The recent 5th National Real Estate Conference held at the Pearl Resort, Pacific Harbour saw more than 100 stakeholders from Fiji’s real estate and property investment industry convene and discuss issues relating to the local property market.

 

There were three sessions to the program with topics of discussions being: property investments and real estate opportunities in Fiji; real estate education program; and approvals and future expectations.

 

The third session, which was approvals and future expectations, allowed participants and the panel, to engage in a healthy debate on Fiji’s valuation principles and how the valuation processes lead to pricing.

 

Recently, the cost of residential properties has sparked concerns from the public who question how these properties are valued, and the standards used to give certain properties the prices they have been given.

 

There are parents who’ve openly questioned whether their children, grandchildren and their future generations would ever be able to purchase and own homes with the surge in property prices.

 

And most times, real estate agents and real estate companies who market these properties on behalf of the owners are at the receiving end “of the public’s wrath”.

 

Loggerheads

Fiji Institute of Valuers and Estate Management President Taraivini Ratumudu, who was one of the panel speakers at the session, said the institute and real estate agents are “always at loggerheads” when it comes to the prices of properties.

“In a nutshell, a property valuer usually comes up with an unbiased source of truth when it comes to determining how much a property’s worth. Whereas, a licensed real estate agent is a licensed professional representing buyers, or sellers in a real estate agency,” Ms Ratumudu said.

“A property valuation is more detailed than a real estate agents’ report and we also have affordable fees, which is legislated. “Real estate agents will use local market knowledge to determine the price that they’ll be selling at. They also aim to get the best price they can get for their clients.

“I think this is where sometimes we are always at loggerheads with the real estate agents, because sometimes it’s always a pointing-finger kind of thing. We’ll always point fingers at the real estate agents for distorting the market, whereas sometimes we do the same too.”

However, Ms Ratumudu’s comments did not sit well with some local realtors who argued that it was the valuers “that were raising the prices in the industry”.

 

Blame game

Jokhan Realtors Pte Ltd managing director, Reginald Jokhan said it was not fair to say that real estate agents “put the price to a property”. “When we agents sell a property, we have a guideline from the valuers.

We do not price it. We can’t say ‘it’s $500,000, $600,000’ before we start selling. We always recommend that the vendors get a valuation,” Mr Jokhan said.

“If we wrote on a letterhead and it says that the property is $500,000 and we took it to the financial institution for loan, they won’t look at our document. They’ll want a registered valuation report.

“So, at the end of it, we sell properties, we get a guideline from the valuers. It won’t be fair to anybody to say that real estate agents put the price to the property. It’s not us. “In the bigger picture, the whole of Fiji, they (valuers) are to be blamed for the price hike. They’re to be blamed for the price they put on the paper, and then it becomes our job to convince buyers to buy to that price. “Reality of the matter is – it’s not us. It’s the valuers, they put pen to paper.”

 

Propmate Realty Fiji agent Anil Prasad, who shared the same sentiment that real estate agents are not to be blamed said the market also dictates the price a property would be sold for. “For example, in the Suva city within the town boundaries, there’s a huge demand because a lot of people are moving into town and city boundaries. The demand actually dictates the price,” he said. “But in areas where you don’t have traction, in areas where you will not have necessarily a lot of buyers, the value will generally be lower than anything closer to the town or city.”

 

Market decides

Anand Krishna Goundar, President of the Real Estate Association of Fiji and managing director of Irok Enterprises Pte Ltd, said at the end of the day, it’s the seller who decides at what price to sell the property.

He said the decision sellers make is usually determined after consideration of he offers made by potential buyers. “Valuation is not the final price of a property. It’s just an indication that a property can sell at around that price but the fact remains that market is the dictating factor,” Mr Goundar said.

“When you have five people come look at a property, and one says ‘I’m going to offer you this much’, and another says ‘I’m going to offer you this much’, we of course take all the five offers and we present it to the seller, educate him on who’s the best qualified person to buy, recommend him a few and then he chooses. “At the end of the day, it’s the seller who chooses the price.”

 

The standards debate

The debate raised some interesting questions, one of which is, what standards are being used in the appraisal process to determine the value of a property? Fiji had adopted the International Valuation Standards (IVS) in 2017 which was authored by the IVS council (IVSC) “the independent global standard setter for the valuation profession”.

The IVS are standards for undertaking valuation assignments using generally recognised concepts and principles that promotes transparency and consistency in valuation practice, according to the IVSC.

However, it further cautioned: “the adoption or use of any IVSC standards by any entity is entirely voluntary and at the user’s risk”.

So, are local properties being valued through the IVS guidelines or are those in the property investment and real estate industry using their own standards because the IVSC “does not audit monitor, review or control in any way the manner in which users apply the standards”?

Source: FIJITIMES.COM.FJ