Competitiveness in the real estate industry has meant, in recent decades, the need for change and alignment with best practices derived from other, more efficient industries. In particular, at the request of professional investors, those in manufacturing and advanced tertiary services.
The diffusion of all-round professional standards is felt today in the real estate sector as a necessity, especially among operators who are more attentive to change, innovation, and ultimately to offering their clients an ever-better service.
What professional standards in the real estate sector?
The real estate sector, like other industries, today needs three broad categories of standards:
- Industry-specific standards, which regulate every direct and indirect activity that falls within the specific real estate industry;
- Standards of conduct, which regulate the activities of individual professionals and the companies and associations in which professionals are grouped;
- The qualification standards, which regulate and provide guidance on training, the accreditation process and the monitoring of the activities of individual professionals and groups.
The sector-specific standards
The real estate industry is a productive sector that has undergone enormous changes over the last century. In the last thirty years in particular, it has seen an acceleration in innovation, the impetus for which has come mainly from institutional investors who have demanded ever greater quality and transparency at every stage of the production process.
In fact, the specific standards in the real estate sector range from the softer phases identifiable at the beginning of the process (mainly those of valuation and design, in all its components) to the hard ones of construction, including safety measures in the working environment, up to the management of the built environment and, finally, decommissioning.
Standards of conduct
The standards of conduct directly involve all professionals, and the groups in which they come together, including companies and associations.
Standards of conduct, in principle, regulate the activities of professionals but are set up to ultimately assure the client of the same, about the alignment of interests between the two parties.
Standards of conduct in fact comprise not only real rules of conduct, but also a series of rules and standards aimed at preventing, within organizations, all situations and circumstances that could potentially reduce the quality level of the service offered to the client: prevention of conflicts of interest, prevention of possible relations with persons involved in illegal activities, rules of conduct for individuals within their own work context and in relation to their clients, suppliers and colleagues, always with a view to providing the highest level of quality of service.
The guarantee of quality, trust and integrity to one’s clients and, in general, to all stakeholders in the sector, passes through the certification of professionals and their compliance with professional standards.
Qualification standards are primarily of direct interest to professionals and the groups in which they meet: the issuance of a certification is the most widespread method, and can take place either through an academic path, or by taking an examination, or by recognition of the relevance of one’s previous professional activity. Certifications, issued by institutes of recognised authority such as universities, public and non-public research bodies, or professional associations, can guarantee the level of quality of a professional in a multitude of areas and for all phases of the real estate production cycle, from design, valuation, consulting, to construction and management.
RICS (Royal Institute of Chartered Surveyors) standards
RICS, which stands for Royal Institute of Chartered Surveyors, is the largest globally recognised professional body operating in the property, construction, infrastructure and land industry today.
Today RICS, which has over 134,000,000 professionals and trainees worldwide, promotes innovation and continuous improvement in the construction and management of the built and natural environments through the issuance of its global standards, with the aim of handing down a better planet to future generations.
RICS Valuation Standards
Of the best-known standards issued by RICS, the valuation standards – RICS Valuation – Professional Standards (the so-called ‘Red Book’) – are the most familiar to practitioners and institutions.
These standards, which complement the International Valuation Standards (IVS) issued by the International Valuation Standards Council (IVSC), contain mandatory rules, best practice guidelines and related commentary for all members carrying out property and asset valuations.
The RICS valuation standard is regularly updated, translated and issued in 25 different languages and countries around the world. It is divided into three main areas: professional, technical and valuation performance standards, and valuation enforcement standards.
RICS measurement standards
Finally, another interesting professional standard issued by RICS regulates and regulates property measurements, both in the definitions to be used (Gross External Area, Gross Internal Area, Net Internal Area), and in the various possible levels of aggregation and subdivision of the surface areas, thus measured, for each building use.
The diffusion of a globally accepted measurement standard arose, again at the urging of institutional investors, in order to homogenize reference data (i.e. commercial surfaces) as a parameter for comparing several investments and for the economic evaluation of a real estate investment. Increasingly widespread and recognised, both by real estate operators and by national institutions and regulatory authorities, these standards struggle, on the other hand, to establish themselves in more traditional and less transparent real estate markets, where professionalism and the expectation of quality on the part of clients and, in general, of all stakeholders are less widespread.