VA LU E WHEREVER IT IS No.2 2016
Edited by ANEVAR – The National Association of Authorized Romanian Valuers
Valuation Standards The Fiscal Code and - Lights and Shadows Building Valuation for Daniel Manațe 6 Taxation Purposes Adrian Vascu 10
Up-To-Date Valuation Appraisal Adrian Vascu 22
If There Is No Competence, Might There Be Responsibility? Dana Ababei 48
Activity Report of ANEVAR Individual and Corporate Members – 2014 50 www.facebook.com/ANEVAR.oficial www.linkedin.com/company/anevar https://twitter.com/AnevarRomania CONTENTS
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22 Up-To-Date Valuation Appraisal Adrian Vascu 05 Inside 28 “VALUATION ACTIVITY Raluca Șlicaru IS A CORNERSTONE IN MARKET ECONOMY” 06 Valuation Standards 56 Determining Taxable Value - Lights and Shadows 34 “TO REACH EXCELLENCE, of Non-Residential Daniel Manațe PEOPLE SHOULD Buildings BE AWARE OF THEIR Anuţa Stan 10 Rest Ensured PERTAINING TO A GROUP” Gheorghe Bădescu of Commitments Adrian Vascu 44 “ANEVAR in twenty years’ 58 The Secret of Success: time: I envisage the Responsibility 16 THE FISCAL CODE AND Association as Adrian Crivii BUILDING VALUATION FOR a European valuation leader“ TAXATION PURPOSES 60 RBA REQUIRES THAT Adrian Vascu 48 If There Is No Competence, THE MORTGAGE CREDIT Might There Be DIRECTIVE, AS CONCEIVED Responsibility? BY ITS ISSUING Dana Ababei ENTITY, SHOULD BE FOLLOWED TO THE LETTER 50 Activity Report of ANEVAR Florin Dănescu Individual and Corporate Members - 2014 62 EVENTS
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VALUE | 2016 3 NEWS
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Editorial Office: 7 Scărlătescu Street , Bucharest, 011158 Tel.: +40 21 315 65 64; +40 21 315 65 05 Fax: +40 21 311 13 40 E-mail: [email protected] VA LU E WHEREVER IT IS Publisher: Coordinating Editor: Advertising Sales: Photos: ANEVAR Raluca Șlicaru Raluca Șlicaru Timi Șlicaru; tel.: 0722 53 44 90 Dreamstime.com Editorial Office: DTP: [email protected] ANEVAR www.dtpdesign.ro
ISSN 2393 – 1477 PRINTED BY CN POȘTA ROMÂNĂ ISSN-L 2393 – 1477
The contents of this publication, integral or partial, is strictly forbidden to reproduce, archive or convey by any means – digital, mechanical, photocopying or recording – in the absence of ANEVAR’s prior written approval. The points of view expressed in Value, Wherever It Is magazine illustrate the opinions of the authors and do not engage ANEVAR’s responsibility. ANEVAR’s official point of view is expressed in the documents adopted and endorsed by its governing bodies. ANEVAR takes no responsibility and offers no guarantees for the products and/or services advertised in Value, Wherever It Is magazine, though they were subject to rigorous verification. Value, Wherever It Is magazine is educational and informative in nature, but, by means of this publication, ANEVAR does not supply consulting services in the field of: valuation, accountancy or legal.
4 VALUE INSIDE
hat a successful year 2015 was! We really made a go of all the Association’s undertakings, which was positively mirrored in the issues dealt with in Wthe Romanian version of the magazine ”VALUE, WHEREVER IT IS.” The English version of the magazine, now at its second edition, has taken up the most important of them. I kindly invite you to join us in looking through them in what follows. Just have your pick of issues. I would recommend those related to the main projects started last year: the ANEVAR 2015 Valuation Standards (a volume published both in Romanian and in English), the data bases BIG (Real Estate Guarantee) and BIF (Taxable Value of Buildings), getting specialised in VE (Valuation Reviews) and others. ŰŰRALUCA ȘLICARU, At the end of 2015, within the ANEVAR National Conference Coordinating Editor in Brasov on 11 December, there were elected the members of the new Board of Directors that will represent the Association during the period 2016-2017. You will find under the Event headings pictures taken during the National Conference works, as well as the names of the current members of ANEVAR Board of Directors. We have also made a note of all the other conferences and events organised by the Association throughout year 2015. Our constant concern to collaborate and be permanently connected to the international bodies in the profession is also manifest in the series of events hosting guests worldwide. The TEGoVA Congress organised in Bucharest with ANEVAR support, entitled ”Hot Topics in Valuation”, brought together prominent personalities, members of the boards of the organizations similar to ours, or bank representatives: Krysztof Grzesik, President of TEGoVA board, Michael MacBrien, Adivser with TEGoVA, Silvia Capelli, TEGoVA board member, Jim Amorin, Vice-President of the Appraisal Institute, Akos Fischl, President of the Valuation Committee for European Mortgage Federation, Jorg Quentin, Managing Director with Deutsche Pfandbriefbank AG and Miguel Angel Lopez, Senior Inspector - Bank of Spain. The conference on ”Valuation for Loan Guarantee” and the celebration of the traditional Valuer’s Day on 9 September were two further events having as guests M. Lance Coyle, current President of the Appraisal Institute and J. Scott Robinson, the President-elect of the Appraisal Institute (J. Scott Robinson being the current President with the Appraisal Institute at the time of the present issue publication). In hope that you will take pleasure and interest in going through all the articles representative of year 2015, gathered in the present edition, let me just remind you that you can keep abreast of our activity by visiting our virtual sites as well, through the official social media accounts: www.facebook. com/ANEVAR.oficial, twitter.com/AnevarRomania and www. linkedin.com/company/anevar.
VALUE | 2016 5 Valuation Standards - Lights and Shadows
he National Association of Authorised Romanian Valuers (ANEVAR) aims to organise, Tco-ordinate and authorise the pursuit of valuation profession in Romania, to represent and protect its members’ professional interests, ensuring the independent exercise of the profession of ŰŰDANIEL MANAȚE, President of ANEVAR authorized valuer in compliance with the 2016 – 2017, MAA, MRICS, REV professional deontology and with a high level of professional qualification, as well At the international scale, the as to promote the valuation standards, World Association of Valuation methods and techniques in the authorized Organizations (WAVO) aims to valuers’ activity. The association adopts the develop valuer practice with a view to permanently ensure the provision binding valuation standards with a view to of valuation services of consistently conducting the valuation activity. The main high quality and uniformity in the standards adopted are the International public interest. This is the reason Valuation Standards issued by the why WAVO promotes the best International Valuation Standards Council practices represented by “robust and consistent” professional standards. (IVSC). Starting from 2014, ANEVAR has The European Group of Valuers’ its own standards – SEV including both the Association (TEGoVA) aims to set International Valuation Standards and the professional standards and to provide European Valuation Standards. a code of conduit for business to the benefit of both customers and its members. To this end in view, “the The mission statement of the International Valuation main goal of TEOoVA consists of the Standards Council (IVSC) is “let us build up confidence scientific and educational promotion in valuation”, and its main objective is to strengthen the of the profession of valuer in Europe valuation profession at a global scale. In order to reach and the harmonisation of the its objective, IVSC considers it of particular importance European Valuation Standards.” to serve public interest, and standardising principles, As we can see, the valuation definitions and concepts is the right way to achieve it. standards account for the main tool
6 VALUE used by all these organizations. These standards most even cause his or her withdrawal certainly stand for the best practices, and compliance from the assignment proposed, with them is essential both to the public interest and to or, sometimes, to enforcing a the interest of the professional valuation associations certain result. Irrespective of the members. goal (secured loans, financial Well, as we have gone through the descriptions above, reporting aimed at taxation it is now crystal clear to everybody that standards are ŰŰIf in personal value, compensation etc.) the important. Standards are and will always be the best life we “plasticine” value may injure practices, as they have been written and developed in sometimes either one party’s legitimate this respect by all the professional organizations have a may choose interests, or even the public say in the field. to change the interest. However, the third In conclusion, relevant valuation standards and environment parties’ penal liability comes the national legislation applicable in the field set the we live, relate under the provisions of Art. 25, profession framework. Everything that is undertaken in to each other para (3) in Ordinance no. 24 / the profession is under their governance. If in personal or work in, this 2011 regarding certain measures life we sometimes may choose to change the environment is not possible governing asset valuation, we live, relate to each other or work in, this is not with the approved with the respective possible with the profession, as it strictly comes under profession, as amendments. I am referring to this framework. the provisions under articles it strictly comes What would be the adequate behaviour of all those 25 and 26 in the Penal Code under this involved in a valuation assignment or in the effects of regarding intentional instigation framework. the decisions adopted pursuant to it: valuers / clients / to committing a deed within the users / authorities / the press or other categories of public scope of penal law. involved? ŰŰ Whenever law courts address the Simple and equally clear. The only appropriate parties for conducting specialty behaviour is to actually abide by the applicable standards works (judicial expertises) by and national legislation. And that goes for all the above expert valuers, according to art. 5, mentioned. para 1, letter c) in the Government At a cursory examination, some may consider that Order no. 24 / 2011 regarding only valuers should be concerned. certain measures governing asset May it really be so? All the parties concerned, with no exception, should ground on standards any opinion they issue, any decision they adopt, or any concrete action they take, with consequences to follow, whatever they may be.
Why?
Because, unless understanding the matter in its essence, form becomes inconsistent, likely to be conducive to random interests which may considerably drift away from the public interest or from the legitimate and fair interests of the parties or the professionals engaged in the undertaking. Let us take an example: ŰŰ The practice of requiring preset values obviously infringes on professional ethics and the valuer’s independence, therefore the standards provisions to the core. Coming from a client or a user, much too interested in a certain result, such a demand may lead to either useless pressures upon the valuer and
VALUE | 2016 7 valuation, approved as amended through Law no. 99 / or modified. Therefore, only to 2013 - the “Association adopts the mandatory valuation the specific purpose of certain standards for valuation activities” – it is absolutely valuations for setting and paying necessary that all the expert appraisal reports should the compensations related to comply with ANEVAR valuation standards. the real estate abusively taken ŰŰ Circulation value is a concept which does not exist over, Government Emergency in any standard, whether international, European or Ordinance no. 209 / 2005 included national. Promoting it as a goal of an expert appraisal provisions in completion to those also including a valuation assignment exceeds the legal in the relevant standards valid in framework which imperatively demands compliance the respective periods. with the valuation standards relevant in any valuation Practically, the knowledge of and activity. At the best, it makes standards look derisive to compliance with the relevant valuation ŰŰIt would be the public or the parties concerned. standards and applicable legal interesting to Ű Market value can be estimated based on offers as well, provisions is the right path to take in Ű see how many not only based on sure transactions. Practically, all the order to protect public interest, as well relevant valuation standards applicable in Romania banks, real as the interest of clients, users and the throughout time included this aspect, sometimes estate agencies profession itself. unhappily speculated on by certain standpoints in the or cadastral Let us point out the importance press. Further examples are: register offices of having all parties involved in the ŰŰ IVS (SIE) 2003, page 45, para 9.2.1.2. Approach by complied, and know of the multiple provisions of the comparing sales: … “In general, a property being respectively, standards corroborated with those of valued (a subject property) is compared with sales of what measures the applicable national legislation – see similar properties that have been transacted in the were taken the case of Government Emergency market. Listings and offerings may also be considered.” against those Ordinance 209 / 2005 amending ŰŰ IVS (SIE) 2005, page 33, para 9.2.1.1. Approach by who would not Law 247 / 2005. The law thus comparing sales: … “In general, a property being cooperate with demanded, throughout the provision valued (a subject property) is compared with sales of the valuers, validity period, that the banks, the similar properties that have been transacted in the should the latter public notaries, the cadastral register market. Listings and offerings may also be considered.” have required offices, the real estate agencies etc. ŰŰ IVS (SIE) 2007, page 32, para 9.2.1.1, Approach by information. should make available information comparing sales: … “In general, a property being regarding the transactions which valued (a subject property) is compared with sales of could have been useful to the valuation similar properties that have been transacted in the assignment, in spite of the special laws market. Listings and offerings may also be considered.” whose stipulations were different (e.g. ŰŰ IVS (SIE) 2011, page 26, Approach through market, the professional secret with notaries paragraph 58: …If few recent transactions have public or with banks). It would be occurred, it may also be appropriate to consider the interesting to see how many banks, prices of identical or similar assets that are listed real estate agencies or cadastral register or offered for sale provided the relevance of this offices complied, and respectively, what information is clearly established and critically analysed. measures were taken against those ŰŰ IVS 2013 (adopted within the body of ANEVAR 2014 who would not cooperate with the Valuation Standards), pages 15-16, General, para 57, valuers, should the latter have required Approach through market: … If few recent transactions information. have occurred, it may also be appropriate to consider It would be important for the the prices of identical or similar assets that are listed interest of both the public and the or offered for sale provided the relevance of this profession, that the legislation should information is clearly established and critically analysed. include, in completion, provisions to ŰŰ The spirit of the International Valuation Standards is sanction those entities holding useful in favour of the national legislations in the countries information for valuation activities, applying these standards; thus, in specific matters of and yet will not make it available to enhanced national interest, the provisions under the the valuers. In completion to these international standards can be completed / restricted measures, a new framework could be
8 VALUE clients or users, as well as with the public interest. We could list in what follows some of the most important such values, namely: fair play, honesty, responsibility, flexibility or respect, but the list can go on according to each one’s personality. In conclusion, Fig. 1 below could be a regarded as a suggestive mapping of the valuation activity complexity. Individual values, which define each of us, are those that determine us to make efforts taking time, money, opportunity costs (sacrificing leisure alternatives), as well as to invest in gaining knowledge, abilities and information related to the valuation activity. Of course, both these efforts and the information gained are related to the status of each party involved in the valuation process: professional / client / user / public authority representative / press representative etc. set up for valuation activity, a pool in which data bases related The mastery of the knowledge and to real estate- or business transactions are systematically skills best suited to each party’s status collected and fed with relevant data. The positive impact of ŰŰIndividual allows us to adopt a fair behaviour creating and developing such data bases could be high both in connection with any valuation values, which economically and socially. process- related aspect (e.g. valuation define each of The issue that faces us here is two-sided: on the one hand, proper, negotiation of the assignment us, are those the information necessary to all the parties involved, and, on and of the reference terms, report that determine the other hand, the appropriate competences and abilities utilization, collaboration with third to successfully undertake valuation contract concluding, us to make parties, criminal research of one or conducting, decision making and output implementing. efforts taking several valuation reports, a court Actual efforts aimed to gather information and time, money, order, a critical newspaper review on a permanently acquire competences and abilities opportunity valuation result etc.) appropriate for the profession, the tasks and the context costs (sacrificing Finally, a behaviour deemed to be in which we act are usually made only when the respective leisure adequate will always reflect a fair image individuals have a solid set of values in accordance with alternatives), of the valuation activity environment the rightful interests of the parties, may they be valuers, as well as to or setting, namely the standards and invest in gaining the national applicable legislation. Fig. 1 Setting / Environment knowledge, It is a difficult challenge to take; Behaviours abilities and yet, I am positive that the readers of Information information this magazine will have the strength of Individual values related to character and the necessary resources Honesty; Respect; Fair play; to take in full honesty and responsibility Flexibility; Responsibility the valuation undertaking. the above described steps, to the benefit Abilities and Competences of all parties involved, from the public A good knowledge of the standards to ANEVAR professionals, authorities’ and the national applicable legislation representatives, or clients and users of Standards and national applicable legislation valuation reports.
VALUE | 2016 9 Rest Ensured of Commitments
here is more to it than a new meaning that the article heading lendsT the acronym title on the cover of this issue of the Value magazine. I will start ŰŰ ADRIAN VASCU, by putting down a few things on President of ANEVAR 2008-2009, 2014 – 2015; the Real Estate Guarantee data MAA, MRICS, REV; Senior Partner VERIDIO base, to go on to tackle some So far, the major decisions further issues, having in view that having translated into progress commitments should be known have been made along two lines: either proactive or reactive. and substantiated, so that they These days we have been may go beyond their declarative presented the reactive perspective. Accordingly, after the Alps tragedy status and, sooner or later, yield of the Germanwings Air Company the expected outputs. plane crash, measures were taken
10 VALUE but before that, let me remind you one thing. Valuation is not an exact science with unique results to be tracked down to decimals. Considering the level of professional expertise, the standards and information known and acknowledged in that the pilot’s cab Romania in year 2015, a difference should be permanently within a range of up to 20% manned by two crew between two values seems fairly members. This is a decision acceptable to me. that apparently stands to reason; Bigger differences call for however, it is intended to have a additional thorough review, since strong impact on future safety. the question arises naturally: what With valuation, the measures made it possible for an over 20% translating commitments implemen- difference? ted in this period of time have come The answer is to be found in one midway between proactive and reactive. of the following three variants I am referring to the data base and the valuation and cannot be provided without review. further examining: Apparently there is no connection between the two. 1. The former report featured Yet, at a closer look, the connection becomes not only nonconformities which manifest, but also very close, fitting within these two affected the valuation result. limits: the data base – the proactive perspective, and the valuation review – the reactive one. 2. Both reports featured nonconformities which Preamble affected the valuation result. There are cases in which one and the same asset valuation conducted by different valuers, having the 3. The latter report same valuation date and the same terms of reference, featured results in different conclusions. That does not mean nonconformities it should be so. The dates the two valuations are which affected conducted at (not the date as of which the valuation the valuation result is valid) may be close to or far apart from one result. another. There is a huge difference between these two situations, therefore they should be distinguished from one another through a basically different approach to either. I am going to come up with a few examples, just to set the concrete framework of our discussion,
VALUE | 2016 11 To put it in other words, the former report should necessarily be in the profession – I not be allegedly labelled as incorrect just because the mean in the valuation profession, latter provided a different result. Proper rules to judge and tremendously good at their such a situation by should be applied – as soon as job, too. possible, too – in order to protect the valuers who do So far, we have gone by the a good job of their assignments, which is the case with principle that rightness sides most of them, the valuation report users, and, last but with the more powerful in terms not least, the public. ŰŰWhen a sub- of status in the relation between Here are some of the situations we have been sequent valuer any two parties (auditor – recently faced with, and which have made it more is of another client, prosecutor – defendant, imperative to take certain steps: opinion, municipality – tax payer), which A customer, legal entity, a credit applicant, is fundamentally wrong, beyond ŰŰ considerably commissioned three valuation reports of an the strict professional reasoning different from ongoing investment, by three different valuers, framework. the previous intended for three different banks, and was The solution is a simple one. one’s, the latter presented three valuation results ranging on a scale When a subsequent valuer is of from simple to double. should take another opinion, considerably ŰŰ A bank had a number of assets they had accepted note of this different from the previous one’s, as payment valued by an independent valuer, and second opinion the latter should take note of this the financial auditor, through the internal valuation and agree to second opinion and agree to the department, came to the conclusion that the values the nonconfor- nonconformities noted underlying should have been lower by much more than 20% mities seized the differences in values. If these for the highest valued properties. The situation was underlying the nonconformities are not manifest noted by the National Bank of Romania. differences and, although professionally sound ŰŰ A piece of information has been publicly in values. If grounded, not agreed to by the circulated, namely: between years 2006 and these noncon- former valuer, then an arbitrator 2008, various real estate properties were valued formities are who should abide by the rules to be returned to their rightful owners, and not manifest is called for. It is only based on overvalued by tens of millions euros in the process. and, although this arbitrator’s judgment that a This statement is probably based on a recently professio- conclusion can be drawn as to conducted valuation having as its valuation date nally sound which of the three situations above that at which the initial reports were drawn up. grounded, applies. Until then, the correctness ŰŰ Rumour has it that some local authorities would not agreed to of the latter valuation cannot but have capitalized undervalued patrimony elements, by the former remain an insubstantial statement. a statement which might be based on a recently Related rules are to be found valuer, then an conducted valuation having as its valuation date in SEV 400 Valuation Standard arbitrator who the date of the initial report. – Valuation Review – and the should abide Ű Some local authorities stated that local taxes had arbitrators should be authorized Ű by the rules is been affected by certain undervaluations, with valuers specialised in Valuation no consideration whatsoever of the particulars called for. Review. of the legal framework still in force which makes no provision of any direct connection between Proactive Measures valuation result and taxable value of buildings. As I said earlier, I am going to All the cases presented above come down to the take a proactive approach to data same “ one-to-one” situation, that is X’s opinion versus bases, that is to two of the concrete Y’s opinion. That is to say that a certain valuer exercises measures to be taken first thing in judgment in considering the work of another valuer. the very near future. The only way to sort it out is by having a set of rules The necessity of data bases is applied by one or several arbitrators who should a topic that has been long talked
12 VALUE over to the point of having worn off its meaning in connection with one or more the process. Yet, the need is still there and ever so credit institutions. bad, too. At a recent conference I attended, I made a ŰŰ The data base will not include parallel between real estate market and a farm products the trading prices of the valued market, referring to the latter as a closed hall aimed assets, but the market values as a meeting point for fruit and vegetables sellers and estimated by the authorised buyers. Similarly, I envisaged the real estate market as valuers against the same a huge hall hosting the whole Romania, with builders, valuation benchmarks. housing- sellers and buyers, bankers, local authorities ŰŰ BIG shall include neither etc. meeting there – that is almost the whole country! confidential details regarding However, with a difference: the food products market the asset owner, nor their exact ŰŰThe is very bright, with both natural and artificial light address. The entries will be compulsory flooding in, as nobody will ever go to the market to identified by their postcode. recording of buy their fruit and vegetables in the dark. As opposed ŰŰ The data base, IT secured, to it, the “real estate hall” has neither natural or the valuation will be managed by ANEVAR artificial light, but only a few candles on here and there, results into through IROVAL. and, as strangely as it may seem, we have somehow the data base ŰŰ IROVAL will periodically grown accustomed to groping our way through these will enhance issue reports and syntheses purchases. Having such a hall electrified is not an easy valuers’ aimed both at the valuers and job, and yet, we should make a start on it. I am positive independence at the banks in order to keep there is no unique problem-solving formula. Neither while also them permanently informed. does it take a single person or a single institution. It reducing The type of information to shall take a well tuned in concerted action to be run the pressure be disclosed can refer to: the as the necessary conditions are met for each and every exerted by number of valuations by types case. some of of assets and geographical As far as ANEVAR is concerned, its current legal the credit criterion, the average market framework and its partnership with the National Bank of institutions values by types of assets, Romania and with the commercial banks, allow us to set representatives minimum and maximum up the data base Real Estate Guarantee (BIG). so far. values, price evolution indexes Also, the partnership with the Ministry of Finance etc. and the provisions under the new Fiscal Code regarding ŰŰ The information in the data the tax on buildings, if they are kept in the form base will be used for valuers’ the Government submitted them to the Parliament, monitoring, by carrying out a provide us the opportunity to set up a second data base consistent prevention activity. of taxable values of the non-residential buildings in ŰŰ The banks will have access to Romania, a data base I will tentatively refer to as the all the information recorded Taxable Value of Buildings (BIF). on behalf of them, thus also checking their own recordings. Real Estate Guarantee Data Base (BIG) ŰŰ Based on the entries in the data base, monitoring will allow You will find technical details on this data base in for any valuer’s activity to be other articles in this issue. What I want is to point out analysed on demand of the a few basic elements instrumental to both the data base National Bank of Romania or and to the application of its outputs by all the parties of the credit institutions. involved. Here it goes: ŰŰ The compulsory recording ŰŰ The data base will include a synthesis of all of the valuation results into the valuation reports to be drawn up for loan the data base will enhance guarantee referring to all real estate types. valuers’ independence while ŰŰ The information will be introduced into the data also reducing the pressure base by the valuers carrying out their activity in exerted by some of the credit
VALUE | 2016 13 institutions representatives so ŰŰ The entries in the data base will of the taxable value of each far. be made by authorised valuers building, so that to eliminate ŰŰ BIG will result in some of the previous to the submission of the risk of either under- or most accurate indices to show the final valuation report to the overvaluation, so harmful to all the evolution of the real estate customer. the parties involved. market values which can be ŰŰ The information in the data used by the credit institutions base will be intended for Reactive Measures in periodically reviewing the valuers’ monitoring, thus collaterals portfolio. carrying out a consistent As specified at the very ŰŰ On average - and long-term, prevention activity. beginning, I will include valuation the effects of the recordings ŰŰ The entries in the data base review into reactive measures. in BIG will translate into will allow for any valuer’s Such a review is increasingly collaterals value quality with activity to be analysed through imperative, as a trustworthy direct effect on the level of monitoring, on the demand of arbitrator under the ever more provisions registered by the the local authorities. frequent circumstances in which credit institutions. ŰŰ A standard valuation report the applications of the valuation as foreseen by valuation guide reports entail most important GEV 500 will underlie the consequences, with an impact on BIF entries in the data base. the state budget, the local budgets, The data base including ŰŰ BIF will include neither as well as on the valuers and the information on the non-residential confidential details regarding intended users. Sticking to the buildings taxable value will feature the building owners, nor their same presentation manner as as follows: exact address. The entries with the data bases above, I will ŰŰ Will be released as of 1 will be referred to by their point out several valuation review- January 2016 if the provisions postcode. related aspects of a novel character known today (30 March 2015) ŰŰ The IT - secured data base which are to be implemented in the regarding building taxation in will be managed by ANEVAR following period. Here they are: the New Fiscal Code remain through the agency of IROVAL ŰŰ Valuation review shall be unchanged. which will periodically submit conducted only by authorised ŰŰ BIF will include the taxable reports and syntheses intended valuers well versed in this line, values of all non-residential to valuers, local authorities, holders of ANEVAR - issued buildings in Romania which as well as to the Ministry of stamp on which the valuer’s need valuating by authorised Finances for their permanent name, the membership number valuers every three years. informing. and the specialization in which ŰŰ The estimated value type will ŰŰ After minimum two three- they are entitled to undertake be the taxable value, not the year cycles, when at least two reviews are stamped. market value. taxable values will be entered ŰŰ The standard underlying the ŰŰ ANEVAR 2015 Valuation for each non-residential review activity is SEV 400, in Standards include a building in Romania, a the ANEVAR 2015 Standards valuation guide regarding the synthesis can be made, and an collection. determination of taxable value algorithm can be developed ŰŰ The reviewers shall exercise of buildings: GEV 500. to provide support for the impartial and independent ŰŰ BIF will include only entries Romanian state, through judgment in expressing their regarding buildings (without the Ministry of Finances, to opinion / conclusion, without land) considered in terms of: properly ground a modern influence by any of the parties purpose and postcode- related system for collecting taxes on involved. location. Types of purpose: building. ŰŰ The reviewers shall avoid administrative buildings, ŰŰ BIF will be of help in “my opinion” versus “your offices, storage, production, minimising bias in estimating opinion”- type positions thermal power stations, silos, building taxable values, as well ŰŰ Review objectives can go along hotels, restaurants etc. as with a transparent tracking the following lines: exercise
14 VALUE impartial judgment on the valuation report The training courses attesting compliance with the valuation standards and the the right of undertaking review legislation in force; in addition to it, the reviewer reports will start in term 2 of the may also express his or her own conclusion on the current year, and envisage their value of the asset as valued within the valuation future graduates as the elite corps report. We call these basic and extended objectives, of professionals who should respectively. The circumstances in which either can transfer review assignments from be applied are foreseen in SEV 400. the reactive measures category to ŰŰ The reviewer shall communicate with the valuer the proactive measures one. who drew up the valuation report, and, no matter whether the review objective is a basic or an ŰŰThese tools Conclusion extended one, the valuation report author should will help take note of the nonconformities pointed out reduce bias in The three activities above and agree to them. Only then can the review be valuation and I have enlarged upon stand for considered to have met its purpose. mitigate the actual projects well on their way to ŰŰ The analysis of the same valuation report should hazards both implementation, albeit at various result in the same judgments, whoever the the profession stages. We will not talk big; we are reviewers may be. as a whole, on believers in acting big. Facts are ŰŰ If the valuation report author does not agree to the the one hand, sure proof that valuable ideas, good nonconformities spotted out by the reviewer in an particularly intentions and commitment have extended review report, there follows the necessity following the been substantiated. The ultimate test of a new review report by an independent credible spreading of vouching for the implementation reviewer. incomplete of these good intentions will be ŰŰ The farther back in time the valuation date, the public to have the information in both more complicated the review mission. If, for information, data bases (BIG and BIF) as well as example, an extended review of a valuation report and individual the professional valuation reviews dated 2006 was undertaken in 2014, the valuer applied in practice. These tools valuers as who drew up the report in 2014 should have will help reduce bias in valuation well as the considered at least as follows: and mitigate the hazards both the institutions Ű Shall not make use, in his or her valuation, of profession as a whole, on the one Ű and the other information apart from that available at the hand, particularly following the valuation date. people having spreading of incomplete public ŰŰ Shall apply the valuation standards and the based their information, and individual valuers methodologies available at that date decisions on as well as the institutions and the ŰŰ Shall put aside the subsequent evolution of the the valuation people having based their decisions market specific to the respective asset. If, at the reports, on the on the valuation reports, on the respective date, nothing was foreseen referring to other hand, are other hand, are faced with. That a boom or a crisis on the specific market, their faced with. does not mean there will no longer occurrence cannot be counted as an argument in be valuation reports including 2014 when a second valuation is undertaken. nonconformities. There will be still ŰŰ Retracing the accurate environment in which the some, but the valuers having drawn valuation was initially undertaken is a complex and them up should come up with the delicate process imposing special requirements on necessary arguments and shoulder the person undertaking such a mission, as there responsibilities. What I want to may appear errors entailing particularly serious point out is that current rules consequences. are much stricter and they will ŰŰ The reviewer shall not take advantage of his or her quickly adjust to concrete realities apparently advantageous status in relation with to best enhance the safety of all the valuer, since the situation may be reversed any those involved – either in a direct time. The reviewer must prove that his status is not or in an indirect way – in asset accidental, but that he is fully entitled to it. valuation.
VALUE | 2016 15 THE FISCAL CODE AND BUILDING VALUATION FOR TAXATION PURPOSES
o far, we have been you are going to read in what follows will refer only to those issues related talking and talking to the taxation on buildings in the new about the “foreseen” Fiscal Code, not to the Fiscal Code as Smeasures under the Fiscal a whole. Code referring to a change Questions are not late to arise from valuers on the one hand, and from in the building taxation tax payers and local authorities on the system – measures which other hand. I will develop this Q&A ŰŰ ADRIAN VASCU, actually came into effect “self-session” in chapters “General President of ANEVAR 2008-2009, alongside the new Fiscal Questions” (assignable to the three 2014 – 2015; MAA, MRICS, REV; actors) as well as distinct chapters Senior Partner VERIDIO Code promulgation by dedicated to valuers, local authorities the President of Romania. and tax payers, respectively. There will the new Fiscal Code coming into also be questions to which my answer force, stands for the buildings Therefore, we – valuers, local may be subject to some modifications “inventory value” as recorded in authorities and particularly tax if the authorities provide additional the tax payers’ financial records. payers – are well on our way heading clarifications in the next period. b. Tax treatment shall be uniformly straight toward implementing the applied, according to building new system. I am calling it “the new General Questions utilization and not according to system” because the provisions under the building owner, as with the the Fiscal Code to take effect as of 1 1 What are the main building tax- current practice. Consequently, January 2016 include a great deal of related modifications foreseen in the same tax shall be paid for novelty regarding building taxation. the new Fiscal Code as compared non-residential buildings (offices, Although its provisions were talked to its previous version? commercial areas, hotels etc.), over at length prior to its approval, The main modifications presented irrespective of their owners being not all the modifications proposed under Title IX can fall under two natural persons or legal entities. So were subject to a thorough analysis, categories: far, tax used to be differentiated, and the application norms were to a. Building taxable value has no that is much more reduced subsequently provide answers to all the longer a direct connection with for natural persons owners past, present and future questions over the book value. In other words, of non-residential buildings. the matter. the taxable value will be made 2 What is the tender spot when In this article I, in my turn, will use of by tax payers only in it comes to implementing try to ask a few questions and try to relation with tax authorities, the new provisions? find answers to them, as well as to without its being recorded in I think the crux of the matter is others that have already been or are the financial statements as it had time, having in view the date at which to be asked. Special mention should been so far. Mention should be the new Fiscal Code was approved be made of the fact that the questions made that taxable value, up to and the short time span of four
16 VALUE months at the most, left ahead until in consistently uniform clearing up and with building taxation on the its becoming effective. It is during this all the new system- related issues by other hand, through two different time that the Ministry of Finance and all the actors involved: valuers, local approaches, and that land taxable value the local authorities will have to take authorities and tax payers. Unitary has no connection with their market firm and quick steps to thoroughly understanding and practice in the value. Consequently, in keeping with brief – both internally and externally first place will make it very likely that the new regulations, buildings- related – the institutions involved so that the the system should be successfully real estate value is decisively influenced new provisions may be applied and implemented. Joint discussions as by the location of the land it is built on understood in a unitary way. The well as joint informing in writing will (which is not relevant in our case, since successful implementation of the new provide significant support. only buildings are taxed). Another measures will necessarily take well 5 Are there any special underlying fact is that valuation is informed actors. Last but not least, provisions to be applied under mainly cost-approached. The standard ANEVAR, both by itself and alongside the valuation standards? includes clear specifications regarding the state authorities, will have to get There certainly are. There is a all valuation approaches, as well as the involved in this briefing. standard specially dedicated to this final value selection, so that a valuer’s 3 Are there any unclear issues topic, namely Valuation Guide GEV subjective approach may be avoided as regarding the application 500 – Determining the taxable value much as possible. of these provisions? a Building. The standard is very new, 6 Is the valuer’s There are some unclear issues to therefore less known. It was also part responsibility enhanced be worked out the soonest possible of ANEVAR 2014 Standards collection by the new regulations? through the Fiscal Code Application and is to be found, naturally, in Responsibility is dramatically Norms or even through the valuation ANEVAR 2015 Standard collection enhanced. In the future, practically standards. Among these unclear including the standards in force at all the local budgets will include a issues, let me mention: (1) the period the date at which the new Fiscal Code component resulted from the tax on in which the valuation reports will be becomes effective. GEV 500 can be building which is directly related to undertaken after 1 January of the year for which the building tax is due; (2) the evaluation date in the case of non- residential buildings belonging to natural persons; (3) the taxable
value as declared effective only as of 1 January 2016. The the tax valuation by legal entities in 2016 for those standard includes special provisions results. I can hardly buildings having been revaluated tailored to the valuation purpose, that imagine a valuer who should three years before and requiring – in is for taxation, and will lay taxable value not be aware of the crucial keeping with the old system – a new estimate on a methodologically unitary importance of these values and of valuation to avoid an increase in the basis. Therefore, I would like to specify the fact that they can be subject to taxation rate. in the first place that the standard review any time, so that responsibility 4 Any possible solutions to the refers to taxation of buildings, not of is practically unlimited. Under successful implementation real state as a whole, having in view these circumstances, the valuer’s of the new provisions? that the Fiscal Cole deals separately independence is decisive and shall I think the possible solution lies with land taxation, on the one hand, be respected primarily by the valuer,
VALUE | 2016 17 A valuation-for-taxation- type valuation report will be used, which will be drawn up so as to comply with the general framework required by GEV 500. In this context, the uniform Report is aimed to provide all the local authorities access to and easy understanding of the same document type. It will also assist valuers to successfully undertake their mission regarding valuation for taxation. 10 Are there the annexes foreseen under GEV 500 on www.anevar.ro site? There are three annexes to the standard. The first includes the tax payer’s request for valuation to be undertaken for taxation, the second is a guidebook to calculating physical depreciation and to re-calculating useful life following modernization actions (if any), and the third consists then by the tax payers, and not least, For legal entities owners of non- of the unitary report. Upon the by the local authorities. Tax payers residential buildings, the valuation release of this magazine issue, all and tax authorities are generally at date is foreseen in the Fiscal Code the annexes are in progress, so that opposed ends. The former will aim at as 31 December of the previous year. they will be published on the site not too high taxable values, while local For natural persons owners of non- the soonest possible. We do hope authorities will aim at not too low ones. residential buildings, the date of 31 the Fiscal Code application norms What everybody should understand is December is not expressly specified. will come out until the annexes are that taxable value is only one, and We expect this date to be mentioned completed, so that they may take into cannot be customised to “higher” or in the application norms of the new account all the clarifications foreseen “lower” according to either party’s Fiscal Code, so that valuation may by the respective norms. expectations. Valuers have (almost) be approached on a unitary basis for 11 What is the valuation report all necessary levers ready at hand, so all types of non-residential buildings, completion date, referred they are in control, free to exercise irrespective of their owner (natural to as the “report date”? their own impartial judgment, with person or legal entity). I mentioned this issue among the no influence whatsoever. Tackling 8 Will the new valuation unclarified aspects contained in the this issue somehow meant treading standards be applied as Fiscal Code as it is. Having in view on delicate ground. What we need of 31 December 2015, or the previous experience, the local now is to go our way by treading as of 31 December 2016? authorities’ expectations, as well as the on solid ground, which takes a clear, The new Standards are most likely preliminary discussions we had with transparent and unequivocal kit of to apply as of 31 December 2015 as the representatives of the Ministry of tools, from regulations to information valuation date, with the Fiscal Code Finance, the time interval in which the source, for valuers to be provided with. becoming effective as of 1 January valuation report should be undertaken The tender spot is currently the “source 2016 and stipulating that the taxable may be 1 January – 15 March. In for estimating the replacement cost”. value reference date is the end of the order to apply the norms on a unitary year previous to that for which the base and to avoid the abnormalities Questions Asked by Valuers tax is due. We shall keep track of existing with certain local authorities whether special provisions will be (Timisoara municipality stands for stipulated to this effect. an indicative example), we do hope 7 What is the valuation date with 9 What type of valuation that the final time interval should be valuation aimed at taxation? report will be used? specified in the norms.
18 VALUE I kindly ask all the readers of this even if different from the previous one, stipulates that valuations for taxation article to follow up our notifications will be also the appropriate one. may be reviewed provided the review regarding the provisions under the 14 The accuracy of estimating is undertaken by qualified staff, namely norms, after their publication, so the building replacement cost by an authorised valuer specialised also that they may make use of the most This is a very delicate subject to be in Valuation Review. Consequently, topical information. tackled with utmost care by valuers. local authorities may employ valuers 12 Will ANEVAR analyse the results The tender spot is the very absence holding this specialization, or they of valuation for taxation? of a unique source of estimating may externalise this review service so Considering the importance of the replacement cost of a building that they may exercise their right to the effects of this valuation type on to be acknowledged by all the users challenge certain taxable values if there the public space in general and the in Romania besides valuers. The are professional arguments in support. local budgets in particular, ANEVAR architects, the designers, or even the Valuers shall be liable to account for will record all the results of valuation public authorities into the acquisition whatever may be called in question, for taxation in a data base. This data of building works would be interested provided the calling in question comes base, called the Taxable Value of in the availability of a tool able to from an authorised valuer specialised Buildings (BIF) will account for the determine the replacement cost of any in Valuation Review. So far, there have main source for monitoring and will building. The existence of several such been cases in which the valuation vouch for primary prevention of any sources which may lead to various reports have been contested, mainly types of slips. Subsequently, the data valuation results makes them most on grounds of the effect of their stored will be turned into reports to vulnerable in terms of credibility, since utilization, namely tax lowering, and be periodically made available to all theoretically there may follow two the respective challenges were most those concerned. values assigned to one and the same often than not aimed exclusively at 13 Will all tax payers ask building, therefore two taxes. This the valuation outcome, instead of at for valuations in 2016? is actually impossible, as the taxable the valuation process. Under these Hardly. In those cases falling within value of a building can be only one. circumstances, in order to reach the three years since the last revaluation It is only a further review that will objective of having the right taxable and whose current taxable values are decide on either potential value as values, the local authorities get the comparable to or lower than the net correct, namely valuers, in keeping necessary levers engaged, necessarily replacement cost of the taxed building, with the valuation standards in force, meeting the valuation standards in it is very likely that tax payers should are bound to check, from an additional force at the valuation date. not call for a valuation. If the three- independent source, which of the two 16 Who will submit the valuation year rule applies starting from 2016 presumably correct taxable values is the report to the local authorities? with no consideration of the previous genuinely correct one. However, under Tax payers will submit the valuation situation, then only those tax payers no circumstances should it be inferred report to the local authorities. whose taxable values would be, in – be it at present or in the future – 17 The date by which valuation the absence of valuation, higher than that the right value is the higher one reports may be submitted those resulted following the valuation only because the ensuing tax would be to the local authorities process, are likely to call for valuation. certainly higher. Estimating a taxable Considering that the valuation However, if the three-year rule still value is not aimed at reaching a certain date is 31 December of the previous applies, taking into consideration tax level, but a correct tax base. And it year, the valuation reports will be the last valuation conducted before is only one that can be correct – a fact undertaken early in the year, therefore 31 December 2015, then it is very only an authorised professional having valuation reports will be undertaken likely that all those tax payers who complied with the valuation standards and implicitly submitted to the tax would have anyway required to have in force at the valuation date will be authorities after 1 January. Until the a valuation undertaken, irrespective aware of. norms under the new Fiscal Code of the coming into force of the new are settled into final shape, so as to provisions, will go for it. In any of the Questions (possibly) explicitly stipulate the time interval previous situations, valuations must Asked by Local Authorities foreseen by the law, all the parties not be undertaken to the purpose of concerned will reasonably expect it to reducing taxes. If correctly applied, 15 May valuation reports be between 1 January and 15 March. standard GEV 500 allows only for fair be challenged? 18 Are the valuation reports valuation. Based on it, the tax resulted, Valuation standard GEV 500 which foresee a taxable
VALUE | 2016 19 value lower than the previous Code. However, it is certain that there its phasing will not prevent any tax one non-compliant with will result a uniform base to estimate payer from having their valuation the valuation standards? taxable value and that, after the first undertaken annually. The taxable value level alone can by valuation exercise, which may be 2016 22 Is valuation compulsory? no means be a clue to valuation reports or 2018, future local taxes estimations There is no incumbency regarding allegedly non-compliant with the will be highly predictable. undertaking valuation with a view to valuation standards in force. Therefore 21 What will be the taxable value taxation. However, there is a provision the answer is definitely NO. A decrease declared in year 2016 for the stipulating an increase in the taxation in the taxable value does not necessarily buildings having been part rate unless valuation is undertaken at entail a non-compliant valuation of the company’s patrimony the time intervals settled according report. As previously mentioned, there for several years now? to the law. This is how the idea of the is a legal leverage to check valuation The Fiscal Code stipulates 5 compulsory character of valuation has accuracy. Only after this procedure possible categories the taxable value been presumed. is applied can professional judgment falls into. With those buildings having 23 What information will be be passed on a report quality and been part of the company’s patrimony made available to valuers? compliance with valuation standards. for several years, taxable value may be Tax payers shall fill in Annex 1 19 Will there be any differences either the current taxable value, or the foreseen under GEV 500, to be also in building taxation on the value resulted from a valuation report found on www.anevar.ro, in which assumption that identical undertaken by an authorised valuer in they will point out the buildings to buildings may be situated keeping with the valuation standards undergo valuation. Valuers will rely in different localities? in force. It will be up to the tax payer on tax payers’ statements, with no It is the taxable value, not the to decide, and his or her decision further referring to the accounting actual tax due by the tax payer that will be decisively influenced by the records of the latter. Following the will ensue following the valuation provisions in the new Fiscal Code annex filling in by the tax payer, undertaken. The tax is the result of the application norms which should clear the valuer will ask for concrete tax rate multiplied by the taxable value. up the issue of the three years status information referring to the buildings Therefore, the tax rates fall within after which the taxation rate increases subject to valuation and that is to be a range foreseen in the Fiscal Code unless a new valuation is undertaken. needed in the valuation process. available to the local authorities. There When speaking of the three years 24 Will the valuation report for follows that these rates may differ status, I am referring to the continuity taxation be identical with from locality to locality, thus being in counting them, that is starting back the valuation report intended conducive to different taxes according from the past, or starting counting for financial reporting? to specific localities. However, as a them afresh alongside with the new The two valuation reports will not general rule, the taxable value should Fiscal Code. In my opinion, either be necessarily identical, since they be the same with identical buildings. variant is possible. Starting counting are elaborated based on valuation afresh will be more convenient to standards including different Questions (possibly) tax payers who will have valuations provisions which may influence Asked by Legal undertaken only provided there is valuation results and, consequently, solid ground that taxable values, the valuation reports structure. Entities Tax Payers before valuation, are not the correct Thus, tax payers may be faced with ones. The final modality of treating the the situation that one and the same 20 Will there be an increase or a starting period of the three years will building is assigned two different drop in taxation on buildings? result only following the publication values, namely from the taxation There is no telling at the moment. of the Fiscal Code application norms. perspective and from the accounting After the first valuation “exercise” Having in view that year counting one, respectively. Of course, valuation has been completed, all the ensuing between two valuations starts on reports will have quite a lot in modifications will result from 31.12.2015 also for natural persons common, but there may be also cases ANEVAR - managed data base Taxable owning non-residential buildings, in which both the results and the Value of Buildings. I think there will I think the same treatment should reports differ on objective grounds. be both increases and decreases, with be applied as well to legal entities 25 Will it be necessary for neither trend possibly followed by the owning non-residential buildings. two valuation reports measures introduced into the Fiscal Of course, the three-year period and to be undertaken?
20 VALUE there may be an increase in the tax, and the Authorized Physical Person may refer to an authorised valuer to determine the taxable value. 30 What will be the taxable value of non-residential buildings owned by natural persons as of 31 December 2015? In most cases (except for new buildings), the taxable value will result based on a valuation report undertaken by an authorised valuer. 31 What is the valuation date with valuation reports undertaken for non-residential buildings owned by natural persons in the case of There may be circumstances Questions (possibly) valuations for taxation? in which two valuation reports Asked by Natural The Fiscal Code does not foresee are needed. If undertaken by the a specific date. I do hope that, same valuer, the reports will have Persons Tax Payers according to norms, this date may common parts; therefore, the fees be identical to that related to legal charged for the two valuations may 28 What are the types of buildings entities, namely 31 December of the not be double as for a single report. to be subject to a tax approach previous year. 26 May valuations be also different from that under 32 Will residential buildings undertaken before the the current Fiscal Code? undergo valuation as well? end of the year to avoid Non-residential buildings owned With residential buildings owned the “overcrowding” at the by natural persons will be subject by natural persons, there is no beginning of the following year? to a different approach. In the modification in terms of the tax Valuation reports for taxation previous Fiscal Code, distinctions payer’s declaration. As far as I can must be always completed at the used to be made only in terms of see, there has been an increase in the beginning of the year following that building owners, not of building taxable value. of the valuation. Starting valuation use. An area still rather unclear is 33 After what time interval work before the end of the year is not the modality of valuating mixed- should a new valuation for mistaken, provided the report date is use buildings. It is through practice taxation be undertaken? after 1 January of the following year, that concrete modalities to approach Just as with legal entities, if the valuation date is 31 December those buildings in terms of taxation taxable value is not updated through of the year previous to that of the will be settled. a valuation report, there is a report and the report considers the 29 Will tax on buildings be considerable increase in the tax rate. building condition on 31 December, modified for the headquarters However, with a difference: with if it is different from that on the date declared as belonging to an natural persons, valuation frequency previous to that of the inspection Authorized Physical Person? shall be every 5 years, instead of and of estimating a value following a Most often than not, these every 3 years, as with legal entities. simulation process, respectively. buildings will fall under the mixed- Well, that would be all about 27 After how long time a use category. There should be no the Q&A self-session. Of course, new valuation for taxation modification as to the previous there may further questions as well, must be undertaken? situation if the declared headquarters besides or derived from those asked As previously specified, if the did not determine utility costs to above. taxable value is not updated through be deducted by the Authorized There will be answers to all of a valuation report every three years, Physical Person. If they still are in them. It takes patience, a good deal there is a considerable increase in charge of the self-employed person of information and good faith. Then the tax rate. the Authorized Physical Person, then things will naturally fall into place.
VALUE | 2016 21 Up-To-Date Valuation Appraisal
s this year is drawing to a close – a year in which the Board of Directors’ 2014-2015 mandate runs out, too – I am going to draw your attention upon several topics I consider important Aand worth being part of an update on valuation “appraisal”. By no means do I expect to have exhausted all the possible topics in so doing; however, I have not left aside any topical issue or hot topic.
22 VALUE It is two years in a row since the valuation standards applicable in Romania have been gathered under the name of ANEVAR Standards. They are in compliance ŰŰData bases – with the international and European Standards, while We are better also including national standards which make the whole informed set best tailored to Romania’s market realities. This because we modality of organizing and adopting these standards at have started ANEVAR National Conference vouches for our absolute to gather autonomy in approving them while providing the modern ŰŰ ADRIAN VASCU, information President of ANEVAR 2008-2009, 2014-2015; mechanism able to turn them into a reference point in related to MAA, MRICS, REV, Senior Partner VERIDIO Romania and a benchmark for other European states. our activity These strengths of the Romanian valuation standards are and which not fully known by all the authorities in our country. It well as the global turnover, seemingly makes us, takes time and further efforts to promote them. approximately by 10-15% higher in the authorities Data bases – We are better informed because we have 2015 as compared to 2014, are all to started to gather information related to our activity and concerned be found there. Another data base is which makes us, the authorities concerned and, last but and, last but the already (hopefully) well-known not least, the business partners, better understand where not least, BIG, whose first semester entries are we stand and where we are heading for. Mention should the business enlarged upon in this issue of the be made here of the activity reports made use of during partners, better “Value” magazine. Figures such as the monitoring process. The figures in these reports understand the total number of valuation reports were presented in the “Value” magazine. For instance, where we stand conducted during the first term the bulk of valuation reports within a year, the valuation and where we of BIG’s coming into being (July – market structure according to the valuation target, as are heading for. September 2015) for the bank system
VALUE | 2016 23 (approx. 26.000), the total number of valuation reports regarding residential properties (over 70% of the overall number) and others, face us with a reality we were not fully aware of and which we may find very useful in the future. Out of this data base, there implicitly result the unitary average market values of the flats in all the county capital cities in Romania, which will allow us to soon release ŰŰ We are better the “purest” evolution index on the real estate market in informed Romania, an index we will be able to name “ANEVAR because we Index”. Another data base to be released at the beginning have started of 2016 is named the Taxable Value of Buildings (BIF) to gather which is to include information from all the valuation information reports drawn up to determine buildings’ taxable value. related to All these data bases required investments to set up and our activity especially to develop. The investments will continue, so and which that the data bases may be addressed also by the valuers makes us, interested in the data recorded in them. the authorities Valuers and criminal law – Starting with the autumn concerned of 2014, the first information appeared in the public space, and, last but namely on suspect valuers or valuers sued and charged with valuation reports considered as non-compliant with not least, the International Valuation Standards. There may be the business also cases in which legal inquiries have started, without partners, better being made public yet. According to criminal law, these understand situations cannot infringe the benefit of the doubt, yet where we stand the application of remand on custody has shown that the where we are valuation activity is by no means deprived of risks. Quite heading for. on the contrary. I think, or I’d rather say, I do hope that the warning signal is crystal clear with all valuers in terms of the risks incurred in exercising their profession, and situations have learnt their lessons and that they understand that the main principle they should will correctly match their expertise be guided by is that of independence. The data bases and experience with the future containing information related to the valuation reports assignments they will undertake. As I and the estimated values therein, as well as valuation have already pointed out, and am still standards tailoring to the realities in Romania, and, of going to do, public expectations from course, compliance with these standards will stand for valuers’ activity are very high and it is tools meant to keep valuers away from the suspicion of up to us to protect ourselves while also “under-” or “over-valuation”. protecting the public in so doing. RASDAQ valuation and closing – was quite a test of The new Fiscal Code, valuation year 2015 under the circumstances in which the liabilities and taxation on buildings – It is the of the National Trade Register Office, of the valuers and hot topic of 2016 under discussion at of the Financial Supervisory Authority regulator were not the end of this year. The Fiscal Code accurately stipulated in the provisions under Law 151. A will come in force as of 1 January 2016, lot of dysfunctionalities were thus triggered by the very while the application norms have not modality of applying the law and its norms. What I want come out yet. Instead, quite a number to particularly point out is that, following the result of the of most unwary and scaremongering monitoring conducted by ANEVAR, a large number of newly arisen questions and opinions valuation reports were classified as unsatisfactory or even have been infesting the public unacceptable, which led to their being remade. There were discourse. Valuers must know there cases in which the new result after their remake was still is a special valuation standard, GEV unsatisfactory. I do hope that the valuers involved in those 500, which was intended to be enough
24 VALUE and at the review date, it is expected that the respective valuations should lead to similar results, whenever reviewed. Valuation Review – It came as one more novelty of the year 2015, born out of the valuation services users’ necessity to be more comfortable with the valuation reports they use to various purposes. A review aspect currently laid stress upon has been the reviewer’s possibility to express his or her own opinion regarding the value resulting from the valuation report subject to the review. Thus, the users have found this demarche in keeping with their expectations. The review plays a predominantly preventive role. This mechanism has the power to raise the valuers’ awareness of the necessity of setting right their internal quality assurance systems, which may mitigate the risks they are exposed to. Another role of the review is to enhance the confidence of the clients and the intended users of the valuation reports in the valuation reports they use. An area in which this is beginning to yield fruitful results is restrictive and clear, so as to minimise the ambiguity and that of secured loans, subsequently to ensure that a similar result may be reached by any versed banks use, upon the National Bank of valuers valuating the same building any time. This is the Romania’s demand, of review reports key to the approach I have talked about, which can make necessary to an additional control of ŰOne of the it possible for valuers to keep their head up and deny all Ű the provisioning level. I am absolutely the current public fears, actually ungrounded most often. essential convinced that review will play its If certain aspects in standard GEV 500 need clearing up, changes to the important role in the future Asset it lies in the legal power of the profession to make the new regulations Quality Review (AQR) banks will necessary adjustments, so that rules may be as clear as comes as a undertake in 2016. The role played possible to everybody. One of the essential amendments consequence of by the review will be also manifest in to the new regulations comes as a consequence of the the fact that the the application of GEV 500 and of the fact that the taxable value is derived straight from the taxable value is new Fiscal Code regarding taxation valuation reports, without any longer passing through the the direct result on buildings, case in which the local companies’ financial statements. Hence the valuers’ direct of the valuation authorities can “call in question” responsibility for local budgets – a responsibility to be fully reports, without valuation reports only provided the aware of, of course. I am positive the local budgets and, any longer opinion is expressed by an authorized implicitly, the valuations underlying them will make the passing through valuer specialised in Valuation Review object of further reviews. It is in two-, five- or ten years’ the companies’ – VR. Another domain I strongly time that the level of the values obtained starting next year financial believe to require valuation review will be tested. As far as these reviews will be undertaken statements. is judicial expertise. Unfortunately, by competent authorized valuers, and as far as the current in my opinion, grounded on the valuation standards are applied in a fair way, both currently correspondence with the specialty
VALUE | 2016 25 department in the Ministry of Justice, the time when this authorized valuers holding also the expertise area will find its well established place in the quality of judicial experts; I am also judicial expertise schedule in Romania is still a long way referring to the judicial expertises off. This is what I think now, when 2015 is coming to an undertaken by the judicial experts in ŰŰAnother end. If something changes in the future, I will change my this capacity, and which were based domain I opinion accordingly, as I firmly believe that professional on the valuation standards in force. strongly believe valuation review will be able to add significant value to the In both cases, the set of provisions judicial process and, implicitly, to all the actors involved. to require to abide by when reviewing expertise Judicial expertise – It is that wide-range domain well valuation review reports quality is lacking from the known to all those who are familiar with legal procedures. is judicial judicial expertise legislation in The topic was widely enlarged upon in issue 3 of the expertise. Romania. Unfortunately, practice “Value” magazine. I will not revert to those elements, yet I has proved that several valuation would like to point out that no significant modification in reports undertaken for the same the judicial expertise activity has been recorded for the last asset, to the same purpose, at the two years. I would like to make a point: I am referring first same valuation date, have led to very and foremost to the judicial expertise having involved the different valuation results. While this
26 VALUE used to be a regular case, and it was up to judges to make analyze as required by each and every justice, I do not find it natural that several valuation case. And, of course, we should take reports undertaken under the same scope of work for a look at what is going on as well on valuation may lead to considerably different results. In the international valuation market we other judicial expertise domains, the experts’ opinion may rightfully pertain to. differ significantly, but this is not the case with valuation. I mean it is not normal that an asset value may differ with Thinking Ahead the expert undertaking the valuation, or that the experts under the respective case may get antagonistic to one ŰŰI only want to The new Board of Directors (2016 another. The expert undertaking a valuation shall stand by point out that – 2017), elected on 11th December the profession independence, not by the party he or she the beginning 2015 and whose list of component represents. This is what normality should mean a judicial of the year will members is to be found within this expertise in the field of asset valuation. To this end in view, be under the magazine, will soon set its priorities there should be created the appropriate valuation review sign of taxation for the next two year’s mandate. mechanisms, and there should be enforced disciplinary valuations in Therefore, I will not make any measures to keep the judicial process away from wrong compliance statement beforehand; instead, I opinions which, although honest-minded, may cause real with GEV 500, alongside ANEVAR President, Mr dramas. I am looking forward to a reform in justice that as soon as Daniel Manate and the new Board of may influence judicial expertise in terms of the above. the new Fiscal Directors members, will analyze and I do hope the subsequent generalized practice will be Code comes then submit ANEVAR members the conducive to slightly or not at all different results between in force. The projects for the time period to come. two or more valuations of the same asset. modalities these I only want to point out that the The difference (20%) between two valuations – As the valuations will beginning of the year will be under figure between the brackets shows, a 20% difference between be undertaken the sign of taxation valuations in two valuations undertaken under the same conditions has during the first compliance with GEV 500, as soon been publicly acceptable in the professional milieu for term will be as the new Fiscal Code comes in the last two years. I think that now, as 2015 winds down, force. The modalities these valuations essential for this percentage needs adapting to a certain extent. The will be undertaken during the the following more sophisticated the techniques, the more educated and first term will be essential for the periods and knowledgeable the public, and the higher the risks valuers following periods and instrumental instrumental to run, the smaller the acceptable percentage between two to accounting for the equidistance valuations. It is absurd we should claim that all valuations accounting for the new taxation system advocates. should be accurate, down to the smallest decimal, just the equidistance I am absolutely positive there will like it is equally absurd to generalize the 20% percentage, the new be various responses from the tax- irrespective of how big the valuation result is. The delicate taxation system payers, namely the local authorities ground we tread on when it comes to the differences advocates. and even the valuers, triggered by between two valuations results is the certainty that they the changes whose complexity will have been undertaken equally fair. If there is a difference be manifest once the new rules have between the quality standard of the two, then any kind of been put into practice. Then, a fair, comparison is out of the question and therefore erroneous; equitable and predictable taxation we actually compare “apples” to “pears”, which will lead to system will be available. However, the nowhere. Therefore, after it was agreed that there can be beginning will not lack the question a tolerance between two results, it must be ensured that marks inherent to the kick off of valuations are undertaken by the same valuation standards, such a complex project. Yet, I am equally correctly applied. It is only then that the acceptable convinced there will be answers to all margin can be discussed over. Thus, big margins may be of the questions and solutions to all the media interest and may entail most serious consequences exceptions if there is patience, trust over valuers and those who based their decisions on certain and good faith. It takes nothing more. valuations. Consequently, it is not something impossible, May good faith, trust, good will but something we may tend to; we should also lower the and, of course, sound health be with public level of expectation of the difference between two you throughout the forthcoming valuations to a margin of even 10% that we should flexibly year!
VALUE | 2016 27 Interview
“VALUATION ACTIVITY IS A CORNERSTONE IN MARKET ECONOMY”
Do you still remember what An interview with Gheorghe Bădescu, exactly you took over from ANEVAR President between 1992 and 2001 the Statute of the Romanian Marketing Association? And from the Statute of the Here we are, almost a There can be no market economy – Romanian Communist Party? quarter of a century (more free exchange – unless one knows the You said at the meeting precisely 23 years) after the value. And then, somebody has to do “ANEVAR, Past and Future” at first steps you took along the job, namely to valuate. Well, yes, Sinaia in 2014, that you even the groundbreaking path everybody has some opinion on value, drew on the way the party of establishing today’s yet there has to be a professional to was structured. Association. How would you undertake the actual valuation. This describe the context at that holds equally true today. Everybody In 1992, I together with the 27 time and the opportunity knows the value of common assets founding members, set up the to forge a new path for a referred to as personal property – association we named ANEVAR. In profession actually non- vehicles, flats, perhaps even usual order to elaborate its statute, there existing in Romania back estates – as they read the newspapers was much talking on where to then? and make comparisons. Things are take examples from. Of course we different if it comes to a mall, or a considered the communist party Actually, the preoccupation for hotel; it takes a professional to deliver statute as well. We were interested the valuation activity goes back to a professional service. This is no longer in some aspects strictly related to 1990, immediately after the revolution a question of a piece of information organization. The communist party’s – therefore, it is more than 23 years. off the shelf, but of paperwork in endurance was the result of its good It all started after a discussion with a which information is analyzed, based organization, because otherwise, it colleague of mine, Mr Fota, currently a on working techniques, yielding a meant nothing in terms of ideology. professor at the University in Craiova. reasonable result which may be agreed It featured a core organization, a Discussing about the valuation activity, on by both sellers and buyers on the hierarchical system, meetings, general I suddenly realized it is a cornerstone market. It was then that I started assemblies etc. We also took as in the market economy. That is because reading about it. I did not attend any models the statute of the Association free market economy means exchange specialized school or courses. I have for Electrothermics, a professional of goods and, before engaging in this only read books borrowed from the association set up prior to ANEVAR, exchange, both the seller and the buyer library of the Bucharest Academy of and the professional associations in must know the respective asset value. Economic Studies. the field of medicine, as they existed
28 VALUE Interview in the socialist era as well. The medical the Committee that elaborated the Yes, this was one of ANEVAR societies were actually the only ones European Standards in 2000 and 2003. strengths. Professional training and to have professional organizations at The 1999 IVSC meeting was held discipline – The Commission of Ethics that time. The Romanian Marketing in China. Philippe was to be elected and Discipline. Association also functioned before as IVSC president. He proposed me Doctors’ permanent need to 1989, to be dissolved after 1990. Mr. to join in the Management Board. I learn have taught us the necessity of Fota used to be the president of the submitted my application, and they permanent training. Marketing Association, so he was in admitted me into IVSC Managing As far as ethical conduct is the know regarding the statute. Board. He was elected president. It was concerned, we found inspiration from also then that China representative the English and from the Romanian What about the Deontological was elected in the Management Board. Code of the American I and the Chinese representatives have Valuers’ Society? Did you take been good friends ever since. anything over from it then? I was in the Board from 1999 to 2008, time during which they elected We considered this deontological me three times. For the last three code as well, but we did not take years I was IVSC vice-president. Since too much over from it. It was the 2000 I have been in the International medical profession that was more of Valuation Standards Committee. inspiration to us. The deontological In 1998, in Stockholm, IVSC code principles are mainly the same. conducted a survey referring to As you know, there is an initiative the modalities of diversifying IVSC at the international scale that there activities. I proposed business- and should be an international standard intangible assets valuation. I and Greg of ethics for the professions. The first Gilbert, from the American Society of draft is due to appear this November. Appraisers (ASA), author of the US That is because the principles are more Business Valuation Standard, worked or less the same everywhere – integrity, on the international standards on confidentiality, competence. business valuation and on intangible assets valuation. Are we going to get Around 1997, there came somewhat involved? two Americans, representatives of East European Real Property Yes, there are several countries Foundation (currently IFPF), involved, and I have just talked with 50% financed by the US current President Adrian Vascu that government. They came to ANEVAR should also join in, as we Romania to assist us with have the necessary expertise. organization. They had already invested over 20 million Euros What other international in Poland. relationships did you manage to develop in that period? Is permanent training one of the factors At TEGoVA I met Philippe contributing to Malaquin, who was the president enhancing both the of the association at that time and valuation assignment who supported my election as quality and the ANEVAR representative in TEGoVA end users’ positive Steering Committee in 1998, and perception of the later on, ANEVAR admission as profession? an IVSC member. I participated in
VALUE | 2016 29 Interview poet Toparceanu’s poem “Why I never It is three years ago that Mr. valuation reports quality. It is to the attend the Academy Award Gala”. Adrian Vascu came up with the idea banks advantage, even if some of them There is a verse there reading: “Because of regulation. I said then I was not first opposed to this initiative. This also I have neither confidence nor whom to for, but that I would not be against, results in a higher safety degree. Now complain to”. The public, since we are either. I stood aside, as I considered they are inquiring about the cost of an speaking about an institution of public we were against the trend with that analysis from the BIG. At first, there interest, must have whom to complain regulation approach. The UE had could be heard some voices against, to and be assured that measures will conducted a study in each country arguing that data are confidential, be taken following their complaint. referring to professional deregulation. then they gave in to the order of the Since the very beginning, we have That was the trend back then, but National Bank of Romania. Evolution been applying sanctions, going as far after the economic crisis, they changed in time is worth following up. A as expelling from the organization. their standpoint, too. When they statistic can be made; and, taking out We have made the sanctions public reached the second or the third draft what falls out of the statistic average for everybody to know that a given of regulatory document, I saw that range, what is left is kind of a picture well grounded complaint resulted in ANEVAR statute had been actually of how the market had been going, a sanction. taken over and turned into law. allowing for evolution to be traced. All the seminars ended with ANEVAR was acknowledged by The idea is also very good because an exam, therefore mere passive the public, just like now. Besides, valuers, although having access only attendance was not enough. The same responsibility has been enhanced, to their own statistic results, can derive went for conferences. This model was which is not bad at all. Before, valuation- based indices, as data are taken over from Ukraine. ANEVAR standards were not gathering. compulsory. If it was written in the Was it from the English report that ANEVAR standards had Looking back, do you that you took over the been complied with and it was not true, have any regret? Perhaps model of the Disciplinary one could have said that the respective a project you set your and Ethics Commission? valuer had deceived his or her client mind to and never – and that was about all there was to managed to carry through? Yes, the prior analysis that is inviting it. Now things have changed. For the the valuer to discussions, as well as Association, there is definitely more I have a small discontentment. I all the meta-judicial procedures. We trouble, but the public confidence is had envisaged IROVAL Institute as wanted to have the same procedures, on the rise. As long as ANEVAR make a main budget coordinator, namely yet without the legal power of the fair decisions to the benefit of the to get financed by ANEVAR or from justice act, to avoid any abuse. public, nobody will intervene. The elsewhere, from European funds, We have learnt about these advantage is higher quality, yet paired for instance, and use those funds disciplinary procedures from by higher responsibility to shoulder. by reallocating them to universities RICS (Royal Institute of Chartered Courses are also compulsory – and or research associations, with a Surveyors) from UK. They publish serious business, too. view to their editing books, articles, in their review a summary of all magazines. That was the initial idea, the test cases, the sanction and the What do you think about but IROVAL’s activity was sometimes infringement, what exactly was not BIG (the Real Estate limited to reviewing coursework complied with etc. They also enforce Guarantee data base)? or translations, or to elaborating fines to be paid, unlike with our ANEVAR Newsletters. The Valuation practice. There, the sanctioned valuers It is a very good attempt to gather Magazine got off to a good start from pay “law expenses” as well. Their information on valuation activity. the very beginning and has been commission does not operate on a There are valuation results, not market keeping its firm ground ever since. volunteering base, and the expenses data. Based on these data, there can There have been few cases in which the are incurred by the offender. be conducted analyses in support of articles were at what I considered to be valuers. Over years, we will be able to a lower standard. And the fact that What can you tell us about refer to the values valuers got in 2015. professionals from abroad contribute the profession regulation? It is to our benefit on the long term, to our magazine is also very important. and the must of reporting enhances We have not been as successful with
30 VALUE Interview
country. What would that imply? An entity, an independent organization, other than the Association, should develop a quality manual, with the required procedures. Then that entity is verified for correct implementation of procedures, and after two or three series of provisional certification, which may be withdrawn as well, is finally granted final accreditation.
What do you think about the exam following which one is granted the capacity of judicial expert?
This is only natural that the Ministry of Justice should have decided that ANEVAR members pass a specific exam for being granted this capacity. It is a formula which was already attempted several years ago. As their number will increase, those who are no longer ANEVAR members will get out of the system.
Who used to conduct such expert appraisals? the research area, I mean genuine view, but did not manage to have this research, namely the academic idea substantiated. They used to address technical milieu. Why? We did not have the There are certain countries, for and accountant experts for valuating right people to be able to coordinate example Georgia, Russia, the Czech assets or businesses. However, they such things. It goes the same with the Republic, Poland, France, Germany, sometimes lacked the necessary European funds. Perhaps we should or the Scandinavian countries, whose expertise, which often showed. address consultants. This would be an valuers are ISO certified. The issue Meanwhile, another initiative was unsuccessful project. has not been discussed ever since. resorted to, namely inviting lawyers, Our intention to set up another Regulation has been regarded as representatives of the Ministry of entity for valuers’ independent amounting to certification. However, Internal Affairs, or of the force services certification may count as another if one wants to work abroad, then to the training courses. failed project. That is when we did not ISO 17024 certification would come in have regulations and in order to be useful as well. The exam valuers have What exactly was aimed acknowledged. We wanted to have a to take in order to be accredited is 80% at through this demarche? certification system in compliance with taken over from that of ISO 17024. We ISO 17024 – personnel certification. thought we should sort of get prepared The idea was to give valuation We addressed RENAR (the Romanian for ISO 17024, which is much more activity as much visibility as possible. Accreditation Association) – the body demanding. Therefore, what would Those people did not come to the accrediting the institutions certifying be necessary now to get ISO? It is a training courses in order to become personnel. At that time, ANEVAR bit complicated: RENAR is no longer association members. It was very good, presidency was held by Mr. Adrian authorized for personnel accreditation, because lawyers subsequently started Crivii, followed by Mihail Bojincă. He therefore we should get accredited to reject in court what was not correct, tried to do something to this end in by another body from other EU to be aware of what is correct and what
VALUE | 2016 31 Interview is not regarding different valuation It was but natural. Because this almost one week through Moldova: assignments. Judges stand for the was the pattern I already had in mind. Buzău, Focșani, Vaslui, two per day last redoubt. They understand that, And I realised that, in ten years’ time, – to one in the morning, to the other if an expert appraisal is conducted, I had achieved the main things: the in the afternoon. That was followed then it should provide an opinion one statute was in good order, membership by a similar tour in Ardeal. Then the must be 100% sure of. They should was in large number, the territorial General Assembly was held and I had rely on the expert appraisal, not structure was very good, the Board one single veto against: Nic Popescu. judge it. Our legal system does not procedures were appropriate, we were allow for competition. The lawyers members of important international Would you tell and valuers representing the parties associations, we had the Institute me as well about the in the UK or in the States contend of Valuation Research (IROVAL), a importance of Ethics in court. The judges hear them all magazine, conferences. All the way in this profession? and decide whom are competent and through my presidency I neglected whom they can rely on. I constantly my own company. Looking now back, Enhanced ethics is certainly one receive from the Americans and the I consider I kind of had come to a thing of major importance. That is English judicial system- related cases, standstill with my company. It was no to say that ethical conduct will be precedents, discussions, motivations longer good: for me, for the company, given a greater importance within the from the Americans and the English. for the Association. It is true I could profession. It is the general trend. At Their judges give the impression to have continued. When I first came RICS, if you do not do well in the be a valuation expert, as they have a up with the idea of former – current ethics subjects, you fail. You may know specific language and is well versed. and future president, people did not everything, but if you do not work Whereas our judges say: this is the understand. Even in the Managing out an ethical case correctly, you are expert, he has been assigned, he said Board, Mr. Nic Popescu thought we rejected. With ANEVAR too, almost so, so do not expect me to valuate. wanted to make up sort of an off all the complaints in the disciplinary We haven’t assigned him for nothing, the reel managing team, namely to commission reports are related to have we? follow one another on and on. He ethics. And I think this will be an did not understand that the currently increasingly important factor, as it What should be done to have elected president no longer comes comes down to public confidence. the judges instructed? back. I chose this modality because, Regarding the profession future, as if presidents had been replaced every long as there is market economy, the ANEVAR has already set about it 4 years, the former one could have profession will not disappear. On the by organizing and participating for been anytime accused of having made contrary, it will get diversified. There the first time in a training course with wrong decisions. Then I said No, this is are yet a lot of topics for us to approach, the magistrates in Cluj, and perhaps not right, and went for the American for instance artworks, or capital market the latter, too, will be willing to go system featuring the three presidents assets, among others, for which we on with this undertaking. We have (the former, the current and the elected are rather behind the schedule. There always taken initiative, but sometimes one) going side by side makes such was not much demand, either, so that it turned out to be useless. The same accusing impossible: you cannot put undertaking valuations of shares or held true for the judicial experts. the blame on the former one, since you derivatives may be appealing to valuers. There was sheer opposition from yourself were part of the managing On the other hand, see what comes of the Ministry of Justice and from the board throughout his mandate. markets: any major event is likely to Bureau of Expertises. This is, after all, both a protection bring about a convulsion. A reduction and a responsibility. People did not in price for routine works will entail Was giving up presidency understand then. They would ask me: an increase in the number of natural and imposing the troika “Are you angry with us? What have we person as independent valuers. There “Former-Current-Elect done? We have been getting on well is a risk to it, too, because they rather President” a natural step for so far, why should you give up?” They tend to no longer train. They may not you to take, or rather sort of protested in the branch offices, they have the necessary time or resources a sacrifice thought for the did not want me to leave. Then, for to further do it, and inevitably can no Association’s good? two weeks, I went round the branch longer keep abreast and come to lose offices to explain myself. It took me their competitive steak.
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How do you envisage for banks. The team includes six matched by sensitivity and a great the profession future? project coordinators, all accredited sense of humour. I was impressed In the future, I see ourselves more members, out of whom 5 are RICS, by the messages of my colleagues focused on delivering professional 2 FRICS and 5 valuers acknowledged from ANEVAR, as well as by those services. It is not for the first time at the European level. Their cross- from China and Georgia. I enjoyed that I am saying it; I have already disciplinary training (engineers, immensely the performance of Gyuri said it and while addressing others economists, accountants), the team Pascu’s band, I being a big fan of as well. That is because there are stability and the experience they have the artist’s. As to the atmosphere valuers who will deliver series material gained allow us to find solutions for created by my colleagues making up (flats, small estates etc.), like in any the complex assignments. the audience, it was unforgettable and profession. There will be low payment awesome. to match and they will not be difficult Do you get involved I keep at home a painting I received to undertake. There is also plenty of in your company’s in Kenya (photo 1). It is a symbol information, there is no bothering everyday activity? in Eastern Africa’s culture, namely one’s head over it either, not much it depicts the modality knowledge judging to it; it is a technique working Almost. I do no longer undertake comes down from generation to almost robot-like. Thus, you can assignments. I work mainly as an generation, as well as the way in undertake a great many assignments at adviser. Elena, my daughter, has taken which each generation contributes a low price. On the other hand, there over the company management. to enlarging it. I find this concept are professional services. They involve perfectly suited and up to date to intricate issues, real estate with some What are your plans ANEVAR development in the past, at complications to them. It takes much for the near future? present and in the future. reading, documenting, subscribing My thanks go to all whom I used to data bases from abroad, spending On 17 September, at Sophia, I will to work with in the park, to those more money. These assignments are deliver a completely new presentation whom I am currently working with paid more. You must specialize, you on “Ethics in valuation assignments” and to all whom I will have the cannot do them all. starting from the Hippocratic Oath. opportunity to work in the future. It took me quite a while to write I know ANEVAR is in good hands Do you also include something completely new. I have and that those contributing to the valuation review here? also introduced six cases to be profession’s development are quite a debated in the conference. We shall lot. A big thank you to all. Yes, but not any kind of review. see what solutions will be found. I Flat valuation review may not even be have the solutions and I am curious necessary. The rest of the reviews will to see whether they will be the same. be rather problematic – say a valuation of whole factory or whatever else. How did you find the event Some valuers will stick to residential organized on 9th September property. Those who are willing to on the Valuer’s Day? learn, to study, to beat their brains will focus on professional services. First and foremost, it came as a big surprise that stirred up a great Consequently, shall we deal of emotion within me. It made understand that profession me relive, with the same satisfaction, future will bring about a the beautiful moments connected to differentiation between ANEVAR’s life, which, to the same difficult, high quality extent, were equally important assignments and easy ones? moments in my own life. The team in charge of this Yes. Our company has specialized event organization proved, besides in undertaking more complicated, professionalism, a wealth of foto 1 larger scope works. We work little fondness and warm-heartedness
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“TO REACH EXCELLENCE, PEOPLE SHOULD BE AWARE OF THEIR PERTAINING TO A GROUP”
An interview with Adrian Vascu, President of ANEVAR 2008-2009, 2014 – 2015
I would like to start our capital market, on the minority and majority stakeholders is interview with a couple of quite big. We have appealed to responsibility and, of course, hot issues of utmost interest in this context, as a preventive action, we have initiated to valuers, namely the a special monitoring procedure the details of which are current challenges ANEVAR, certainly well known to all ANEVAR members involved. the association you have been running for a year and Did you get involved in the discussions previous to the adoption of the new a half now, is faced with. The ŰŰ From the very first topic I kindly ask you to beginning, our Fiscal Code? Could you tell us what tackle here is the connection main concern changes you proposed and what was between the Association was the the feedback from the authorities? and the application of law extremely high The area we were consulted was title 9 in the Fiscal Code no. 151/2014 on clearing up responsibility for referring to the tax on building. This issue is rather old, dating the legal status of the shares both the valuer back from 2014, so that last summer, when we approved traded on RASDAQ market and for the ANEVAR Valuation Standards, we included the Guidance or on the unlisted market. profession. We on Valuation Methodology (GEV 500) which would have have insisted on come in force if the Fiscal Code had been approved. Nothing It was one of the year 2015 the application has changed so far and we are now in the same situation. To challenges – a law in which ANEVAR, of the valuation the best of my knowledge, title 9 is still at issue across the alongside the National Trade standards and Commissions, before being up for debate in the plenum of the Office Register (ONRC) and ASF the legislation Chamber of Deputies. We are speaking of a significant change got somehow involved. Of course in force, and in the philosophy of taxation on buildings, with valuers playing ANEVAR participated indirectly, recommended a very important part. This part should be well understood in namely by having to cooperate with the valuers to be terms of both workload and responsibility. We are looking ONRC in order to submit to the aware of their forward to the final form of the Fiscal Code, after which we issuers to be delisted the names of responsibility are ready to put the finishing touches to the necessary training the authorized valuers who may be programmes so that the new provisions may be applied by and expertise, assigned in this process. I can say that valuers starting from 1st January 2016. I want to specify as the impact the regulatory document was rather that, although GEV 500 is published in ANEVAR Valuation on the whole unclear. From the very beginning, our Standards, it will be applied only provided the Fiscal Code capital market, main concern was the extremely high becomes effective. This is because I have come across several responsibility for both the valuer and on the minority instances in which it was already applied last year, namely for the profession. We have insisted and majority it was referred to in some valuation reports. Well, perhaps on the application of the valuation stakeholders is those having applied it did not get to read the last article as standards and the legislation in force, quite big. well, that one stipulating it becomes effective only provided and recommended the valuers to certain conditions are met. Another aspect referring to which be aware of their responsibility and we have tried to make our point was the “notaries’ grid”. Of expertise, as the impact on the whole course, we have contacted our colleagues from UNNPR (the
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National Union of Notaries Public from Romanian). The topics proposed by us were the replacement of circulation value notion, expertise renaming and limiting the possibility of using it in other purposes than the established one for the use of notaries public.
In what way was affiliation to UPLR (the Union of Liberal Professions from Romania) of any assistance to you? Affiliation to the UPLR is an important thing too little exploited so far both by ANEVAR and by the other liberal professions. The Presidency of Romania expressed their interest in discussing with the representatives of the liberal professions, inviting the ULPR to a discussion at Cotroceni Palace, on the assumption of a talk with the representative of all the independent professions – instead of each representative of a given liberal profession approaching the issues of specific interest. I think ULPR and its role have not been capitalized at their best. There is one more very important thing: ULPR is actually us. If the associations and their representatives do not get involved in ULPR activity, there is nothing the organization itself can do for us.
Last year, some of ANEVAR members passed the exam which entitled them to act as judicial experts. What is your advice for those carrying out this new activity type? Judicial expertise is a highly important area, particularly in the public space. ANEVAR members are not judicial experts from the very start. Therefore, we could say it is not a responsibility for us to take necessarily. On the other hand, the valuation reports undertaken in the Romanian
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courts should be in compliance Romania needs a fundamental reform complied with by them all. Therefore, with the valuation standards that to be started the soonest possible. the challenge is not necessarily for according to valuation profession Judicial expertise in Romania lacks, at the magistrates, but for the experts to law only ANEVAR approves. This is least in this area of asset valuation, a apply the standards to a high degree a first element of utmost importance mechanism of continuous renewal of of consistency. Think a little: what can common both to our Association the professionals’ body, a transparent be more difficult for a magistrate than and to judicial expertise. Not all and strict mechanism of ethical rules be faced with two or several valuation ANEVAR members are entitled to and disciplinary regulations. reports referring to the same asset, conduct judicial expertise. However, undertaken at the same date, within all judicial experts shall comply with Have you got any feedback the same scope of work, and yet with the valuation standards when it comes as a result of the course very different values. In order to avoid to asset valuation, as judicial expertise you have recently held such situations, we should first be aware encompasses a wide range of domains with the magistrates of the fact that an asset cannot have in Romania. of Court of Appeal? substantially different values at one and We are referring only to the domains the same given date, and make it clear pertaining to the valuation part. And It was a very interesting and to all the valuation services users. These because law allowed for the organization challenging course to me, among the values should differ within a range of of an interview, we required it to the first ANEVAR had ever organized up to 20% - and this is something the Ministry of Justice. Following its actual alongside a Court of Appeal. It was experts should first know. organization, eight hundred ANEVAR actually an undertaking within the members have become judicial magistrates’ continuous training, a A project initiated during experts. This has come with the right partnership between the Appeal Court your mandate was the responsibility. ANEVAR is addressed and ANEVAR in which we reviewed, data base of Real Estate quite a large number of notifications in a non-technical language, the main Guarantee (BIG). As of and of valuation reports submitted by aspects pertaining to the valuation 1st July, it will become people dissatisfied with the decisions profession specific character. From mandatory for all the and with the reports themselves. What my point of view, it was an interesting we have found out is that, although the course and the feedback I felt has been valuers undertaking expertise reports undertaken by our a positive one. I was among people valuations for banks. How members in their capacity as judicial whose job is to judge, and who do a can be all the information experts, should have complied with really good job of it, therefore holding gathered in the data base be the valuation standards, many of them this course was quite a challenge made use of in the future? include inadvertencies that could have to myself. I had the feeling that I influenced the valuation results. We managed to convey a minimum of For ANEVAR, data bases have are facing a rather difficult situation, asset valuation- related information been kind of a “Fata Morgana” mirage. as I cannot believe that an ANEVAR to the trainees, information to be This data base, closely related to banks, member who is also a judicial expert perceived in a different way than so far. resulted following a discussion with and while using the same standards, Related to judicial expertise, I think the National Bank at the beginning of delivers such faulty reports as those we it is the profession’s role to inform last year. The National Bank stood firm are notified of, and, on the other hand, about their preoccupations and tools referring to the compliance with the the same person can deliver high quality they dispose of, all the actors in the valuation rules, having in view its duties valuation reports based on the same judicial area in Romania. And I am as to monitoring the provision level standards, in response to another type not referring only to experts. I am also and the risk the banking system and of commission this time. We are thus referring to magistrates, lawyers, and the banks run. When decisions are to following up these valuations, through attorneys. It is about all those meeting be made, it is essential to start from the the Monitoring Department, keeping and making use of judicial expertise in information already gathered. Let me watch on their quality, although we their activity. The valuation profession give an example: during that discussion, are legally restrained from taking any should promote the valuation principles the National Bank of Romania told us disciplinary measures regarding the and the valuation standards, as one they had a list of several valuers referred valuation activity as regulated by OG thing is certain: the standards are the to by the banks as having infringed on 24. In my opinion, judicial expertise in same for all these categories and shall be the professional norms and demanded
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site and is known both to the banks and to the valuers involved. What is sure is that, as of 1st July, we have been kind of sluicing the practice so far, and now we start to reap information. I am positive that the reports we are to submit every term will subsequently become a very useful instrument. We currently have several report proposals we submitted to the conference in Timisoara, to be further adjusted to date. Once the information is gathered, it can be made available to valuers, to the public, and to banks. What I want to point out is that the data base does not include information which could be selected as comparable transactions. It is a data base which will prove necessary in Romania, without solving out all the problems we have been facing for twenty years now. Yet, at a closer analysis, BIG (Real Estate Guarantee data base) reflects the valuers’ activity in the banking system and protects them against the possible unjustified “penalties”. The information in this data base will be first of all capitalised on through the trimestrial reports we will issue. Secondly, the fairest evolution indices in Romania are likely to result, since they will have the same reporting base, namely the market value estimated by valuers. The recordings in BIG will be of assistance to the valuers themselves, as they will find there a clear record of the activity conducted in relation with the banks, having access to all the we should take measures accordingly. to know what was going on. It was then records introduced into BIG. And there We asked what professional norms were that, as a preventive measure, during is something more to it. At this point I not complied with. The answer was: the discussions with the National Bank would like you to give me a blank “We do not know, we do not have any of Romania and with the valuers, it cheque: there is unperceived potential further information. We expect you was decided that all the valuation to the data base and its utilization. Let to take the proper measures, as we do reports undertaken in relation with us get it started and then see what we not want those who created problems the banks should be traced in a data can use it for. I am also aware of the somewhere to do it somewhere else, base monitored by ANEVAR through fatalistic attitude according to which it too”. The requirement is, of course, IROVAL. Thus, starting from 1st July, will not be of much assistance, as there rightful. Only that, if somebody made a according to the valuation standards is not enough information. I propose mistake, or a report happened to be non- and the National Bank of Romania we should start the project, see how compliant, that does not necessarily norms, recording in the data base it works, and subsequently develop mean that the respective valuer’s activity becomes compulsory. The underlying the data base towards what it needs. is wrong as a whole. Therefore we had procedure can be found on ANEVAR BIG is conceived to be of assistance
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to valuers, to the valuation market, calls for reconsidering, and we, valuers will assist other municipalities as for the protection of both valuers and are to be the change by taking the well, if they require our support. And, intended users, having in view that first step and offering something new. what is very important, I consider we cannot but notice the importance Our partners should be aware of that. these guidelines an alternative to the valuation profession holds for the This reconciliation or passing through notaries’ fee grid. We have long given public space today. another stage is not a smoothly even up criticizing notary public expertise. process, as there are still various As long as you do not come up with an How would you describe clauses valuers are bound to sign in alternative, you accept it as a necessary the relationship between various contracts with the banks, some evil. The notaries’ grid has been valuers and the Romanian of which being impossible to sign, misused, serving other purposes than banks? Are there any too. The evidence of the pressure the the taxation of real estate transactions. abusive clauses valuers contracts put justifies, more or less And then, overbidding its utilization, in jest, my opinion regarding valuers’ it was made inappropriate use of. have come across in position in relation to banks. But, if you dare criticize something, their relationship with then you must provide an alternative; the banks? I am asking The second edition of otherwise, everything will come down because I know there have the Real Estate Guidelines to pure demagogy. been such complaints. for Cluj, a premiere in Romania under your It is also as of 1 July Referring particularly to the past, coordination, including that ANEVAR 2015 I could describe this relationship as the information for year Valuation Standards will similar to that between somebody and 2014, has recently come become effective. What their father confessor: valuers on their is new in the updated knees, and the banks standing. This out. What can you tell version, as compared state of things, rooted back in history, us about its usefulness? has been undergoing a significant to the 2014 edition? change, as many of the partners What I can say is that definitely We are used to updating standards in the banking field have begun to one swallow does not make spring. It yearly. It is only those outside the understand the situation. Valuers, is an example of what and how can profession who can think that standards too, should understand it. Half of the be done, starting from information are just like the Bible, a collection of valuation market is (still) related to that has been available in every city universally binding dogma which has banks. Banks are our partners. On hall in Romania for many years. We been going unchanged for years. Being the other hand, banks have specific will be going on with this project a young and dynamic profession, requirements regarding cost keeping to until someone becomes aware of this since 1997, when we had the first the lowest. A balance should be finally practice replicability. There is not much Valuation Standards edition published, reached, harmonizing the valuation philosophy to it. It merely comes down up to date, in 2015, they have been reports quality, the rate at which they to taking over the information recorded undergoing significant modifications. should be drawn up and the price to be at the Head Office of Taxes and Local We made use of the International paid for them. I think right now there Rates. The Guidelines developed in Valuation Standards (IVS), as is a misunderstanding. The fees cannot Cluj so far are public, therefore they translated by IROVAL for a long time. be very high as they are in relation can be visualized and analysed and, Then profession regulation came up with the banks competitiveness on this just like with BIG, there are multiple as a must. Up to 2011, standards were market. This is the way it generally ways of using them. It is a project compulsory only for our members. goes worldwide when it comes to loan we are fond of and that we intend to Since then, they have been compulsory guarantee, particularly with residential continue. Even after I have completed for the whole valuation market in estate. However, the standard is too low my mandate as ANEVAR President, Romania, being called “ANEVAR in our country. The current fees put at we - I mean I and my colleagues who Valuation Standards.” They take risk the minimum quality standard have volunteered in developing them - into account the European- and the for this kind of services. Therefore, I will go on publishing these guidelines. International Valuation Standards, and could say the relation between the two The raw spot is information generally the best practice worldwide. parties has reached a point in which it preparing by local authorities. We They are in a permanent dynamic, as
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they are adapting to the realities. The as of 1 January 2016? And a specialization and the right to use a 2015 Standards, to the difference of what does specializing in stamp; it will also include information the 2014 ones, include two types of Valuation Review imply? extremely useful to the valuers. modifications. The former referred to the standards names and structure, Valuation Review has got quite Was the idea of publishing while the latter aimed at adding some an important role of late. Basically, the volume “On Valuation standards (or rewriting the existing when there are two different opinions, and Valuation Review” born ones, for instance the standard related issued by two experts, regarding the alongside the preparation to valuation review) and at adjusting same asset, it generally goes like in the of the course for getting the valuation guidelines. There are saying: “Two dogs strive for a bone the specialization as no basic modifications; we have and a third runs away with it”. It is only adopted several more European not a question of the third gaining Valuation Reviewers? Valuation Standards, so that our something, but only of a third valuer That’s right. I already had in mind collection may be in accordance with lending confidence both to the former the structure of the Valuation Review the European valuation requirements, two valuers involved, and to the clients course, but there was still something just as the European bodies demand and users of the valuation reports. It missing, as one of the requirements as well. At the same time, ANEVAR takes experience and special review was that those performing the review Standards are in compliance with the rules. It is not always simple to get into be experienced valuers and know what International Valuation Standards the shoes of the valuers who worked this profession is all about. And then and have included, since last year, at the date the respective valuation it seemed quite normal that I should the valuation guidelines part, which report was drawn up. For this reason, start the coursework by mentioning actually means tailoring standards we aimed at creating an elite body, a few things related to valuation in application to the particular realities in meaning by that a number of review general. And, while doing so, to make Romania. We have got a Committee in valuers who will get this specialization some sense, it seemed to me that it is charge of the standards, permanently and whom I expect to reach the same not complete unless I speak of fees, analysing what is to be introduced in result if they are to undertake a certain of the valuation methods and so on, the next edition. We aim at getting them valuation review assignment. I would until, little by little, there has resulted a a certain stability and trustworthiness, like the bias we still happen to detect in meaningful material. I further shaped and that is why we do not want the valuation to be much more restricted it into this book: “On Valuation and modifications to be major ones. in reviewing. The pilot course was Valuation Review”. It includes the held. We have standardised the theoretical information we are going to How do you prepare coursework materials and announced use in the course on Valuation Review. coming into force of the on the site the date at which the first The book stands for the coursework Valuation Review Standard course on valuation review is to take support structure, but there si more place. The course is not only to provide than that to it!
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Is the moment of the there, there is no due respect. It is Has the communication release of a book on not something easy to achieve, but, of between ANEVAR and valuation – a not necessarily course, the first step to be taken is to set its members, as well very technical book, your mind to it. And we set our minds as with those outside but one which makes on it that is reaching excellence. We the Association always a radiography of this defined it as our desire to take pride been handy and easy to profession – a coincidence, in our belonging to this organization, manage? Is ANEVAR official just as the organization should take or did you envisage it to Facebook page a modern pride in having us as members. This be addressed to a larger was an objective we set ourselves at the tool helping you get faster audience, making it easier beginning of last year and we took steps to all those interested in to them to understand alongside various lines: from changing the valuation activity? the valuation profession? our image, starting with ANEVAR logo, to the consistent substance of ANEVAR Communication with the members The book is not written in a activity. The review “Value, wherever it is of paramount importance. Actually, technical language. It is rather a spoken is” is getting more and more serious and communication with everybody is book, just like telling a story, as Mr well known, and our colleagues read it important. ANEVAR, as the profession Sorin Stan (from IROVAL) said, in his and make good use of the information umbrella, should communicate equally capacity as one of its first readers. I have it includes. We have focused on the well both ways: with the authorities, tried to make a written audiobook that website, on the mechanisms through advising them about what the members is exactly the other way round than which we announce the conferences, do, and with the members, advising them customary. Others first write their books on the quality of what we are trying about what the authorities do. It should and then read it. I first told it and then to achieve through the courses and bridge the gap between the valuation wrote it. That is exactly what makes me the presentations at conferences, on service and the intended users. It does think it is useful to those who are not the public message we address, on the not make sense to do certain things valuers, but who are somehow related meetings we had with the authorities, throughout the mandate you have been to the valuation profession. I think their the conferences organized with the assigned for if the members do not know reading it is of use to us. They can thus Financial Gazette, aimed at audience about them. You do not do it for yourself, understand things we have to do and do training. Under these circumstances, but for the benefit of the members. So far, not manage to explain to them, so that we team up with whoever fosters communication was direct, within the it should clearly follow what both the genuine value. We considered that the National Conferences where, between client and the user should understand. gala UNITER regales us with is actually you and me, turnout was very low. This I am looking forward to the feedback a valuation and an awarding of artistic spring we have wondered: if we do not from the review readers, those who will performance throughout a year. We meet at the general assemblies, then how read this book. got to UNITER after having initially should you know what is going on? Last revaluated the Latin dictum Mens sana year we organized an event by means of I have noticed the in corpore sano. A valuer needs both his which we tried to somehow chart the particular attention you or her mind and body equally healthy. history of our profession, and made a pay enhancing ANEVAR Fitness halls solve out the physical film called “ANEVAR, past and future”. image. Hence the idea health side. Spirit should be also alert, The main actors are the outstanding of the association with and where else could its keenness be representatives of the Association, those preserved if not in the area of art?! We having made a particular effort so far in excellence as awarded want the partnership with UNITER building up this organization. We are within the UNITER Gala? to be conducive to their permanently well on our way, although it is a long Excellence was one of the objectives informing us regarding drama events. one. The film was viewed in all our we set ourselves last year, at the Not for a moment did we forget that branch offices by approximately eight beginning of the mandate of the current we stand for the Association at the scale hundred colleagues of ours. I consider Managing Board. We said that, unless of the whole country, consequently our that this material has laid one more brick there is a tendency to be an elite body, colleagues countrywide need to keep to the organization culture. To reach highly thought of and respected, there abreast of the regional events in the line excellence, people should be aware of is no reaching there, and, if not reaching as well. their pertaining to a group- an awareness
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that comes as a result of a strong bond. These meetings stand for hence the idea of asking for questions a form of communication. The other form of communication from other ANEVAR members. is in writing. I am thinking of the site and the reviews we edit. However, the most up to date and prospective form is Are there any differences that provided by the social media. It is with a single mind in terms of management that we have created the official ANEVAR Facebook page. I, requirements between for one, am not a big fan of Facebook accounts. I have had running an association my own page for a very short time, as I did not consider it and a business? an opportunity. However, being aware of today’s information tendency, when the main communiqués are conveyed through Oh yes! Both leadership areas are this medium, it has been clear to us that ANEVAR must get equally interesting and challenging. The in line with the modern communication trends. After we had difference between a non-governmental ŰŰI personally, made the decision and given the go ahead, we appointed the organization and a company is related use the social person in charge of this page administration – she is to select to profit. Of course, both aim at a media for the information and give it an attractive form to further send it profit. However, the non-governmental to our colleagues. I expect the communication created in this professional organization aims at a gain in terms of space to become very important. I personally, use the social communication image, a profit for its members, while media for professional communication and see it is a positive and see it with entrepreneurship, the output of informational environment, particularly that the message gets is a positive one’s work is the financial yield or the instantaneously to those directly interested in the respective informational profit. In valuation, there is a question piece of information. It is a direct communication manner, environment, of what you do, of the way the public you can rapidly react to modifications that can arise any time particularly perceives you, and of the degree of within the dynamics of this profession. I am a strong believer that the confidence the clients put in you, rather in the valuers’ community on the rise in the social media. message gets than of profit. I suppose you have asked There are already three hundred and thirty subscribers to the instantaneously this as you know of my entrepreneurial ANEVAR page on the Facebook. I am a fervent supporter of to those directly undertaking this year, alongside a group this community. They stand for the step ahead taken along the interested in the of colleagues with whom I have been path of tomorrow’s events, as it is a reversible matter: on the one respective piece working for some time now. It is a hand, you can find out what is going on, and on the other hand, of information. challenge and we want to add both value you can make things happen, by making known a requirement and quality to the valuation market in to everybody at the same time. Romania. Our intention is not to take something out of the valuation market, What can you tell us about the challenge but to add value to it. It would be you launched on the Facebook and on really interesting to add to the review a ANEVAR site, to all members to address rubric in which our peers’ experiences you questions for this interview? of this type should be shared, having in view that in order to do business It is part of the new things I want to be easy to implement. out of valuation, one needs to be This interview stands for my input to the current issue of the knowledgeable about valuation. And magazine, only that I am not contributing to it by writing, yet, being versed only in valuation is but by talking. I have thought that, besides the questions not enough. While valuation is taught at you wanted to ask anyway, there may be other topics our courses, as far as the business in this line colleagues would like to tackle as well. I cannot be upset that is concerned, some have the necessary no questions were addressed. It is kind of novelty in terms of skills, others acquire them. What really practice, perhaps not everybody knew, some may have not matters is to share the experiences we known what to ask, others may shy away from asking as long live and further hand them down. I as they assumed their questions. I would not have answered think that learning from the experience anonymous questions. It is a very good approach to be further of others and thus avoiding hitting the continued with those who will hold important positions, upper threshold is an objective worth perhaps to be also applied to the Ethics Commission or to reaching by valuers who are basically other peers. We feared lest our interview should be boring, wise people.
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How does function affect status of a “former”. It is the “heavy current course of things rather than try relationships with people? legacy” syndrome overwhelming our to bring about some significant change, people. Now, coming back to ANEVAR, having in view how fast time passes. This challenge often arises in the idea of a function over a limited The organization taken over at moment the associative environment. What period of time and the existing “troika” T and brought to moment T+2 should counts more, the function or the are two of the key trump cards of the come out richer than at the moment man? Within companies, the function profession. I am a fervent advocate of it was taken over. It is an interesting plays its well established role in terms this idea that must be maintained. Such experience which, if properly prepared, of responsibility, yet it will never taking turns is of much assistance to gets to be a natural passage. command the due respect unless paired permanently refreshing the atmosphere by expertise. Generally people take and to avoiding the awkward situation How do you see the people, not functions as role models. when one is no longer willing to let evolution of the valuation As I see it, with the associative area go of a function after getting to like profession? How many years things seem to go the other way round. the status that goes with it. Another do you think it will take I, for one, has never been comfortable strength is that the profession applies for the projects started to with those attitudes of the third parties fixed fees and does not intervene in the yield the expected results? inclined to deal with the function, not percentage business side in the turnover with the person behind it. But that’s it, the profession members achieve. The profession evolution is taking it is part of the game. However, with a better and better course. Once the a difference: those who took interest Is it generally difficult profession has been regulated, a large only in the function you stood for at a to let go of the number of ANEVAR members have given moment will simply forget you president function? understood which the main projects the moment you no longer hold it. are. The relationship with the Ministry Perhaps there is nothing new and even No, if you know that this is the of Justice is a long-term project. The not natural to it. People tend to progress natural course of things, and you know relationship with the Ministry of and look forward. This comes with a it in the first place. Secondly, it is not Finance, related to the Fiscal Code, is also real challenge. Those who are elected difficult, as it is extremely strenuous a long- term project. The relationship to a certain function should realize they work. There is an absolutely infernal with the banks is yet another long- will keep it for only a limited period rhythm to it. You must be continuously term project. The profession should of time. My advice is that no one in alert to what happens every day, to the train better and better professionals. such a position should change their responsibility you have, to no missing Therefore, the coursework part will take style, attitude, behaviour or opinion any profession- related opportunity. some reconsidering and consolidating. about themselves, as they will soon Besides the members, there is also the Those who are already members should go back to their initial status. And if, staff part, which is more and more be more and more present and well during that limited span of time, they specialized, has a certain background versed in the activity fields above. And indulge in the false illusion that they are and has understood the profession that takes unceasing assiduous training. somebody else, they will be in for harsh requirements. The president should The course of action is known in broad disappointment when returning back delegate some of his tasks to the staff. lines. What is not already known at to where they started from. The power However, management should run present, and this is very well, is what the a function temporarily provides you is smooth in spite of the high dynamic. next president is to do. He will have to not easy to keep under control unless It is not possible that each one should do whatever will be best suited for the you are well aware of how things work. impose their style. The association has a organization at that time. It would be If you understand that you have come certain image in front of the authorities, wrong to have a line of action already to do something, then you try to do it a certain discourse, a certain public prepared for him in advance. That is as well as you can, after which it is up to behaviour, and all that will have to be out of the question. He should have people to judge. Some will praise him, preserved. It is the staff that shapes the the freedom and the responsibility to some will not. The system adopted by us, course of conduct and impresses the decide on what he deems best he has to to elect a new president every two years, general atmosphere. It is a challenge for do. He can always lean on the former allows for a certain exposure and entails them, too, to keep having presidents presidents and the Managing Board a post- presidency period in which the changed every two years. My appeal should a major change in the trend be former president still enjoys his or her to presidents is that they adjust to the called for, as a result of some dramatic
42 VALUE Interview
change in the market. Setting a certain Board who have been working hard some high interest information from pace, be it faster or slower, will be tailored and keeping a brisk pace, making the joint activity area. ANEVAR is a to each and every domain. Laying stress most of the times consensus- based host to this first event and I do hope on one or another trend will depend on decisions. Our colleagues had that all the participants on behalf each case. This profession has created the opportunity to read about the of ANEVAR should appreciate the quite a number of personalities and Managing Board’s activity in every issues to be tackled. The speakers changed quite a number of destinies, minutes of their meeting, published will be high-profile figures in the therefore I do believe in its power to in our monthly Newsletter. valuation area both from Europe defend itself and take further steps along the path chosen to follow it to the better. It has been keeping pace all the way these 23 years, and furthermore, it has gone beyond, adjusting to the times. I am both optimistic and proud of being part of the relay team having reached as far. Consequently, I see a bright future to the valuation profession. Mentalities need also changing, which will prolong the period in which we will see concrete results. Not everything we have initiated now is known to everybody, not everybody has agreed to them, perhaps not everybody has understood them. I doubt we will ever be able to be much better than the society as a whole. The Romanian society, too, should evolve. ANEVAR is one step ahead of it as its structure backed on highly trained professionals is over the society average structure. It will be a rather lengthy process. It takes patience. The final test will be when all valuers have to assess one and the same asset with a result varying within a range of 20%. It is only then that we will have the proof that things have been understood, and that the public and the valuers have finally reached the longed for consensus. I am optimistic. I am confident in the already Now, in the end, please and the United States of America. I existing rules and in those that can be tell us a few things about recommend that as many as possible further developed since the necessary the two major events of our colleagues attend the event, leverage exists. I am confident in the on ANEVAR agenda, and invite them to join in. It will people we back on, in the staff who is benefit themselves, ANEVAR, and, already by us, making up a whole. Any to be held in the next not least, Romania. possible syncope along any of these period: TEGoVA Congress As far as the Valuer’s Day is directions will translate stagnation. And and the Valuer’s Day. concerned, on 9 September we will that will call for urgent remedy. go on with the tradition we started I cannot wind up without pointing TEGoVA Congress, on the 9th eight years ago. We hope that this out the instrumental role played by the July, is the first such event held by this year, too, this event will take us one Managing Board. My thanks go to my professional organization and aims at step closer to the level of excellence colleagues in the current Managing presenting the valuers across Europe we have been all wishing for!
VALUE | 2016 43 Interview
“ANEVAR in twenty years’ time: I envisage the Association as a European valuation leader“
It was your mother who came up with the idea of your enrolling in the Business Valuation training course in Arad, in 1992, as we have all read in the article “The future of a profession” you contributed to the first issue of the Value magazine. Was that your first coming into contact with the valuer profession? Of course, very little was known about the valuer profession back then, but my mother was a visionary, as she always understood what the trends were. And she seems to have been right, as she used to work in a bank. Her intuition was that a market economy cannot develop in the absence of property- or business valuation, so she insisted I should take it up and venture into uncharted areas, as she regarded it as a prospective and interesting job, since it had not existed until then.
How have things been evolving? What is the professional path you have pursued so far like?
An interview with Daniel Manaţe, I and the Association have forged ahead side by side charting a new First Vice President of ANEVAR path. I started as a business valuer in August 1992, the first training course
44 VALUE Interview being in the spring of the same year. 2007, followed by an improved one, in Now, as it has fallen upon I went on with business valuations 2009. After the financial crisis, people you to prepare the next and with report reviews, preparing the were taking less and less interest in generations of valuers, arguments with a view to facilitating this specialization, and the number of would you tell me, please, negotiations. That happened for a long members qualified in this domain was whether today’s students are time, until the Association decided actually rather small. Currently, the different from those in your to set up a section to deal with real course on Financial Asset Valuation is generation, and in what sense? estate, as a response to the market held only on demand. Most requests are demand. This demand was triggered for the course on Real Estate Valuation, Life and society have been evolving, first by the banks, which, in the loan followed by those for Business Valuation therefore it is but natural they should be lending process, needed real estate and Personal Property Valuation. different, too, considering these aspects collateral valuation. Up to then, real as well as others, for instance the internet estate valuation was just a part of what Allow me to quote from impact and the access to information. was taught at the BV course, without the same above mentioned Now, referring to the average: it may benefiting of an exhaustive approach. article: ”I am aware that be as well that the exigencies in some The Real Estate Valuation course was what is valuable is not within education settlements have somehow very well organised as it got off to a easy reach, but I am ready disappeared here and there. As far as I good start: they bought the copyright to experiment”. Are you can remember, the standard was higher for one of the best valuation books open to new experiments 20 years ago, to say nothing of the fact worldwide, the Canadian edition of or are you rather a that it was at its highest 30 years ago. “Real Estate Valuation”. ANEVAR thus conservatory by nature? Yet, I am always glad to meet those who set off along a path that has been on have been brilliant at subjects related the rise all the way through. I will always be open to new to valuation. They are ambitious and There followed the Personal Property experiments, as long as they allow us eager to perfect, by learning as much as Valuation specialization, which got off to preserve whatever we want to in possible. They are those whose follow- on the right foot as well, the Association terms of strategy and policy. I mean up I take most interest in, as they could getting the support of the American organizational policy, of course; have the makings of very good valuers, Society of Appraisers (ASA) in running or related to the Association’s short- good managers or influential managers the training course. Namely, ASA sent term objectives. Well, yes, why not of public organizations, and therefore two of their best lecturers in plant and experiment if it benefits the Association benefit the country through their equipment valuation. They trained a members, the profession, the public. professional activity. pilot group that further became the core lecturers who made it possible for What most appeals to you What are your plans for that precious knowledge to be conveyed professionally: pedagogy the two-year mandate to our members. ANEVAR has always or the valuation activity? as ANEVAR President? collaborated with the best. Later on, there was also a market demand First and foremost, it is the Exactly those I put forward when for what used to be called Financial valuation activity – and particularly, I put my name down for this position. Asset Valuation. A lot of transactions the more complex one, that dealing Things have not changed. First, I want were made, people were interested in with business valuation. I’d rather say to further consolidate our already very investments. That was before the 2007 that the fact I have been teaching at good current position that we owe crisis. This new section was set up in the University since 1995, and have not only the excellent presidents the order to meet that growing interest. been a lecturer with other institutions Association had, but its members as I had the honour to coordinate the as well, not only within ANEVAR, well. One single man cannot change elaboration of an ANEVAR course for is my calling, my way of expressing the result of a battle. It takes soldiers, the Financial Asset Valuation specialty, the pleasure to teach. I have come lieutenants, generals, and they all by collaborating with a team of experts to realise very quickly that, if I teach together raise that victory song including, among others: Ion Anghel, and work in the same line, it is easy charming the audience. Well, of course, Doru Puiu Tiberiu, Adina Ababei, to make myself understood and I there may be some tone deaf intruder Mihai Căruntu, Anamaria Ciobanu, am extremely efficient in conveying to spoil the harmony. Yet, the profession Dan Cecilia and Victor Dragotă. The the information. I can always give must go on, honoured by those who are first version of the course came out in examples from my own experience. honest and dedicated to it. Broadly, that
VALUE | 2016 45 Interview would be the main idea. Ethics Commission and, why not, those who followed him came through Of course, I am following some the professional power having the with flying colours. We want to turn specific objectives, for example to capacity to elaborate training courses this task into a routine one. re-organise the specialty Real Estate and develop lifelong training seminars, Valuation in Residential Property to be successfully replicated by What kind of a leader will Valuation, which will probably be the other countries. We can become a you be: will you tailor your appanage of most of our members, regional- or even a European leader by strategies to the feedback and Commercial Property Valuation, exporting our know-how in the field from the team you coordinate, involving a rather more demanding of standards, our skill with which we or will you let yourself guided qualification referring to complex manage to add to the unsubstantial by your own intuition? properties, like office buildings, support provided by the International commercial centres, industrial sites Valuation Standards Council (IVSC). It depends on the circumstances. etc. Once more, this reorganization My warm congratulations go to Perhaps a combination of the two. is required by the market, and ANEVAR experts who have elaborated Feedback is valuable. I will always have mainly promoted by TEGoVA those purely Romanian guidelines, it in view, but that does not mean I will (The European Group of Valuers’ which are not copied from anywhere. consider it exclusively. It is important Associations) within which ANEVAR This is a model to follow by Serbia, to find the right path between the is an extremely active member. the Republic of Moldova or Bulgaria objectives you set yourself, what you In another train of thoughts, as well. This is the vision. We have consider it should be done, and the I have set myself the objective to long-term objectives to start from and opinion of the others who join you in enhance communication with the then go backwards towards setting the leadership assignment. fellow members. I want to improve the middle- and short-term ones. We the involvement of the branch offices proceed to allocating resources and How important do you councils, as they are the direct setting responsibilities. We should think the Association image interface with our members. That will complete all that in two years’ time, is to its own members be another line I will be trying to act then submit the Strategy project and as well to the public? along together with the branch offices have it approved in the last National members and councils. Conference of the mandate I will start It is important from both And now, in the end, something I in January 2016. standpoints. If the public fails to trust hold very dear: I would like, together ANEVAR, the result can be extremely with the next Board of Directors to What is the Association painful for the profession. By public be partially elected in December and president’s role, I mean all the categories: from which will join those who are holding in your opinion? authorities to the physical persons their ground, together with the former who take an interest in the valuation presidents and with whoever may ANEVAR staff is a homogenous activity only for a short time. On still take an interest and have a big team whose members perfectly know the other hand, in my opinion, the say, to elaborate a long-term strategy their attributions, are loyal to the image we have of ourselves is equally starting from the topic ”ANEVAR organization and dedicated, never important. The more powerful and in twenty years’ time”. I envisage the thinking of calling it a day unless every beautiful this image is in our minds Association as a regional valuation single day’s task is completed. Relying and hearts, what we will all join in leader. An organization to rightfully on the staff value and already having a developing will undoubtedly benefit take the lead for the associations in the strategy well-rounded, all that is left to the society. If our image of ourselves Balkan area, in the first place, to follow the president is the role of representing were poor, that would be not only in an orderly line. I want ANEVAR the Association. However, we are still sad, but also detrimental. Our to play a more important role at the some way off. Let us first take these innermost feelings should be of pride international scale. I want ANEVAR steps, consolidate the staff part, know and responsibility. Then, it would successful organizational model, with for sure where we want to get and generate a mirror image accordingly, the leadership pattern of taking turns what the objectives are, and then it will namely the one we wish for. – former president, current president be easier and easier to be ANEVAR and elected president – as well as president. I remember how difficult How are you considering other ANEVAR key organizational it was for the presidents of the early contributing to aspects, such as monitoring, the years, and yet Mr Bădescu, as well as its consolidation?
46 VALUE Interview
not to say that those we currently have are not good, but we can freshen up the atmosphere by drawing valuable young people. According to the communicating vessels principle, it is by undertaking valuations that one gains experience, can pass information on, and is better understood. On the other hand, while doing your best to teach others, you develop an organised thinking that otherwise, as a practitioner, you may miss. In other words, it is a win-win situation. Therefore, by teaching, young practitioners will become better valuers. ANEVAR permanently reviews the training materials and has relevant texts in the field translated. The conferences are an excellent means to enhance our members’ professional training standard.
Have you got any message for those who have elected you to represent them throughout the next two years?
I expect an honest communication between ANEVAR members and management structures; involvement in the organization life, participation in the actions the branch offices will organise; and last but not least, raising awareness That document I have told you about, are not paid. It is only those who really of responsibility. Those who are willing intended to guide us in the future, will want to serve ANEVAR, the profession to get involved should inform us, so that leave those to come with nothing more and the members’ interest that should we may know whom to nominate in to do than make certain adjustments aspire to these functions. I want to make the Commissions. Perhaps sometimes, according to the particular conditions it clear from the very beginning that a one does not hold a certain position at that time. We can develop a proactive certain position in a commission or the in a Commission just because they did self-regulation mechanism. For the membership in the Board of Directors not express their availability and did Association to be proactive, let us breathe does not come with extra money. It is not apply for it. Paraphrasing, I will say new life into it, let us make it a living just the opportunity to put one’s hand that once you submitted the valuation being. That will be achieved through to enhance the Association’s image and report, it is just like you have let go the joint support of the staff and of the progress. of a pigeon you were holding in your temporary structures: the presidents (the hand. Submitting a report must set your former, the current and the future one), Have you got any strategy heart at ease. That means it must be all the Board of Directors, the members with a view to developing the valid irrespective of who reads it, of of the Commissions the vice-presidents professional training side? the context in which it is analysed, in in the Board of Directors work with. relation with the valuation standards. The commitment of the Commission I consider everything is going just Communication, commitment and a members should match that of the well from this point of view. However, deeper sense of responsibility. These are members in the Board of Directors. I think we could do with some fresh the key words I pray you all to consider Let us not forget that all these activities blood in the board of lecturers. That is in the future.
VALUE | 2016 47 If There Is No Competence, Might There Be Responsibility?
ome years ago I read an article I still cannot get out of my mind. It went like that: a personal property valuer undertook the assignment of valuing several paintings owned by a certain Scompany, by making use of the costs method. To this end in view, he added the market value of the painting, to the market value of the oils used, to the estimated number of hours (however he may have estimated them) it took to achieve the painting, multiplied by the average salary per hour of a painter (without specifying whether it was a train car painter or Picasso), and guess what it all added up to: well, ŰŰDANA ABABEI, of course, the market value. I was simply horrified. Actually, I still find Vice-President of ANEVAR, President of the Judicial Commission, CEO it difficult to believe that was possible. And yet, for the last two years, with CMF CONSULTING S.A. we have been witness to an unprecedented situation: people who have probably forgotten the basics of the valuation profession have taken does not contain all the information upon themselves to undertake various assignments on one of the required in a complete one, but the most contentious markets: that on which Law 151 / 2014 on clearing inadequacies are minor and have had up the legal status of the shares traded on RASDAQ market or on the no influence on the valuation results and unquoted securities market (1), is applicable. Considering the large on the opinion expressed. The credibility number of complaints received by the Association, and of the warning level is good. signals sounded by the media, ANEVAR decided that all the reports Satisfactory – the valuation report undertaken to this end in view should be collected and reviewed. is incomplete and contains inadequacies that have affected the opinion expressed. Following this demarche, with the activity completion at the The credibility level is at the lowest guess what? deadline foreseen under the law). admissible limit. ŰŰ Reports based on valuation Unsatisfactory – the valuation report ŰŰ Reports aimed at dealing with law reports issued by other valuers, is not complete and contains inadequacies 151/2014 application, yet issued while the actually assigned person that have affected the valuation results. under ignorance of the said law. (having unconditionally agreed to The inadequacies can be removed by That is to say, what does it matter the responsibility of undertaking the report author making the necessary that the report is overtly intended the assignment) took everything completions. The credibility level is below in support of this law application, for granted, without making even the lowest admissible limit and the report while nobody took notice that the a minimum check. must be remade. law requires the estimation of a ŰŰ Mention should be made that the Inacceptable – the valuation report special value of an administrative reports reviewed fall under the contains various inadequacies, and nature? whole range of categories in which therefore it can no longer be remade by ŰŰ Reports based only on the reports may be classified, namely: its author. It is recommended that the information received from the Complete – the valuation report report should be undertaken by another companies’ managing boards contains all the information required valuer. It is ranked with zero credibility (naturally, employed by the in order to substantiate the opinion level. majority shareholders taking expressed, and features a high credibility Of course, I have not chosen to deal particular interest in the estimated level. with the reports classified as “complete”, value, while not at all concerned Acceptable – the valuation report as I find it quite natural that we should all
48 VALUE issue reports to fall under this category. ŰŰ Provide professional services in the Association members. This is our calling, isn’t it? accordance with the applicable In other words, even if one It is the reports ranked as valuation professional standards collaborates with people they rely on “inacceptable” and “unsatisfactory” that compulsory for the Association in issuing the report, the responsibility have drawn my attention. members. lies entirely with the contractor of the What did our fellow valuers having Professional competence supposes assignment, and therefore, it is the issued such reports forget, and what use a judgment by applying professional respective contractor that dissatisfied did they draw on in applying their knowledge and skills in order to provide clients will refer to in the first place. knowledge (or, better said, their lack valuation services and involves: Consequently, the person who contracts of it)? ŰŰ gain adequate professional the assignment, that is the person who They drew on a paragraph in the knowledge; assumes responsibility (I insist on this code of ethics of the authorized valuation ŰŰ maintain the professional aspect, since apparently, many of our profession. It reads as follows: knowledge standard through fellow valuers forget to consider it when “The authorized valuer shall the continuing professional undertaking assignments and setting undertake those valuation assignments development programmes. fees) shall be satisfied with the quality he or she has the required skills and Therefore, issuing a valuation report of subcontracted works, check if they competence for, in compliance with takes more than having obtained the meet the legal conditions and whether the Table of authorized valuers, gained authorization for a specialization the subcontractors have the adequate through specific professional training”. specified by Government Order no. professional standard. No client shall All the reports complained of met this 24/2011; it needs maintaining the agree to exonerate the contracting valuer rule, apart from some small exceptions, standard of professional knowledge. and accuse only the subcontractor. because, irrespective of how much the Let us not forget that our profession Another aspect refers to the obligatory Association strove to collaborate with and is new in the national framework, it character of undertaking assignments for inform the institutions involved on the continuously develops and adapts to the which we lack the required knowledge modality in which the valuation activity is economic environment evolution. It is a and experience. organized and conducted in our country, profession the knowledge of which needs May we, valuers, be obliged to do Law 151/2014 started to be applied by permanent updating, not only through what we do not know how to? having an unauthorized person appointed ANEVAR programmes, but also through Absolutely NOT. Of course, nobody by the National Trade Register Office other programmes and, last but not least, likes turning down an offer and tries to undertake the valuation of one of the through individual study. How can the to find a way to work it out. However, biggest companies quoted at the stock reports we issue comply with the national one should think twice before saying exchange. The respective appointment legislation unless we adjust to its changes “YES, I can do it!” Why? Because the caused a wave of discontent with minor and of European legislation too? It is not consequences of an unsatisfactory report shareholders and ended up having enough we graduated a training course delivered on the market can be beyond somebody else, an authorized valuer, on valuation some ten or fifteen years imagination. Even if we may not like appointed to undertake the assignment. ago unless we permanently update our to include clauses into the report, our What did valuers forget when knowledge. How can clients possibly be responsibility does not lie only within conducting the assignments satisfied with reports issued based on first the range of the fee charged. How much undertaken? versions of methodologies valid fifteen should a fee be for a faulty report? At least They forgot other very important years ago, although these methodologies the amount estimated for the valuer’s paragraphs in the code of ethical have been constantly improved? daily living throughout his or her lifetime principles for professional valuers, I also consider it important to left ahead, because sooner or later he paragraphs dealing with professional mention one more paragraph in the or she will find it difficult to find some competence, namely: area of professional competence, other job to live by, having in view that The principle of professional apparently forgotten by some fellow the valuer authorization is lost when the competence involves the following valuers. I am referring to the following: valuer is subject to a final sentence for liabilities of the authorized valuer: The authorized valuer shall take deliberate crime. Maintain professional knowledge any reasonable measure to make ŰŰ (1) Why do I think it is one of the most contentious mar- and skills at the required standard sure that those undertaking their kets? Because it is only those companies featuring a tense atmosphere between majority - and minority sharehol- so that the employer or the valuation assignments under his or her ders, the companies at bay, or those whose majority sha- clients may receive competent coordination will act in compliance with reholders consider that the minority ones deserve nothing and consequently will go all length to reach their aim, that professional services; the valuation standards compulsory for have been in the situation of applying the respective law.
VALUE | 2016 49 Activity Report of ANEVAR Individual and Corporate Members - 2014
The turnover achieved in 2014 out of the valuation activity undertaken in Romania is of approximately Euro 35 million.
tarting with this magazine issue, information on: the turnover achieved we will publish annually the report throughout 2014, the turnover share of on the valuation activity carried valuation undertakings versus speciali- Sout by ANEVAR members, both natu- zation and valuation purpose, as well as ral persons and legal entities. It includes turnover versus specialization.
A. General statistics countrywide
Indicators Individual members Corporate members Total number of reporting 1.424 327 individual/corporate members Total number of valuation undertakings 42.936 119.104
Turnover (RON) 33.629.188 99.679.473
Turnover (EURO*) 7.642.997 22.654.425
Total Turnover (EURO*) 30.297.422
* 1 Euro = 4,4 lei 50 VALUE B. General statistics versus counties
No. of reporting Number of Share County Individual/Corporate valuation Turnover (RON) Turnover (EURO*) Turnover (%) of works (%) members undertakings INDIVIDUAL MEMEBERS București 176 5.650 13,2 4.479.474 1.018.062 13,3 Constanța 65 2.730 6,4 2.185.677 496.745 6,5 Timiș 63 1.973 4,6 1.889.669 429.470 5,6 Brașov 70 2.621 6,1 1.627.789 369.952 4,8 Cluj 66 2.126 5,0 1.203.240 273.464 3,6 Total 35,3 11.385.849 2.587.693 33,8 CORPORATE MEMBERS București 98 56.420 47,4 56.135.508 12.758.070 56,32 Cluj 13 14.139 11,9 15.321.280 34.82.109 15,37 Constanța 13 3.232 2,7 2.509.617 570.368 2,52 Brașov 11 2.060 1,7 2.438.706 554.251 2,45 Timiș 20 3.188 2,7 2.442.018 555.004 2,45 Total 66,4 78.847.129 17.919.802 79,11 * 1 Euro = 4,4 lei
CifraTurnover de afaceri per countiespe jude %)e (%)
60% 56.32% ț 50%
40%
30%
20% 15.37% 13.30%
10% 6.50% 5.60% 4.80% 2.52% 2.45% 2.45% 3.60% 0% Bucure ti Constan Ti Bra ov Cluj
ș PeIndividualțarsoane members izicemiș FirmeCorporateș members
� VALUE | 2016 51 C. Share of valuation undertakings versus specialization
Share of works (%) Number of valuation undertakings Specialization INDIVIDUAL MEMBERS CORPORATE MEMBERS INDIVIDUAL MEMBERS CORPORATE MEMBERS
EPI 87,82 90,59 37.709 107.901
EI 1,32 1,07 566 1.271
EBM 10,35 7,52 4.403 8.961
EIF 0,60 0,81 259 969
TOTAL 100,00 100,00 42.936 119.104
PondereShare of works lucr versusri pe specializare specialization (%)(%) 100% 87.82% 90.59% ă 90%
80%
70%
60%
50%
40%
30%
20% 10.35% 10% 7.52% 1.32% 1.07% 0.60% 0.81% 0% EPI EI EBM EIF
PeIndividualrsoane members izice FirmeCorporate members
52 VALUE � D. Turnover versus specialization
Turnover (%) Turnover (EURO*) Specialization INDIVIDUAL MEMBERS CORPORATE MEMBERS INDIVIDUAL MEMBERS CORPORATE MEMBERS
EPI 88,11 77,55 6.734.286 17.568.078
EI 2,86 12,20 218.434 2.763.098
EBM 8,70 9,41 664.609 2.130.846
EIF 0,34 0,85 25.669 192.404
TOTAL 100,00 100,00 7.642.997 22.654.425
* 1 Euro = 4,4 lei
CifrTurnover afaceri per pe specialization specializare (%) (%) 100% 88.11% ă 90% 77.55% 80%
70%
60%
50%
40%
30%
20% 12.20% 8.70% 9.41% 10% 0.34% 2.86% 0.85% 0% EPI EI EBM EIF
PersoaneIndividual members izice FirmeCorporate members
� VALUE | 2016 53 E. Share of valuation undertakings versus valuation purpose
Share of works (%) Number of valuation undertakings Valuation purpose INDIVIDUAL MEMBERS CORPORATE MEMBERS INDIVIDUAL MEMBERS CORPORATE MEMBERS
Secured loans 25,98 77,67 11.156 92.513
Fusions, acquisitions, 0,52 0,88 224 1.044 unlisting Expropriation 0,28 0,05 122 60 Financial reporting 30,52 7,94 13.104 9.458 Law courts 5,71 NA 2.450 NA Other purposes 36,98 13,46 15.880 16.026 TOTAL 100,00 100,00 42.936 119.104
PondereShare of works lucr riversus pe scop valuation al evalu purposerii (%)(%) 90% ă ă 80% 77.67%
70%
60%
50%
40% 36.98% 30.52% 30% 25.98%
20% 13.46% 7.94% 10% 5.71% 0.52% 0.88% 0.28% 0.05% NA 0% SecuredGarant. Fuziuni,Mergers Expropriere Rap.Financial inan. InstaLaw AlteOther Expropriation împrum.Loans andach Aquisitions reporting courts purposes � nțe iziții PersoaneIndividual members izice FirmeCorporate members
54 VALUE � F. Turnover versus valuation purpose
Turnover (%) Turnover (EURO*) Valuation purpose INDIVIDUAL MEMBERS CORPORATE MEMBERS INDIVIDUAL MEMBERS CORPORATE MEMBERS
Secured loans 16,16 52,86 1.235.111 11.976.200
Mergers and 0,80 8,07 60.911 1.828.271 Acquisitions, Delisting Expropriation 0,42 0,16 31.886 36.285 Financial reporting 37,49 20,22 2.865.172 4.581.178 Law courts 6,73 NA 514.345 NA Other purposes 38,41 18,68 2.935.572 4.232.490 TOTAL 100,00 100,00 7.642.997 22.654.425 * 1 Euro = 4,4 lei
CifrTurnover afaceri versus pe scopvaluation al evalu purposerii (%) (%) 60% 52.86% ă ă
50%
40% 37.49% 38.41%
30%
20.22% 18.68% 20% 16.16%
8.07% 10% 6.73% NA 0.80% 0.42% 0.16% 0% SecuredGarant. Fuziuni,Mergers Expropriere Rap.Financial inan. InstaLaw AlteOther Expropriation împrum.Loans andachizi Aquisitionsii reporting courts purposes � nțe ț PersoaneIndividual members izice FirmeCorporate members
� VALUE | 2016 55 Determining Taxable Value of Non-Residential Buildings
fter so many years in which stress was laid particularly on market- and income approaches, respectively, here we are, back to our first love, cost approach. The ”more experienced” of us, Ato put it more delicately and not to say we, ”the elderly ones” remember those times when cost approach used to be given priority, and know how important it is to find a trustworthy source to start from.
I started the ”story” of determining the replacement cost, after ANEVAR the replacement cost, leaving the Standards 2015 came in force, in GEV 630 determining of physical deterioration – Real estate property valuation – under ŰŰ ANUŢA STAN, at the end, because, if things are quite paragraph 70 it is specified that this source Vice-President of ANEVAR, MAA, MRICS, well settled for determining physical shall be checked against information REV, President of the Membership Record Commission, Director with Fairvalue Consulting deterioration, it is becoming more and obtained from a second one. more important what we start from, so that, if two valuers estimate the taxable It should be no sooner value of the same building, they should said than done. Yet, reach identical or very similar results. where are we to find Related to cost, let me remind you that these sources? in GEV 500 – Determining the Taxable Value of Buildings - it is specified as We have got the catalogues edited follows: by IROVAL, “Reconstruction costs Ű The valuer must choose between – replacement costs for residential-, Ű ŰŰGHEORGHE BĂDESCU, the two types of replacement industrial-, commercial- and agricultural President of ANEVAR between 1992 cost – the replacement cost or the buildings” (special buildings do not fall and 2001, FRICS, REV, MAA, Founder reconstruction one. under the scope of these valuations, of CMF Consulting S.A. ŰŰ Replacement cost application is having in view that the object is to recommended, and if it is not determine buildings’ taxable value). regardless the source you decide to possible, reconstruction cost shall be Other possible sources available are make use of, you should check the applied, by providing the arguments Matrix Rom catalogues, the “Rapid result obtained against another source. underlying the decision in favor of Building Valuation” collection with the For relatively recent buildings the later one. price level set at 01.01.1965, and, also (after 1990), you will certainly find a Under paragraph 17 it is also specified from Matrix Rom publishing house, the source for determining the replacement as follows: “the input data used for “Technical Guidelines for immediate cost in IROVAL catalogues, or in the estimating the replacement cost must be valuation at the updated day’s price, “Guidelines for immediate valuation at taken over from credible sources which of the costs of building elements and the updated day’s price” from Matrix are to be presented in the valuation report. buildings – in terms of percentage and Rom. We can check this source by Whenever possible, the input data used value”, the latest of which being edited in means of an estimate obtained from a to estimate the replacement cost shall be September 2015. civil engineering company. checked from two different credible data Further possible sources are I say certainly because these catalogues sources before being made use of in the customized estimates. Of course, they contain technical sheets of buildings made report.” should be drawn up by a company in the of materials and using technologies similar Therefore, if until several years back we line of civil engineering or cost estimates. to those used today, too. used a single source in order to determine Practically, it is recommended that, However, if, for a certain property
56 VALUE type you cannot identify a technical sheet to match the building to be valuated, in terms of characteristics – which is very likely to happen with older buildings (completed before 1990), built of materials and with technologies no longer in use today – a reason why you cannot apply the replacement cost and you need the reconstruction one (you may probably start from the Matrix Rom Catalogues with the 1965 prices), then you must take particular care of the update indices for these prices. these works will be considered only immediately carried out in order to bring With these buildings, too, a second provided they lead to an increase in the the building to a level which would allow source can be an estimate made by a building useful life or in the operation for its classification under one of the civil engineering company. The decision capacity. Maintenance works, as well as technical conditions above. regarding the source you will use to base current- and capital repairs will not be A building normal useful life under your opinion on value is up to you. considered, because their effect is dealt the circumstances of having maintenance Logically, after checking against with when determining the building works, current and capital repairs a second source of cost, the differences technical condition. carried out in due time, depends on the between the two results should be small, If there are modernization / environment engendered by the activities otherwise the “check” criterion is no extension works, the effective age is performed inside the building. The longer met. That is why it is preferable to calculated as a weighted average of the environment is classified as follows: work independently with either source component elements of the building. ŰŰ normal environment and analyze the results only at the end. The weighing key is generally the ŰŰ aggressive environment Physical deterioration is a loss of replacement cost at the valuation (characterized by humidity, high value occurring throughout the building date, or the gross building areas if the temperatures, regular corrosiveness) utilization as a result of time lapse as well extension is of the same building type. ŰŰ highly aggressive mixed as of the maintenance works, the current In describing the building technical environment (humidity and high and capital repairs. Physical deterioration condition, the state of the maintenance temperatures, humidity and corrosive also depends on a series of other factors, works and of the current and capital environment, high temperatures namely: building materials used, repairs falls under the following categories: and corrosive environment, highly construction solutions, activities carried ŰŰ Very good – when various corrosive environment). out inside the building. The method of maintenance works and current- and Knowing the building effective age, determining the physical deterioration is capital repairs were carried out in due use, type, technical condition and the the relationship between the effective age time and under proper conditions. environment, physical deterioration is of the structure and its useful life. ŰŰ Good – when various maintenance determined by using the tables in Annex The effective age is the same with works and current repairs were 2 to the Valuation Guidelines GEV 500. actual age if the maintenance works, carried out in due time and under When determining depreciation for ages the current and capital repairs were fairly acceptable conditions, but no ranging outside the scope of the tables, performed in due time, and no activities capital repairs were performed. interpolation will be resorted to. engendering an environment aggressive ŰŰ Satisfactory – when some to the building were carried out inside maintenance works were carried out it. Actual age is that declared by the at the most, while current- and capital owner and available in the building’s repairs were completely neglected. final acceptance certificate, the related In case of accidental physical energy performance certificate, or the depreciations as a result of vandalism, excerpt from the land registry. calamities (earthquakes, catastrophic When, after the building had gone floods, explosions, fires, storms, landslips into use, there were carried out various etc.) and / or serious structure damages, modernization and / or extension works, these depreciations are determined the effective age is reduced. However, through the cost of works to be
VALUE | 2016 57 The Secret of Success: Responsibility
t is over two decades now since ANEVAR, the professional association having successfully charted valuation in IRomania, was set up, and here we are, faced with new challenges I am positive we will manage to rise to, as we have always done. ŰŰADRIAN CRIVII, The discussions from the public space, the bank- or the PhD, FRICS, REV, MAA legal system refer to valuations with an impact on the public CEO with Darian DRS SA budget and call for responses, decisions of the association aimed at enhancing the valuation process transparence, ensuring compliance with the valuation standards in a continuous updating process, and, last but not least, reviewing. The prolonged crisis Romania has been subject to since the latter half of 2008 has not only left deep traces in the real estate industry, but it has also brought about important changes in our ŰŰEvaluation, as a during the period 2004 – 2008 is a thing profession. Ever since its appearance, it has developed under the market economy of the past. To date, the clients’ and the umbrella of the professional and ethic standards in compliance profession valuation target groups’ claims have been with the international ones – thanks to ANEVAR’s relating, as serving both consistently getting higher and higher, early as its setting up, to the experience of the long-standing investors and the with beneficial effects on the profession. tradition professional associations in the developed economies. public interest If we are referring to valuers as to the same Evaluation, as a market economy profession serving both individuals, stress should be laid on extent, has investors and the public interest to the same extent, has been been developing continuous professional training developing in Romania alongside the specific evolution of the in Romania aimed at reaching a higher professional local market economy, successfully rising to the challenges alongside the standard and on adjusting to the all the way through – and they were quite a lot, too. It is by specific evolution new regulations. If we have associate coping with them all that the profession has been increasingly of the local companies in mind, then developing earning the trust of the public institutions and of the public in market economy, quality assurance- and valuation general. The peak of this evolution is the status of valuation as successfully review processes, respectively, should rising to the a regulated profession with an increasingly important role in be emphasized. challenges all society making it imperative for its perfecting and adapting the way through These two parameters, which should to the ever so challenging economic evolution at a fast pace. – and they were be solid pillars of evolution, will not have I think the “lonely wolves” time has long gone, and the non- quite a lot, too. the expected effect without an enhanced stop working system characteristic of the real estate boom transparency of the information made
58 VALUE use of in the valuation reports. The ongoing initiatives ŰŰ ANEVAR, the report can be conducted unless there regarding the data bases are welcome to this effect. It is a well- effort made by is a perfect interlacing between pilot known fact that the accuracy of the information underlying a each and every and vehicle. However, responsibilities valuation report, alongside compliance with standards vouch valuer and by should be reasonably assigned as well. for the valuation report quality. the associate Accidents may be caused either by the ANEVAR, the effort made by each and every valuer and companies, the poor technical condition of the vehicle, place where by the associate companies, the place where experience was or by the pilot’s error or incompetence. experience was put together and the know-how was best transferred and put together Consequently, responsibilities fathomed, as well as standard implementation have been all and the know- and actions go between the quality instrumental to raising professional standard. how was best of the activity framework (the vehicle As far as the ever higher responsibilities to be taken transferred and technical review – ISO system) and the both by individual valuers and by associate companies are fathomed, as valuer’s competence in undertaking concerned, we could epitomize as follows: the companies well as standard the mission (professional training, shall provide the adequate means and an efficient framework implementation which would correspond to the pilot’s have been all for quality assurance, knowledge and data bases, while driving licence category). Errors can instrumental valuers’ input shall be the necessary qualification, motivation to raising be avoided upon the completion of and expertise to undertake the valuation mission. We could professional the mission through a thorough check further sum it up by picturing companies as providing a standard. of the final report, according to the high quality vehicle for the valuer to pilot safely. No quality standards.
VALUE | 2016 59 RBA REQUIRES THAT THE MORTGAGE CREDIT DIRECTIVE, AS CONCEIVED BY ITS ISSUING ENTITY, SHOULD BE FOLLOWED TO THE LETTER
The Romanian Banking Association agreements concluded subsequent submitted to the National Authority to this date, not to the whole bundle for Consumers’ Protection the banking of contracts, considering that the community’s comments and proposals Directive provisions forbid application regarding the bill of law on real estate to the contracts existing prior to 21 property- secured credit agreements for March 2016. consumers, as initiated by the National A further amendment brought Authority for Consumer Protection by the banking community refers to (ANPC). The proposals are aimed at a eliminating from the text of the bill ŰŰFLORIN DĂNESCU, Executive President with the Romanian comprehensive and correct transposing the article stipulating that, when the Banking Association of the compulsory provisions under exchange rate fluctuation is equal Directive no. 17/ 2014 regarding the to or higher than 20%, the lender he Romanian credit agreements for consumers offers the consumer the possibility Banking community relating to residential immovable to reduce costs, namely a cut down property, through which the interests by at least 10% in the cost of the demands that of all parties involved, inclusively of the interest or of the commission. This TEuropean directives, as lenders, should be considered. liability exceeds the provisions under initially conceived, should We consider that restrictive the Directive and, besides, it is rather be transposed into the regulation as ensued from the unclear as far as the modality and the national legislation in stipulations of the bill on the Directive time duration it applies. Setting up implementation regarding those the lender’s liability to reduce costs keeping with the provisions aspects left up to the Member States, whenever the exchange rate features approved by the European should be based on a thorough fluctuations equal to or higher than regulators, and followed to analysis of the impact and on public 20% is excessive. This mechanism the letter. We should make consultations focusing on each such stands for unjustified limitation to aspect, conducted over a reasonable the contractual freedom principle sure that directives are period of time. stipulated through the provisions transposed in compliance The European legislation, through under art. 1169 of the Civil Code with their provisions – we Directive 17/ 2014, is grounded on a and to the lenders’ freedom of are referring particularly to series of clear action principles, the most setting prices in keeping with the Directive 17/ 2014 on credit important of which being related to its market economy principles. Lenders application only to future contracts. We shall adapt to the conditions on the agreements for consumers propose that compliance with article 43 financial market, the fluctuations relating to residential under Directive 17/ 2014 specifying that in the exchange rate resulting from immovable property – in “it does not apply to credit agreements circumstances beyond their control. order to avoid the 2010 dating before 21 March 2016” should The text of the bill stipulating be very clearly expressed. There should that the return or the transfer of the experience regarding be no ambiguity whatsoever to the idea security or of the returns resulted from the implementation of that the law transposing the Directive selling it, back to the lender, is sufficient Directive 48/2008. shall apply exclusively to those credit for the total refund of the loan, also
60 VALUE exceeds the Directive scope. European with the consumer’s actual incomes. non-bank operator whose registered Directive 17/ 2014 stipulates only that Under all circumstances, as office or subsidiary is not based in the Member States do not prevent the stipulated in the bill, the interest rate Romania, as well as the transfer of parties to a credit agreement from to be annually applied to the sum of debts to persons who are not credit explicitly agreeing that the return or money taken from the credit must institutions or non-banking financial transfer to the lender of the security or not exceed 15%. We appreciate that institutions may affect market of the returns resulted from selling is this article is arbitrarily limiting the competitiveness and limit the foreign sufficient for refunding the loan. lender’s freedom of setting up the price operators’ access, which runs contrary We consider it a measure policy, against the rules of a competitive to the spirit of the Directive. discriminating upon those borrowers market. This provision contradicts Law fully carrying out their contract duties According to the financial market no. 93/ 2009 which foresees that and liable to generate abuse from ill- evolution, and particularly of the the transfer of the credit portfolio willed borrowers to the disadvantage refinance interest rates, this limiting falling under the category of loss of honest-minded ones. The fact that could prevent granting loans to does not stand for lending activity. the remaining outstanding debt which consumers, provided the lender It also contradicts articles 35 and 37 could not be covered following the asset couldn’t get financed below the T UEF (Treaty on the Functioning selling is considered extinct according randomly imposed limit. of the European Union) on the free to the law, is equivalent to a lender’s The banking community requires circulation of goods, by restricting non-compensated or ungrounded that the Directive provisions should be acquisition for foreign citizens. expropriation. complied with regarding the exchange The banking community also The current legislation in force rate allowed for the conversion. The proposed the initiator to eliminate already includes terms for asset taking Directive stipulates that a consumer is the provision according to which over on the account of the debt, namely entitled to convert a credit agreement the consumer is entitled to choose art. 2460 in the Civil Code, which in an alternative currency, the whether the valuation is undertaken grants sufficient protection to the exchange rate at which the conversion by an external independent valuer, constituent party. is performed being the market or by a lender’s internal independent This provision transfers to the exchange rate applicable on the day valuer. The valuation activity is lender the liquidity risk the immovable the conversion is actually applied, not practically externalised and is subject property, although the respective the official exchange rate put up by the to the provisions of the National Bank lender is a financial intermediary, not National Bank of Romania, as foreseen of Romania regarding externalised a real estate agency. Such an approach in the bill transposing the Directive. activities. Under these circumstances, runs against prudence regulations Also, the credit conversion- generated additional operational risks may be which restricts the lender’s acquiring costs which are not related to the bank incurred. of the immovable property and can shall be incurred by the client. It should Unreasonably enlarging the endanger the lender’s financial position be also considered that a possible credit European legislation application area under unfavourable circumstances conversion into another currency calls would entail Romania’s worrying lag on the real estate market. This aspect for both addendum of the real estate behind in terms of banking practices as could lead to the practice of very low mortgage contract and re-registering compared to the other European states LTV (loan to value) ratios, so that the the real estate mortgage- type where the authorities strictly comply economic operator may recover the collaterals at the Electronic Archive for with the provisions under the directives sum of money lent at an optimum level, Security Interests in Movable Property approved by the European law, which entails his or her granting loans (AEGRM) according to the new value inclusively in terms of banking system- to lower values. and currency of the loan, which means incurred costs. It would be a threat to We also consider excessive costs which will not go to banks, but the credit institutions’ capacity to grant the provision stipulating that, if it which the client is due to pay to the loans to the population for housing impossible for consumers to admit an notary, the record operator and the purchase, loans acting as drivers of the increase in the interest, the lender has valuer. economic development for that matter. no right to unilaterally terminate or The provisions under the bill of law It could affect the perception on the cancel the contract; instead, the lender forbidding the transfer of the mortgage country risk, the financing cost of the shall propose reconsidering spacing out agreement having residential real estate local private entities, as well as the or refinancing the credit, in keeping as their object, to a financial bank or state’s financing cost as a whole.
VALUE | 2016 61 EVENTS National Conference Braşov, 11th December 2015
ANEVAR National Conference was held in Braşov, on 11th December 2015. On the agenda - the election of the new Board of Directors made up of the following members:
ANEVAR Board of Directors 2016 - 2017
President Daniel MANAŢE First Vice-President Dana ABABEI Former President Adrian VASCU Treasurer Adrian Ioan POPA-BOCHIŞ Vice-President, Chairman of the Professional Qualification and Certification Commission Laurenţiu Adrian STAN Vice-President, Chairwoman of the Scientific and Standards Commission Elena APOSTOLESCU Vice-President, Chairwoman of the Membership Record Commission Delia Voichiţa BRATU Vice-President, Chairwoman of the Verification and Monitoring Commission Ileana GUŢU Vice-President, Chairman of the Domestic and International Relations Commission Laurenţiu Aurelian LAZĂR Vice-President, Chairwoman of the Judicial Commission Cristina GRIGORESCU General Secretary Marian Ilie SIMINICĂ
62 VALUE EVENTS
Adrian Vascu, Daniel Manațe Daniel Manațe
Adrian Vascu
Gheorghe Bădescu. President of Honor of ANEVAR
VALUE | 2016 63 EVENTS ANEVAR Corporate Members’ Annual Meeting
The corporate members’ meeting held in Brasov, on 12 December, included the following topics and activities on its agenda: The role and competences of NOPCML (the National Office for Prevention and Control of Money Laundering) – Mihaela Drăgoi, Director of the Head Office for NOPCML Monitoring and Control A debate on the legal framework in the field of prevention and control of money laundering – Laurenţiu ROBU, Financial Analyst with NOPCML Legal Department Overview of money laundering typologies / schemes – Carmen BABICIU, Financial Analyst with the Head Office for NOPCML Information Analysis and Uptake The impact of the new Fiscal Code provisions on the liberal professions activity – Irina Nistor, Senior Manager PricewaterhouseCoopers ANEVAR Activity Report. Structure of the Records for Buildings Taxable Value data base. Latest news from the Fiscal Code – Adrian VASCU, ANEVAR President 2014-2015 / Senior Partner VERIDIO S.R.L. Valuation activity monitoring. Selection of the companies to be monitored in 2016 – Sorin PETRE, Director Valuation & Strategy PricewaterhouseCoopers Results of the accreditation session. Handing in of the MAA insignia – Adrian VASCU, ANEVAR President 2014-2015/ Senior Partner VERIDIO S.R.L.
64 VALUE EVENTS
Daniel Manațe Adrian Vascu
Irina Nistor Laurențiu Robu
Mihaela DRĂGOI, Carmen BABICIU Radu Dimitriu
Sorin Petre MAA
VALUE | 2016 65 EVENTS
Press Conference: RELEASE OF THE FIRST STATISTICAL ANALYSIS REPORT BASED ON THE REAL ESTATE GUARANTEE DATA BASE (Q3 2015)
n 8th December 2015, a press conference with the representatives of the leading publications in the domain was Oheld at the Association central headquarters. President Adrian Vascu and Prime Vice-President Daniel Manaţe presented the first information from the Statistical Analysis Report of the Real Estate Guarantee data base (BIG) for Q3 2015. Therefore, the real estate collaterals for the secured loans approved during July – September 2015 amount to over 4 billion Euros. The Real Estate Guarantee data base (BIG), managed by the National Association of Romanian Authorized Valuers (ANEVAR) through the agency of the Romanian Institute for Research on Valuation (IROVAL) gathered over 25,000 valuation reports in Q3 2015. The collaterals estimated by valuers in this period amount to 4.116 billion Euros. Most of the real estate valued for the credits issued are residential, namely 18,905 units, accounting for 73.05% of the total number, over 1.2 billion Euros over the 3 up to approximately 633 million followed a long way off by the months under analysis. Euros. The valuated real estate, 2,745 lands accounting for Out of the residential estate housing and lands (4,257 units) 10.61% of their total number. valuated, most were block accounted for 22.5% of the However, the most valuable flats (14,152), accountingoverall total number and 36.77% real estates valuated pertain to for approximately 75% of of the overall value. the commercial area. The 2,283 the overall total number and According to the data in commercial properties valuated approximately 54% of their total BIG, most valuation reports for credit lending amounted to value. Their overall value added were issued for the real estate
66 VALUE EVENTS
in Bucharest (2,278 reports), followed by those for the real estate in Cluj (1,652 reports), in Constanta (1,561 reports), Timis (1,185 reports) and Brasov (1,011 reports). As far as the capital city is concerned, the most active district in terms of real estate crediting was, over the period under analysis, District 3, namely with 1,021 reports. It is also Bucharest that ranks first in the top of the most expensive estates per square meter, followed by Cluj, Timisoara, Constanta, Iasi, Brasov, Craiova, Ploiesti, Sibiu and Tulcea. At the opposite end, the cheapest block flats are to be found in Giurgiu, where the average market value per square meter amounts to 459 Euros. In Bucharest, the most expensive estates are to be found in District 1, with average values per square meter amounting to 1,226 Euros for block flats, and to 1,107 Euros for houses with land. The cheapest district for the Bucharest inhabitants willing to live in houses is apparently District 6, where the average value per square meter amounts to 822 Euros, while for those who prefer block flats, District 5, with an average square meter of 871 Euros. “We already have the first real estate indices extracted from the BIG data base, monthly for the time being, namely for August vs July and for September vs August”, ANEVAR President Adrian Vascu stated. “The values did not feature big variations during this period – however, is a rather short period to be considered very relevant. It will be interesting when we can make comparisons between terms and then years, and we are going to periodically publish ANEVAR real estate index, as we are gradually getting the data.
VALUE | 2016 67 EVENTS
Club Business Magazin BUILDINGS TAXABLE VALUE AGAINST THE BACKGROUND OF THE NEW FISCAL CODE
ANEVAR joined as an was held in the following the Official Journal right official partner of Clubcontext: Law no 227/2015 on 3rd November, date at Business Magazin on the regarding the Fiscal Code which the discussions of topic “Buildings taxation and was published in the Official the participants in Club the new Fiscal Code” on 3rd Journal on 10th September Business Magazin were in November. The event venue 2015, the application norms full swing. Last but not least, was the Intercontinental Hotel. are under work at the fiscal the guidelines dedicated to The debate organized authority, and Government setting the building taxable by ANEVAR and Business Emergency Order OUG value (as published in Magazin on building taxation, 50/2015 amending certain ANEVAR Valuation Standards as regulated in the new provisions from the initial – the 2014 edition and re- Fiscal Code which comes in version of the new Fiscal published in the 2015 edition force as of 1st January 2016 Code was published in under the name GEV 500, to
Daniel Manațe
Adrian Vascu
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Ramona Jurubiță
Mihaela Mitroi, Ruxandra Grinzeanu
be applied as soon as the new Taxation, KPMG Romania and President Daniel Manaţe. Fiscal Code comes in force) Mihaela Mitroi – Partner, Leader The discussions were aimed are underway to be amended of Fiscal and Legal Consultancy mainly to inform all those with completions also Services, PwC Romania and involved in applying the new including the 4 annexes to South-Eastern Europe; one regulations, as well as to come be considered in determining tax payers representative: up with certain solutions to buildings’ taxable value. Ruxandra Grinzeanu – CEO with clear up the still outstanding The event was attended Sky Tower Building, Raiffeisen situations and submit them by: two fiscal advisersProperty International; and, on to the authorities in charge representatives: Ramona behalf of ANEVAR, by President of elaborating the new Fiscal Jurubiţă – Partner, Head of Adrian Vascu and Prime Vice- Code norms.
VALUE | 2016 69 EVENTS
“VALUATION OF REAL ESTATE PROPERTY IN AGRICULTURE, FORESTRY AND FOOD INDUSTRY“
th Craiova – 24 October Among the topics dealt with: On 24th October, the Nati- • Land valuation and GEV 500; onal Association of Authorized • Frequent errors with land valuation; Romanian Valuers organized • Land valuation through the market extraction method; the fifth edition of the Conferen- • Qualitative analysis. Land valuation through the relative comparison method; ce on “Valuation of real estate property in agriculture, forestry • Land valuation through the land- plotting and –development method. Practical aspects and application principles; and food industry”. The event • Case Study on agricultural land valuation; was focused on the valuation of all types of land. The venue was • Agricultural market in Romania; the University of Craiova. • Vine plantations valuation in the Republic of Moldova.
Revetchi VEACESLAV Andrei BOTIȘ
Cristian DEMETRESCU Adrian VASCU, Anuța STAN Adrian VASCU Adrian NICOLESCU
Eugen DUMITRESCU Laurențiu STAN Radu TIMBUȘ
The speakers to this event: • Adrian VASCU – ANEVAR President / Senior Partner VERIDIO S.R.L. • Radu TIMBUŞ – ANEVAR Vice-President / CEO with EUROEVAL S.R.L. • Cristian DEMETRESCU – CEO with ROMNIVAL S.R.L. • Laurentiu STAN – Senior Executive with FAIRVALUE CONSULTING S.R.L. • Adrian NICOLESCU – ANEVAR Free lance Valuer • Eugen DUMITRESCU – Manager with DARIAN DRS S.A. • Andrei BOTIŞ – Founding Partner NAI Romania • Revetchi VEACESLAV – Associate Actimob Consulting SRL – Republic of Moldova
70 VALUE EVENTS ANEVAR National Conference March 20, 2015
Nicolae CINTEZĂ Georgeta PETRE Lenuța MARTINIUC Cornel FLOREA
Speranța MUNTEANU Emilian RADU Vasile IUGA Gheorghe BĂDESCU
Gabriel RADU Florin DĂNESCU Florentina ŞUŞNEA Virgil PUTICIU
VALUE | 2016 71 EVENTS Conference “Valuation for Secured Loans”
ANEVAR organised on Wednesday, 9th September, the Conference “Valuation for Secured Loans”. The event took place at the Intercontinental Hotel in Bucharest and was structured on two sessions, having as topics of interest: Valuation Review and the data base of Real Estate
Adrian Vascu Guarantee. The speakers were:
• M. Lance COYLE – President of APPRAISAL INSTITUTE
• J. Scott ROBINSON – President elect of APPRAISAL INSTITUTE
• Adrian VASCU – ANEVAR President / Senior Partner VERIDIO S.R.L.
• Dana Ababei – ANEVAR Vice- President / CEO with CMF CONSULTING S.A.
• Cristina GRIGORESCU – Member of ANEVAR-BIG Working Group / Manager of Collaterals Dept. – Risk Division of RAIFFEISEN BANK
• Irina BENE – IROVAL Researcher
• Laurențiu STAN – Member of ANEVAR BIG Working Group / CEO with FAIRVALUE CONSULTING S.R.L. Cristina Grigorescu
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Dana Ababei Daniel Manațe, M. Lance Coyle
Irina Bene J. Scott Robinson
Laurențiu Stan M. Lance Coyle
Nino Beraia, Gheorghe Bădescu, M. Lance Coyle Adrian Vascu, President of ANEVAR
VALUE | 2016 73 EVENTS
VALUER’S DAY 9th September 2015
On 9th September, in the evening, Mr Gheorghe Bădescu, ANEVAR Founding President, was awarded for his whole activity dedicated to the cause of the birth and development of the valuation profession in Romania.
The trophee presented to the Association Founding President, Gheorghe Bădescu, by ANEVAR current President Adrian Vascu Special edition of “VALUE” – Personalities” review - Issue no. 1
Daniel Manațe, J. Scott Robinson, M. Lance Coyle, Adrian Vascu
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Anniversary booklet – ANEVAR, 9th September 2015
Ioan Gyuri Pascu and Gheorghe Bădescu Elena Apostolescu, Gheorghe Bădescu
J. Scott Robinson, M. Lance Coyle, Elena Apostolescu Dana Ababei, Lasha Lezhava Nino Beraia
M. Lance Coyle, Adrian Vascu, J. Scott Robinson Adrian Vascu, Dana Ababei, Radu Dimitriu
VALUE | 2016 75 EVENTS Conference “HOT TOPICS IN VALUATION”
The European Group of Valuers’ Associations (TEGoVA) joined ANEVAR in organising its first Congress on 9 July 2015 in Bucharest. The event on Hot Topics in Valuation dealt with issues of particular importance with a major impact on the European real estate valuation markets in the bank sector and in the field of specific regulations, such as Asset Quality Review, Secured mortgage loan value, Sustainable buildings valuation and Valuation Adrian Vascu review.
The speakers to the event:
ŰŰ Krzysztof Grzesik – Chairman of TEGoVA Board ŰŰ Silvia Cappelli – TEGoVA Board member ŰŰ Michael MacBrien – Adviser with TEGoVA ŰŰ Jim Amorin – Vice-President of the Appraisal Institute ŰŰ Jörg Quentin - Managing Director Akos Fischl with Deutsche Plandbriefbank AG ŰŰ Akos Fischl – Chairman of the Valuation Committee for European Mortgage Federation ŰŰ Miguel Angel Lopez – Senior Inspector – Bank of Spain.
The conference was held in English (with simultaneous translation into Romanian) at the Intercontinental Hotel in Bucharest. The Congress was broadcast live and can be watched by accessing the link: www.privesc. eu/Arhiva/62336/First-TEGoVA-Congress.
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Jim Amorin Jörg Quentin
Krzysztof Grzesik Michael MacBrien
Miguel Angel Lopez Silvia Cappelli
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Conference “STATISTICS IN REAL ESTATE VALUATION” Timişoara, 13th June 2015, Boavista Hotel
Adrian Vascu, President of ANEVAR, Senior Partner Veridio
Anca Fodor, Senior Manager Dorel Niță – Project Manager, Daniel Manațe, ANEVAR Prime-Vice-President, presented Veridio www.AnalizeImobiliare.ro the book ”On Valuation and Valuation Review” by Adrian Vascu
Anamaria Ciobanu, ANEVAR Vice-President, Professor PhD at the Academy of Economics, Bucharest
Andrei Botiș, Vice-President ROGBC, Laurențiu Stan, CEO with FairValue Consulting, Founding Partner NAI Romania Sorin Udrea – Supplier with Flexmls Europe Member of ANEVAR BIG working group
Irina Bene, IROVAL Researcher
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One of the longest tradition conferences organised by ANEVAR and hosted by the Bucharest Academy Conference “Valuation for the Capital of Economic Studies, had the following agenda: Relevance of transactions on own shares in business Market in Romania” – The Academy valuation – Gheorghe BĂDESCU, ANEVAR President 1992-2001, FRICS, REV / CMF Consulting S.A.; th Analysis of the factors with an impact on cash flow of Economics, 4 June 2015 forecast – Anamaria CIOBANU, ANEVAR Vice-President, Professor PhD at the Bucharest Academy of Economic Studies; Rasdaq valuation and closing down – Adrian VASCU, ANEVAR President / Senior Partner VERIDIO SRL; Uncertainty in valuation – Ion ANGHEL, ANEVAR President 2006-2007, Professor PhD at the Bucharest Academy of Economic Studies, Director of Economic – Financial Analysis and Valuation Dept.; Consistency and correlations in applying business valuation methods – Sorin PETRE, ANEVAR Vice-President, Director - Valuation & Strategy Pricewaterhouse-Coopers; Valuation of non-performant companies and valuation results reconciling – CristianVeleanu, Manager of the Valuation and Financial Modelling Dept, Ernst & Young and Horiana Istodor, Senior Manager, Manager of the Valuation and Financial Modelling Dept., Ernst & Young. The conference also provided the framework for the release of the book “On Valuation and Valuation Review” by Adrian Vascu, edited by Hamanglu Publishing House in collaboration with Iroval.
Adrian Vascu Anamaria Ciobanu Gheorghe Bădescu
Ion Anghel Sorin Petre Cristian Vețeanu
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Adrian Vascu
The conference “Topics to Day in Valuation” was held in Murighiol on 16 May 2015. The event ended with a tour of the Danube Delta.
Gheorghe Bădescu
Dalina Bădescu Dana Ababei
Sorin Petre Adrian Nicolescu
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Filip Stoica Pavel Șușară
VALUE | 2016 81 EVENTS 2015 UNITER Award Gala
ANEVAR President Adrian Vascu presented Mr Doru Mares with the award for Drama Critique
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UNITER President Ion Caramitru was the host of the 23rd edition of Uniter Awards Gala, just like he has been every year so far. The nomination jury was made up of drama critics Monica Andronescu, Mircea Morariu and Maria Zărnescu, and the gala jury that decided on the winners was made up of scenographer Ştefania Cenean, literary critic and commenter Dan. C. Mihăilescu, actress Valeria Seciu, drama critic Oana Stoica and director Alexa Visarion. ANEVAR played an important part alongside UNITER partners, as it was the first year in which the Association supported award winners and handed in an award. The Association representative, Adrian Vascu, accompanied by actress Andreea Bibiri on stage, Adrian Vascu, Andreea Bibiri handed in Mr Doru Mareş the award for Drama Critique.
ANEVAR Team
Ion Caramitru
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