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Since 2013, alternative investment funds (AIF), which include both open-ended and closed-end real estate funds, have been regulated by the German government under the German Investment Act (KAGB). With the introduction of this new regulation, the previously applicable Investment Act has become considerably stricter. The regulations relating to property appraisal are particularly noteworthy with regard to the choice of appraisal methods, the inspection of the properties, and the selection of appraisers.
Section 168 (1) KAGB stipulates that the value of open-ended public investment assets must be determined on the basis of the individual market values of the assets that it is comprised of using the respective statutory or standard market procedures. To ensure a proper, transparent, and independent appraisal, the capital management company must prepare an internal appraisal guideline (§ 169 KAGB). The assets must be valued impartially and with due expertise, care, and diligence. Since a proper appraisal cannot be ensured without a comprehensive property inspection, § 231 KAGB for purchase appraisals and § 239 for standard appraisals stipulate that the inspections must be carried out in person by the appraiser(s) (the number of appraisers depends on the volume of value). The essential criteria for the selection of a suitable appraiser are stipulated in § 216 KAGB. The appraiser must be subject to a legally recognized, mandatory professional registration or legal and administrative regulations or rules of professional conduct, and must provide sufficient professional guarantees to be able to perform the appraisal effectively. Furthermore, the assessment shall not be delegated to a third party.
The appraisal of high-quality, investment-ready real estate is one of our core competencies. For over 25 years, we have been assisting institutional investors as purchase appraisers and standard appraisers, and are also very familiar with the typical processes and requirements necessary to perform efficient appraisals. An up-to-date list of our clients can be found here (link to references). You would like more information on a possible cooperation? We would be happy to provide you with more information about our company and the relevant BaFin documents.