🏭 Determine Industrial Values & Prepare a Valuation Report

Understanding and accurately determining industrial property values is critical for clients, investors, and stakeholders. The valuation process must be based on clear, comprehensive instructions from the client to ensure a professional, compliant, and legally sound outcome. Under the Valuers Act Regulations, certified valuers are required to:

• Provide a written estimate of fees

• Confirm valuation instructions in writing

• Follow all Rules of Conduct and legislative requirements

Let’s explore the essential elements that shape professional valuation practices.

🚫 No Predetermined Valuations

A professional valuer must maintain independence. Valuation outcomes cannot be influenced by client expectations or compensation structures. For example:

• Valuers must not agree to a fixed valuation amount in advance.

• Assignments must not be contingent on obtaining a specific compensation figure, especially in compulsory acquisition valuations.

This ensures the credibility and legality of valuation reports in all property classes.

⚖️ Legal & Ethical Compliance in Valuation

Valuers are bound by both statutory law and common law to act:

• a) Competently with knowledge of all relevant legislation

• b) Professionally, even under pressure

• c) With complete confidentiality

• d) Without conflicts of interest

e) Valuers must decline assignments that fall outside their area of expertise or in which they have personal or financial interests.

📚 Valuation Standards and Industry Guidelines

The Australian Property Institute (API) plays a leading role in setting valuation standards. These are outlined in a series of professional practice notes and guidelines that ensure ethical and consistent conduct across the industry.

🔹 API Practice Notes Cover:

• i) Ethics & professional conduct

• ii) Business-client engagement

• iii) Valuation methodology & standards

• iv) Advisory guidance for niche cases

v) Membership in the API, even at the student level, grants access to these resources. Alternatively, the Australian Valuers      Institute (AVI) provides similar guidelines. Professionals often maintain their own libraries of valuation standards and guidance notes.

📐 Professional Practice Standards (Mandatory for API Members)

Valuers must comply with API's practice standards when undertaking the following types of valuations:

• Valuation procedures and methodology

• Valuations for mortgage and loan security

• Valuations for financial reporting

• Valuations for compulsory acquisition

Each valuation must be based on a written instruction, followed by a detailed property inspection and market analysis to support the final valuation opinion.

📖 Key Guidance Notes for Valuers

While not mandatory, Guidance Notes offer critical insights into niche valuation areas. They help develop best practices for property valuers across different sectors. Key guidance topics include:

• 1) Valuation procedures – real property

• 2) Land contamination assessments

• 3) Valuation of owner-occupied properties

• 4) Disclaimer and qualification statements

• 5) Digital document transmission standards

• 6) Valuations for mortgage or loan purposes

• 7) Valuations for financial reporting

• 8) Compulsory acquisition property valuation

• 9) Valuation for rating and taxing

• 10) Feasibility studies and prospectus valuations

11) These notes ensure standardization, accuracy, and legal compliance.

✍️ Clear Instructions & Terms of Reference

Accurate valuation begins with precise client instructions. Ambiguity in instructions can lead to disputes or misalignment of expectations. Therefore, every valuation assignment should confirm:

• The purpose of the valuation

• Relevant business terms, such as fees and costs

• Property details and report format

• Any specific valuation criteria or client considerations

Written confirmation is not only a legal safeguard—it is your primary evidence if your valuation is ever challenged.

🏢 Common Purposes of Commercial & Industrial Property Valuation

Valuations serve multiple business and legal needs. It is essential that the valuer understands the purpose of the assignment, as it dictates:

• The valuation methodology

• The market evidence required

• The regulatory standards to be followed

  
  

🔹 Asset Valuation & Financial Reporting

One of the most common reasons for conducting a valuation is to meet financial reporting requirements. Public companies, government agencies, and trusts must regularly assess their real estate holdings to:

• Comply with Australian Accounting Standards Board (AASB) regulations

• Report property values in annual reports

• Support shareholder and public transparency

A key standard for this is AASB 1041, which outlines how assets must be measured and disclosed.

📌 Final Thoughts

Whether you're a student, a certified valuer, or a property investor, understanding the industrial property valuation process is crucial. Legal compliance, professional ethics, and sound valuation methodology must all come together to produce reliable, defendable valuation reports.

For anyone considering a career or service offering in this field, aligning with bodies like the API or AVI and staying updated with practice standards is essential to long-term success.