by Ákos Budai | Report

Greater transparency and continuous training pave the way for higher professional standards on the real estate market. More than 100 professionals, from all over Austria and Central & Eastern Europe gathered in Vienna last week to discuss new directions in the profession at the latest RICS event. 

Financial stability is vital for a functioning property market so it is important that central banks pay attention to potential risks, said Philip Reading, Director of the Department for Financial Stability and the Supervision of Less Significant Institutions at the National Bank of Austria (OeNB). He reminded that as house prices in Austria have been growing steadily since 2009, the European Systemic Risk Board has issued warnings on medium-term residential real estate vulnerabilities concerning eight member states, including Austria. Although the country is characterised by a low home ownership rate, small and decreasing indebtedness and a favourable household debt to GDP ratio, a bill promoting sustainable lending standards will soon be put to a vote at the Austrian Parliament. 
Property valuation indirectly influences financial stability as commercial real estate loans can cause serious losses for banks during a crisis, highlighted Gergely Fábián, Director of Financial System Analysis at the Central Bank of Hungary (MNB). The fact that the ratio of non-performing loans is still a lot higher than it was before the crisis proves the importance of valuation, as well as the need for greater market transparency and more reliable data. The Central Bank of Hungary already has high-quality data on the housing market and should focus on collecting more data on commercial real estate, thus improving transparency, he added. 

The availability of high-quality data and valuation also has a positive message for investors, added Alexander Bosak MRICS. The Vienna Research Forum has divided the Vienna office market into 8 submarkets and since than gathers and publishes data quarterly. There is a constant need for up-to-date information on the total stock and vacancy rates as the Vienna office market is the largest in Central Europe with 10.85 million sqm of office space. Unfortunately it is nearly impossible to produce comparable date for all markets in the region due to country-specific issues, he added. 
"While initiatives such as the Vienna Research Forum are very welcomed and represent major steps forward we shouldn't stop here in obtaining and reporting more detailed data about the properties and transactions in the market because only publishing the price of the transaction is just insufficient – many additional details such as the vacancy, add-on factor or the service charge leakage in the respective building may substantially affect the transaction price. Therefore the market will be influenced by wrong or insufficient communication about the price and the transaction's real conditions. Valuers will just take and put this price in their valuations without the proper influencing factors mentioned above and will report further to the investor/client and the financing bank and further transactions happen on this basis. Media communicates further a half true transaction and that is how the markets get influenced only by perception and not properly digested data", said Radu Boitan FRICS, Senior Investment Director at Revetas Capital.
Erwin Hanslik MRICS, Partner at Taylor Wessing talked about legal issues concerning the property market. He emphasised the need for mortgage records next to the importance of real estate records.
All the experts that came together in Vienna agreed that greater transparency and continuous training pave the way for higher professional standards. In the future, more effort needs to be put into data-gathering, education and increasing transparency, summarised Péter Számely MRICS, Head of Team CEE and SEE at Hypo NOE.