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EFSA Issues Real Estate Valuation C

EFSA Issues Real Estate Valuation Criteria
On 7 June 2015, the Egyptian Financial Supervisory Authority (“EFSA”) issued a decision stipulating the Egyptian standards for the valuation of real estate (the "Decision").[1] These criteria are the standards and the accounting basics that the licensees to engage in real estate valuation need to abide by when evaluating any property in accordance with the Mortgage Finance Law or in any other case where the law requires the valuation to be carried out by a specific authority. It should be noted that EFSA’s recent decree has obligated listed companies in the stock market to abide by these standards when evaluating any assets they own or deal in, which will have an impact on the valuation of properties of the listed companies and the companies that have properties of great value in general. The criteria, which came in more than one hundred pages, include the following main topics:
  • Identifying general concepts related to mortgage financing, including the concept of the independent expert, the definition of different types of properties, the definition of the types of depreciation, market value and the different ways of valuation regulated by these rules.
  • Charter of the rules of conduct and ethics of the real estate valuation experts, including integrity, confidentiality and non-conflict of interest, and disclosure which seek to achieve the purpose of the valuation.
  • Valuation criteria: valuation in accordance with the market value, valuation according to many other values adopted by the rules, and the standards of the valuation report.
  • Organization of the mechanisms of conducting the valuation and its various stages, the requirements of the preparation of financial statements, valuation of real estate collateral, in addition to the standards of evaluating real estate projects under construction.
  • Additional pilot controls to facilitate and supervise the performance of the real estate valuation profession.
The Decision will take effect from 1 July 2015, and the listed valuation experts in EFSA are committed to these criteria starting from that date.
Conclusion
This Decision is an example of the legislative positive effort that EFSA took during the past two years, which is based on the structural institutional approach and the progressive regulatory approach in the various aspects of non-banking markets. It also complements a significant shortage that was suffered by the Egyptian market in one of the most important and most significant financial regulatory areas which is the real estate valuation. It is hoped that this decree contributes to raising the level of transparency of the real estate valuation, which leads to more transparency in the valuation of companies in general.   [1] EFSA Board of Directors' Decision No. 39/2015 on Real Estate Valuation Criteria, Official Gazette, Issue No. 130 (cont.), 7 June 2015.
On 7 June 2015, the Egyptian Financial Supervisory Authority (“EFSA”) issued a decision stipulating the Egyptian standards for the valuation of real estate (the "Decision").[1] These criteria are the standards and the accounting basics that the licensees to engage in real estate valuation need to abide by when evaluating any property in accordance with the Mortgage Finance Law or in any other case where the law requires the valuation to be carried out by a specific authority. It should be noted that EFSA’s recent decree has obligated listed companies in the stock market to abide by these standards when evaluating any assets they own or deal in, which will have an impact on the valuation of properties of the listed companies and the companies that have properties of great value in general. The criteria, which came in more than one hundred pages, include the following main topics:
  • Identifying general concepts related to mortgage financing, including the concept of the independent expert, the definition of different types of properties, the definition of the types of depreciation, market value and the different ways of valuation regulated by these rules.
  • Charter of the rules of conduct and ethics of the real estate valuation experts, including integrity, confidentiality and non-conflict of interest, and disclosure which seek to achieve the purpose of the valuation.
  • Valuation criteria: valuation in accordance with the market value, valuation according to many other values adopted by the rules, and the standards of the valuation report.
  • Organization of the mechanisms of conducting the valuation and its various stages, the requirements of the preparation of financial statements, valuation of real estate collateral, in addition to the standards of evaluating real estate projects under construction.
  • Additional pilot controls to facilitate and supervise the performance of the real estate valuation profession.
The Decision will take effect from 1 July 2015, and the listed valuation experts in EFSA are committed to these criteria starting from that date.
Conclusion
This Decision is an example of the legislative positive effort that EFSA took during the past two years, which is based on the structural institutional approach and the progressive regulatory approach in the various aspects of non-banking markets. It also complements a significant shortage that was suffered by the Egyptian market in one of the most important and most significant financial regulatory areas which is the real estate valuation. It is hoped that this decree contributes to raising the level of transparency of the real estate valuation, which leads to more transparency in the valuation of companies in general.   [1] EFSA Board of Directors' Decision No. 39/2015 on Real Estate Valuation Criteria, Official Gazette, Issue No. 130 (cont.), 7 June 2015.