SINGAPORE (Oct 15): Singapore Exchange Regulation (SGX RegCo) has entered into an MOU with Singapore Institute of Surveyors and Valuers (SISV) to enhance standards of valuations of real estate and land.

This issue of property and business valuation has become pertinent as more listed companies do deals that need to be accorded valuations, which, by its nature, involves certain elements of subjectivity by the valuers engaged.

Under the terms of the MOU, SGX RegCo may seek SISV’s advice if and when there are concerns about property valuation reports, or disclosures made by listed companies or listing applicants on valuations.

SISV will provide expert advice and support in reviewing whether property valuation reports are conducted and prepared in compliance with its valuation reporting guide.

The guide was introduced back in 2018 in collaboration with SGX RegCo, and applicable standards and practices guidelines. The cooperation will include referrals of valuations of concern to SISV.

See: SGX and Singapore Institute of Surveyors and Valuers to jointly review reporting for valuations

Both SGX RegCo and SISV will also cooperate in setting standards and guidance relating to real estate valuation and disclosures, where need be.

“Robust property valuations are crucial to Singapore’s standing as a leading hub for REITs and property companies. SGX-listed REITs are acquiring more diverse and offshore assets and the standard of valuations should be enhanced so as to mitigate any potential risks,” says SGX RegCo CEO Tan Boon Gin.

SGX RegCo’s MOU with the valuers' bodies come about because of past experiences.

Back in 2017, minority unitholders of Sabana REIT took issue with the appraised value of acquisitions the REIT’s previous manager wanted to make.

See: Sabana REIT's purchase of Changi South property from Vibrant draws scrutiny

See also: Here are the responses our questions drew at Sabana REIT’s EGM

“SISV is honoured to support SGX RegCo specifically on real estate and land valuation as this would help to lead to further enhance a sustainable level of confidence in the provision of valuation reporting to listed issuers,” says Dr Lim Lan Yuan, President, Valuation and General Practice, SISV.

“In today’s evolving global business environment where Singapore holds a global position as a destination for real estate investments, we are pleased to do our part towards raising standards and minimising risks,” he adds.

“There is significant public interest in the work that valuers do especially in relation to financial reporting and capital markets,” says Harsha Basnayake, Chairman, IVAS Council and Asia Pacific Managing Partner for Transaction Advisory Services at Ernst & Young.