CLIENT PRESSURE IN THE COMMERCIAL APPRAISAL INDUSTRY

Abstract

Client pressure poses more serious threats to the local valuation industry than is perhaps realized or understood. The lack of relevant literature pertaining to the issue mirrors this fact. By acceding to clients' requests for valuation adjustment, valuers not only compromise their professional integrity but through their actions, give the impression that other valuers are prone to manipulation. As such, the professional integrity of other valuers is also being tarnished. In the long run, as a consequence of increased competition, declining valuation fees and a continued dependence on clients and investment managers for such fees, the situation is more likely to worsen. In commercial property appraisal, the issue has far greater repercussions. Appraised values typically involve much larger sums and valuation fees involved tend to be higher. In today's evolving corporate climate, focus on corporate governance and business transparency have become increasingly significant as Singapore strives to be a global financial and business hub. Real estate asset valuation affects not only business balance sheets but lends itself towards influencing other key stakeholders such as shareholders, business partners as well as the general market. It is therefore imperative to study the extent of client pressure in the valuation of such properties. The objectives of this study are twofold: to determine whether client pressure exists in the valuation industry in Singapore and to ascertain the likely impact of client pressure on the valuation of commercial properties in Singapore.