Informing Investment Choice
There is a fundamental lack of transparency and information in the Spanish property markets. This can lead to poorly informed project analysis and appraisals lacking in substance and objectivity. Patron provide the best quality economic, demographic and real estate research possible for each project.
These current economic and market difficulties can provide opportunities for investors. For well analysed projects and investments with a clearly thought out business plan, it is possible to carry out efficient projects resulting in strategic decisions and investments with positive outcomes.
For our clients to better understand the projects they are considering the process needs to be timely, cost effective and deliver results that give a credible, three-dimensional and dynamic analysis. In the case of portfolio investments, analysis of the quality, liquidity and possible future price evolution of the individual assets.
Portfolio Valuation – Challenges
The traditional methods and processes employed by the appraisal firms to value large portfolios create fundamental problems:
- The appraisal method adopted universally in Spain today of basing values on a % discount of asking prices is highly artificial and prone to over-value assets.
- A thin market for particular types of asset in a particular location leads to a valuation giving inadequate depth of understanding or explanation of liquidity, supply and demand dynamics and potential price expectations at the current time or as the market evolves over the six month to three year time frame.
- Little is known about the overall characteristics of a portfolio at the outset of a project. This makes it difficult to assess the assets to appraise in order to capture a representative sample of the portfolio in a short analysis period and results in inaccurate and poor quality conclusions.
Research Based Solutions.
Fundamental understanding of the economic, financial, demographic and real estate markets in order to understand the distortions that have been produced in pricing. This is achieved by a three stage process in the case of portfolio valuations:
The result is an objective analysis that can be used to appraise the portfolio assets. This can be directly used with the appraisal reports to model the portfolio from a financial perspective, as both an initial stage of business planning for the management and sale strategy of the portfolio, and on an on-going basis in reviewing the sales during the process.
Utilising research methods in this way will:
- Save the client significant consultancy fees in the initial stages of a project as it reduces the need for appraisals;
- Save the time for appraisals and during the appraisal review process;
- Facilitate better informed financial modelling (for example current prices, evolution of prices and sales periods); and
- Improve objective review of on-going project performance.
Patron is regulated by the Royal Institution of Chartered Surveyors (RICS), the leading professional body for qualifications and standards worldwide in the real estate and construction industry.