Property valuations based on comparable evidence are a “faulty process”, according to legendary US property entrepreneur Samuel Zell. He told the IDRC conference that the US market had reduced its reliance on appraisals, and predicted that the same attitude would soon spread to Europe.
Zell, whose Equity Group Investments controls institutional funds of $2.5bn invested in US property, said: “So many mistakes have been made because some idiot agreed to pay $10 per sq ft and so everyone else was forced to pay $10 per sq ft. Investment decisions should not be based on “what somebody else might do”.
Dr Peter Linnemann of the Wharton School of Business in Pennsylvania, added that “Europe is still an appraisal-driven world; appraisals don’t drive things in the US anymore.”
