European Valuation Standards (EVS)

TEGOVA has published European Valuation Standards since the early 1980s. This, the ninth edition, is effective from 1 January 2021.The digital version of the book is downloadable from this page.

EVS 2020 (The Blue Book)

INTRODUCTION

by Michael P. Reinberg PHD REV FRICS CRE, Chairman of the European Valuation Standards Board

Building on the foundation of its predecessors, this ninth edition was designed with the particular objective of providing standards that are relevant and easily comprehensible to valuers, clients and the public authorities. All sections have been reviewed in that light, and all new parts passed through that filter.

EVS 2020 enhances European valuation practice with:

Greater clarity on the key concept of Market Value, compensating flaws that have crept into various language versions of EU law;
A common European Valuation Report for Residential Property;
Energy efficiency valuation upgraded to Standard level;
New Guidance Notes and Information Papers on subjects of real interest to practicing valuers;
Clarification of the role of advanced statistical models in line with the new EBA Guidelines;
A comprehensive approach to Valuation Methodology including detailed exposition of key concepts such as income approach and depreciated replacement cost;
A unique, landmark exposé of European Union Legislation and Property Valuation enabling practicing valuers to understand how much of the real estate regulatory environment is based on EU law, equally valuable to European and national supervisory authorities, policy makers and academics.

The Standards were designed in the belief that the valuation profession must be conscious of the real added value that quality valuation brings to markets and society and must imbue clients and public authorities with an understanding of how the valuer reached the determination of value.

It was a collective effort based on a clear concept of the needs of society and the future of the profession.

EVS 2020 is effective from 1 January 2021.

EVS 2020

The Book (1806 KB)

PREFACE

These lines are written in the eye of the storm. The Covid-19 pandemic has disrupted our way of life and our very livelihoods as businesses and workers weather the continuing onslaught of the disease and the measures taken to curtail it. Commercial property is among the hardest hit, with existential challenges for retail and even office property.

For valuers there is, sadly, an element of vindication. Our profession is never more vitally relevant than when the economy and real estate are in free-fall. Gone are the false certainties about value. Vanished, the faith in algorithms crunching out-of-date data. Badly shaken, the confidence of so many that they could gauge the market for themselves. In crisis, valuers come into their own, relying on their experience, intuition and intimate local market knowledge to ascertain value.

Valuation practice is the conciliation of a paradox: deriving value from hard evidence while also identifying market phenomena with a lasting impact on value. A key purpose of valuation standards is to alert valuers to change and provide them with the tools for integrating it into their determination of value. Mirroring this, EVS 2020 is both a continuation and a disruption.

EVS 2020 continues to adapt valuation standards to the ever-increasing sway of EU law over financial and real estate markets. EU law permeates the Blue Book even more than in previous editions, all definitions and concepts are in line with those of EU law and policy - witness the adaptation of EVS's approach to AVMs to the recent Guidelines of the European Banking Authority - and the impacts of EU law on real estate markets and on valuation are analysed in ever greater detail and are expected to be well understood by Blue Book valuers.

Since the last edition, the European authorities have confirmed their faith in EVS. Most notably, the European Central Bank in the 2018 edition of its Asset Quality Review manual for the valuation of banks' real estate collateral reiterated that EVS takes precedence over all other standards.

These marks of confidence in EVS inspired us to help the European authorities further in the present edition, most crucially by addressing the confusion generated by radically differing EU legal language versions of 'arm's-length transaction' in the Capital Requirements Regulation's definition of 'Market Value'.

Alongside this continuing Europeanisation of the profession, EVS 2020 also brings disruption, coming to grips with the imperative of determining the value of energy efficiency in buildings in a Union in which climate leadership is the top priority. The tipping point came this year with the publication of EU-mandated member state Long-term Renovation Strategies, several of which contained legal obligations to renovate a building to a higher level of energy efficiency by a fixed date or at a certain inflection point (e.g. rental, sale) creating an unavoidable major cost impacting value. Accordingly, EVS 2020 upgrades energy efficiency valuation to Standard status and advises valuers to integrate these costs into their determination of Market Value.

The transparency of financial and real estate markets and the climate impact of buildings are systemic and existential issues of our time. Valuers' key role in these places a great responsibility on TEGOVA, which the European Valuation Standards Board has risen to in this ninth edition of EVS, providing our 70,000 valuers, their clients and the European and national public authorities with the underpinning for rigorous evidence-based determination of value.

Krzysztof Grzesik REV FRICS
Chairman of the Board of TEGOVA