Property buyers and end-users in Hong Kong stand to get more "bang for their buck" if a proposed global property measurement standard is implemented, a valuation expert says.
"End-users will benefit in a very big way if the premises they are getting is clearly defined. This is important, especially to flat buyers," says David Faulkner, chairman of the Asia Valuation Professional Group Board and past chairman of the Royal Institution of Chartered Surveyors Hong Kong.
Hong Kong would not want to fall behind international standards, Faulkner added, and if there was more consistency and transparency in property measurement standards across the board, listings of foreign companies and foreign investment were also likely to be boosted.
A global property measurement standard is being set up.
Preparatory work is being done by the International Property Measurement Standards Coalition (IPMSC), which has selected 19 real estate experts from around the world to join its standards setting committee.
The coalition says the manner in which property assets - office, residential, retail and industrial - are measured vary considerably from country to country. The different methods make it difficult for global investors and occupiers to accurately compare premises.
With the implementation of a measurement standard, properties will be consistently measured, creating a more transparent market place, greater public trust, stronger investor confidence and increased market stability, it says. The standard will have a significant impact on the way property is measured, leading to improvements in valuation and financial reporting consistency across international markets.
Standards setting committee members include academics, real estate fund and asset managers, residential professionals, valuers and specialists in development and construction.
"Property is a global business for international investors, corporate occupiers and their advisers, but floor-space measuring practices vary from country to country and even between markets in the same country," says committee chairman Max Crofts.
Encouraged by a meeting at the World Bank, the committee now intends to create standards of measurement that will complement international financial reporting and valuation standards and enable the collection and use of reliable data across worldwide markets.
The committee aims to have a draft ready for consultation early next year.
Faulkner says there are always two groups in all standard-setting talks, namely the developed and developing markets. Established standards are used in developed markets and there will therefore be more resistance to changes, unlike in developing markets such as China.
"A study has shown that nearly every country in Asia has a different definition of gross floor area. There are different practices and there will be some resistance. However, there's a desire to move forward," he says.
"In China, floor area is not clearly defined at the moment. So it will be easier for the country to adopt international standards."