium of Real Estate Associations (ICREA) – Global
- International Facility Management Association (IFMA) – Global
- International Federation of Surveyors (FIG) – Global
- International Monetary Fund (IMF) – Global
- International Valuation Standards Council (IVSC) – Global
- Royal Institution of Chartered Surveyors (RICS) – Global