India endorses international valuation standards

BVWireIssue #64-3
January 23, 2008

It has been almost two years since India opened its real estate investment sector to foreign investors.  The response was “overwhelming,” according to an International Valuation Standards Committee (IVSC) release.  “Billions of dollars have been committed to various projects in India.”   While industry players predict that it will take a year for the first real estate investment trust to hit the market, last month the Securities and Exchange Board of India (SEBI) issued the long-awaited draft regulations for setting up REITs.  The draft provides guidelines for establishing trust and fund management companies, their minimum net worth and infrastructure.  “All schemes must be appraised by an appraisal agency, rated by a credit rating agency, and also valued by a valuer,” SEBI says.  “The valuations must follow either national Indian valuation standards or the International Valuation Standards.”  The draft guidelines are available at the SEBI website.

The IVSC welcomed the guidance and the endorsement.  Elvin Fernandez, IVSC chair, noted the “timely introduction of a REIT framework in India and …emphasis on the conduct of professional valuations,” in particular the recognition of International Valuation Standards (IVS).  The latest edition (IVS 2007) “adequately guides valuers on such valuations,” he noted.

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