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CRE PERSPECTIVE
Herein, the author looks at the age-old conundrum to see whether, in today's hi-tech world and with the advent of Global Valuation Standards, there is a consensus of opinion.
Art: thing in which skill may be exercised.
Science: systematic and formulated knowledge.
-Source: The Concise Oxford Dictionary
There seems to be a common view among those I interviewed for this article that roughly correlates with the dictionary definitions. Another way of distinguishing between the two might be that one is subjective whilst the other is objective. Which is which? Well, I believe that whilst art is a subjective view, a scientific view should be objective. However, in terms of an appraisal, it could be argued that a client is paying the appraiser for a subjective interpretation of the objective scientific analysis and calculation. There will always be an esoteric mix of factors to interpret, such as current market sentiment, the micro-location of the asset, age, and precise specification of the building, among many others.
NEW VIEWS FOR OLD
Is this ratio of subjectivity a new view? Has this view changed in recent years? Folk have been valuing property for centuries. The Roman trader needed to assess an asset's value just as much as today's real estate bond trader. What has changed, particularly in very recent years, is the methodology by which the number is calculated. Indeed, the very word calculated implies a more scientific approach than when I first valued property. Gut feel had a lot to do with a value then, based on the comparables method. Yes, there was some mathematics-the application of a years purchase multiplier to the rent. Even then, the valuer needed to apply a subjective judgement to arrive at the number reported to the client.
Perhaps appraisal was, in the past, a cottage industry, as the quality of the output depended on the appraiser's ability to gather market information that used to not be so readily available. Lack of data needs more experience. More data leads to a better opinion.
Nowadays, most appraisers would not dream of undertaking an appraisal without the benefit of a computer package. It is not for me to give credit to a particular supplier-there are many on the market..some better...