Knight Frank Real Estate Valuations in Financial Reporting

Real Estate Valuations
in Financial Reporting
REAL ESTATE ASSETS AFFECTING YOUR
FINANCIAL STATEMENTS
In the current dynamic business environment, there has been an
increased need for recording transactions and assets in the financial
statements in the most transparent and informative manner for all
stakeholders, usually under the International Financial Reporting
Standards.
Tangible assets, more specifically real estate is no different and Knight
Frank’s Valuation team has been increasingly involved with its clients in
the Kingdom assisting them with Transaction Related Valuation under
the guide of IFRS 3 - Business Combinations and IFRS-13 Fair Value
Measurement and impairment testing exercises (IAS 36 – Impairment of
Assets).
We have seen an interest from
some listed companies running the
exercise of Fair Value measurement
from year end 2021, assessing the
potential implications of adopting
such on their financial statements.
We, at Knight Frank, have a proven
track record of providing reliable
valuation advice to our clients,
which is essential while considering
a decision this critical.
STEPHEN FLANAGAN
PARTNER -
HEAD OF VALUATION & ADVISORY, MENA
WHERE WE CAN BE OF ASSISTANCE TO YOU
FINANCIAL
REPORTING
INITIAL PUBLIC
OFFERING
LOAN SECURITY
VALUATION
SLB TRANSACTION
MERGERS &
ACQUISITIONS
INSURANCE

RECENT CHANGES BY CMA ON REAL ESTATE VALUATION
At the beginning of the calendar year, the CMA allowed listed companies to opt for the Fair Value model
under IFRS13 to measure property and investment property, while continuing to adopt the cost model
to measure plant, equipment and intangible assets.
IFRS 13 defines fair value, sets out a framework for measuring fair value, and requires disclosures about fair
value measurements.
The definition of Fair Value under IFRS13 is “the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date”.
The CMA has however specified six conditions which must be fulfilled for companies to adopt the Fair Value
measurement for property and investment property.
WHY ADOPT FAIR VALUE MEASUREMENT?
Income Reflection, Relevance and Accuracy
The fundamentals behind the Fair Value measurement are that “an entity uses the assumptions that market
participants would use when pricing the asset or the liability under current market conditions, including
assumptions about risk.” (IFRS). This makes accounting information more relevant to the actual market as of
the measurement date and provide an accurate valuation.
VALUATION SUPPORT ASSET CLASSES
Commercial
Properties
Specialised
Properties
Other
Tangible
Assets
Offices
Retail
Industrial
Mixed Use
Hospitality
Healthcare
Education
Data Centres
Plant
Machinery
Equipment
SPECIALIST TEAMS TO SUPPORT YOU
Stephen Flanagan MRICS
Partner - Head of Valuation & Advisory, MENA
Stephen.Flanagan@me.knightfrank.com
M +971 50 813 3402
Daniel Pugh MRICS
Partner ‐ Head of Hospitality Valuation & Advisory
Daniel.Pugh@me.knightfrank.com
M +971 50 945 2635
Talal Raqaban MRICS
Partner - Valuation & Advisory, KSA
Talal.Raqaban@me.knightfrank.com
M +966 56 816 6826
Shehzad Jamal
Partner StratCon –Healthcare | Education | Real Estate
Shehzad.Jamal@me.knightfrank.com
M +971 56 410 1298
Ibrahim Alrashed
Manager, Valuation & Advisory
Ibrahim.Alrashed@me.knightfrank.com
M +966 55 252 5810
Dr. Gireesh Kumar
Associate Partner- Healthcare Advisory
Gireesh.Kumar@me.knightfrank.com
M +971 56 484 5490