RICS said the manner in which property assets such as housing developments or shopping centres are measured varies widely. “With so many different methods of measurement available, it makes it difficult for those looking to invest in these developments to compare like with like,” RICS said. This confusion can affect property values, lead to errors in financial reporting and, consequently, undermine market confidence and economic stability.”

 

As a result some of the world’s leading property institutions, including RICS are meeting at the World Bank in Washington DC, to address this issue through the proposed implementation of a universal standard of property measurement. This would ensure global consistency, cut fraud, bring a more transparent market, greater public trust and increased economic stability. Convened by RICS, this initial meeting of the International Property Measurement Standards Coalition is the first step to delivering this consistency which will provide:

 

· greater global financial stability

· more accurate and consistent financial reporting

· stronger investor confidence

· greater transparency of data

· reduced risk of fraud

 

One example of inconsistency is in the calculation of floor space, RICS said. In Spain, areas are 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 existing foundations; and in Australia, measurements have included outdoor parking spaces even when they are not physically adjoined to the property. The IPMSC aim is to resolve disparities by developing and implementing a set of international standards, to be adopted by all nations across the globe.

 

Ken Creighton, RICS Director of Professional Standards commented: "This is a groundbreaking initiative which has the potential to deliver huge benefits, both to real estate markets and to economies and populations around the world, by creating a level playing field for the way property is measured, valued and ultimately reported in financial statements."

 

Added Julian Lyon, Manager, European Real Estate, General Motors: "Working with international portfolios inevitably brings real difficulties of comparison when every market has at least one different way of measuring space. It is bad enough that we do not all use the same conversion factor between square feet and square metres!… 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."