A call by Dutch financial regulators for more transparency in relation to the valuation of commercial real estate in the Netherlands is counterproductive, a leading industry professional has warned.
'I hate to say it but the fact the regulators have called for more transparency indicates a lack of real estate expertise at the Dutch central bank (DNB) and the financial markets regulator AFM,' Marco Hekman, managing director of CBRE Netherlands, told Dutch financial daily Het Financieele Dagblad.
His comments came at the start of Provada, the largest real estate trade fair in the Netherlands.
Hekman was reacting to warnings from both regulatory agencies that there are significant differences between official valuations reports, index findings and comments from market parties on the extent of writedowns for office, retail and distribution properties in the Netherlands since the onset of the financial crisis.
Various trade associations are now setting up databases, which due to the different objectives are not always complete, Hekman said. ‘And, market players will be reluctant to provide information when it is obligatory - they will do the bare minimal. We should not play ‘panic football’ because the Dutch market is more transparent than people think.’
The regulators have expressed concern about the variation in office devaluations registered by different indices. The IPD/ROZ index - considered by many to be the leading index for the Dutch market - suggests values have fallen 16% since the start of the crisis. CBRE’s own country index, in contrast, shows a devaluation of 40% for offices over the same period.
Hekman said the difference was large but could be explained by the fact the IPD index only covers the upper end of the office market, while CBRE looks at the entire office segment, from prime to almost obsolete assets.
The CBRE boss added that the lack of investment transactions in the Dutch market complicated the valuations process.