SINGAPORE (Aug 17): Singapore Exchange (SGX) and the Singapore Institute of Surveyors and Valuers (SISV) are jointly reviewing valuation practices and the reporting carried out by real estate valuers that listed issuers engage.

Investors rely on real estate valuations when making decisions on investments in REITs and business trusts. Quality valuations are therefore crucial to safeguarding investor interest and maintaining confidence in the REITs and business trust sector. Of particular interest to investors would be the methodologies and principal assumptions adopted in the valuation reports.

“SGX is committed to collaborating with the entire eco-system to improve governance and disclosure. We welcome this opportunity to work with the SISV to review valuation practices and how valuers come up with valuation reports. We believe investors will benefit when valuation reports contain clearer information on methodology and key assumptions,” says Michael Tang, Head of Listing Policy & Product Admission.

Dr Lim Lan Yuan, President of Valuation and General Practice, Singapore Institute of Surveyors and Valuers, says, “This is timely as the need for enhancing the valuation reporting requirements has been the Institute’s key objective over the years with the increasing competition in the industry. We are certainly very happy to have the support of SGX and industry stakeholders to work on this together with the Institute and to set effective disclosure requirements which not only will benefit the valuation industry, but more importantly, to raise Singapore’s attractiveness as a safe investment haven in the global business environment today.”

SGX and SISV are forming a committee to carry out the review. The committee comprises representatives from various stakeholder groups as detailed in the Appendix. The Committee will be tasked to identify and recommend enhancements to the disclosure framework for real estate valuation and reporting in Singapore.

Thursday’s announcement follows SGX’s engagement with professionals from the real estate, financial auditing and valuation industry in the past few months to better understand how valuations are done, and how such information is featured in documents such as shareholders’ circulars.

Shares in SGX closed 2 cents lower at $7.54.