International Scientific-Practical Conference

« Real Estate Valuation:

Changing Face of Mortgage Lending Valuation -

Experience from Germany and Europe »

21 - 22 November 2019

Reiner Lux

Reiner Lux, Managing Director of…

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Certification of real estate appraisers who carry out real estate valuations for the

Financial Industry

Development and distribution of the ‚LGD-Grading‘ (Loss Given Default)

Transaction database, assessment and analysis of real estate markets

Professional education and training of persons working in the valuation and

financing of real estate, preparation for the certification examination as real

estate appraiser HypZert for Mortgage Lending Valuation (CIS HypZert MLV)

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Shareholders of HypZert GmbH

Association of German Banks

National Association of German Cooperative Banks

German Savings Banks Association

Association of German Pfandbrief Banks

Association of Private Bausparkassen

Association of German Public Banks e.V.

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Hyp

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CIS HypZert (S) CIS HypZert (F) CIS HypZert (M) CIS HypZert (MLV)

1.960 HypZert Certified Valuers!

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Care Facilities

Retail

Hospitality & Restaurant Industry

International

Energy & Environment

Logistics

Agriculture

Industrial

NEW: Co-Working Offices

HypZert Professional Groups

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Professional Groups Publications (Extract)

Valuation of Logistics Properties (English version available)

Valuation of Retail Properties (English version available)

Valuation of Lodging Property (English version available)

Valuation of Nursing Homes

Valuation of Rehabilitation Centres

Valuation of Hospitals

Valuation of Industrial Properties

Valuation of Real Estate with Photovoltaic Systems

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Risk Management – Real Estate Collaterals

RiskManagement Real Estate Collaterals

Monitoring & Forecast

Determi-nation of

MLV

LGD Grading

Property andMarket Rating

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Challenges for the Future of Valuation

Six big challenges facing the valuation for the financial industry:

1. Higher volatility of capital markets and faster social upheavals

2. Various approaches for a sustainable value

3. Increasing regulation of the banking sector

4. Monitoring of banks

5. Digitisation and digitalisation

6. Big Data

What is Digitisation?

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Geoinformation and Digitisation

Computer Science Maths and Statistics

Software Research

Property Market

Expertise

Machine

Learning

Computer-Assisted

Property Valuation with

CIB+

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Standard Valuation – Income Approach

Depending on the valuation approach, overwritable suggested values can be added in

for:

assessment of location

guideline land value

construction costs (updated using the Building Costs Index [BPI])

operating costs

rents / prices

remaining useful life / total useful life

property yields / capitalization rates

DRC factors

regional factors

future price trends (5-year forecasts)

Inspection Service

and Application

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Home Page: Inspection Jobs

Jobs

All jobs – jobs with date – jobs without date – finished jobs –

declined jobs

Internal inspection

(address)

Contact person

Date/time

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Extract from Entry and Text Fields

Inspection

State of repair (choose)

Buildings defects

Other construction works

Summary and Overall evaluation

Integration of Geoinformation

Systems – Possible Uses

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Market Information System – Classification Web App

Market classification Germany

The app analyses and condenses

information on the state of the

German real estate market on

district level. The results are

shown in the map as “above

average/ average/below

average”.

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Market Information System – Comparative Data Analysis

Prices/sqm for owner-occupied

residential properties

(Euro/sqm)

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Example of Link to CIB +-: Analysis of Surrounding Area with POI

Area Map

Regional market information:

Inhabitants, unemployement

rate, purchase power, housing

stock, building permits, building

completions

Facilities in the Area:

e.g. child care, schools…

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Example of Link to CIB +: Monitoring

Price changes (within 3 years):

More than 12 %

9-12%

6-9%

3-6%

Less than 3%

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The Future of Valuations

The valuer as advisor?

Valuation

Provide independent valuations

Value up until the present day

Professional and independent

Impartial and objective

Market Value (or another basis)

Advisor

Provide commercial advice

Forward-looking advice

Professional and independent

Not impartial and objective

Not necessarily Market Value

Can a valuer perform both functions? What about liability?

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Skill-setProcess

Data

StandardsForward

Looking

Client

experience

The Future of Valuations

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Long Term Sustainable Value (L-TSV)

Initiative aiming to:• Define an international standard of a sustainable value• Avoid inconsistent standards in the application of regulation set by Basel

Status quo:• Definition of country specifics• Addition of a methodology for residential properties• Rules for a L-TSV deriving from AVM•

HypZert GmbH

Georgenstrasse 24

10117 Berlin

Germany

+49 (0) 30 206 229 265

lux@hypzert.de

hypzert.de