The changing playbook - What RICS’ Red Book revisions mean for CRE valuations

The RICS Red Book, more officially the RICS Valuation - Global Standards (Red Book), is widely seen as the authoritative professional standards guide for property valuation. RICS has recently released an updated version of the Red Book, aimed at bringing this critical standard into line with some of the recent industry developments we’ve seen, including addressing emerging technologies and evolving ESG compliance needs, as well as some shifts to valuation modeling and risk assessment in line with industry trends.

With this in mind, we reached out to our global team of valuation advisory experts Timothy Comer, Robby Tandjung, Rajinder Singh, and Nicolas Le Goff for their insight on these changes and what they mean for our clients. Here’s what they had to say.

The RICS Red Book 2025 updates

In particular, the latest RICS Red Book updates and changes center on:

• Valuation modeling

• Risk assessment

• ESG data

• How AI and new technology intersect with valuations

These updates better reflect the latest version of the International Valuation Standards (IVS), and incorporate key shifts from the RICS Valuation Review. With the changes to both ESG and technology standards, these updates will help future-proof valuation practices across the industry and assist valuers in offering the very best in both service and transparent reporting. Additionally, these regular updates help keep the public trust and confidence in RICS-registered valuers.

A general observation on the RICS updates

As a globally regulated RICS member, we see these updates as mandatory and best-practice guidance, ensuring the property valuation landscape remains consistent, transparent, reliable, and compliant with regulations.

Timothy Comer, our Director of Valuation Advisory, with additional insight from our other experts, offered this general overview of the impact of the RICS updates to set the scene.

Across the Uniform Standards of Professional Appraisal Practice (USPAP), IVS, and RICS standards, we’ve noted a trend towards more consistent valuation standards applicable across jurisdictional boundaries. This, of course, helps enable better internal controls over compliance with multiple valuation standards, something that often affects clients with global portfolios, or scenarios where multi-jurisdictional statutory, regulatory, or other authoritative requirements are involved.

However, it can be a double-edged sword. With the removal of cross-references to the national supplements, there is a risk of valuers mistakenly omitting their mandatory local requirements for full compliance. This may impact attempts to standardize valuation processes and reporting formats, needing them implemented equally across all national regions for multi-national valuation firms, which can create compliance risk.

With these general insights in mind, let’s take a closer look at the key RICS Red Book changes.

Digging deeper into the RICS Red Book changes

Most of our valuation experts agreed that the revised Red Book is a positive step towards industry modernization, and better consideration for rising modern concerns within valuations. Rajinder Singh, Senior Director of Valuation Advisory in Asia-Pacific put it well:

“They are timely and relevant in future-proofing the valuation practice through updates relating to technology and ESG.”

However, our experts also noted that these updates aren’t really a disruptive force in the industry. None of the new changes should significantly deviate from the best practices of prior versions—just clarify and elaborate on existing standards.

Valuation modeling and risk assessment

Although a new standalone section, this consolidates and expands previous guidance and does not present a significant operational change or impact from a compliance perspective.

However, it is a key development that comparable information can now include KPIs, metrics, and benchmarking data from service providers as long as it is subject to professional judgment, similar to AI’s treatment under the changes. This increases consistency and better aligns reporting standards.

As Timothy Comer observed, “The edits to both RICS and IVS provide better alignment with USPAP.”

ESG data

Rajinder Singh summed the ESG-related changes up as follows:

“This is a game changer in embracing ESG considerations, which are now critical determinants of risk and return. For the first time, the standards incorporate mandatory ESG considerations, requiring valuers to record relevant ESG data and assess its potential impact on property values.”

While most of our experts agreed that the shift to valuers reflecting markets, rather than leading them, is a positive, Robby Tandjung, Executive Vice President, Valuation Advisory, notes that asking property appraisers to determine and appropriately gauge ESG factors will be very difficult, introducing new scopes of time and work. Any ESG requirements should also involve the fund managers and owners, as appraisers should reflect/consider their underwriting in the valuation.

In particular, there’s the fact that “significant” ESG factors must now be identified, with an impact on value quantified. Determining that an ESG factor is not significant and does not impact value is problematic and likely wrought with lack of market support. It is a fair expectation that the overall quality of certain non-environmental ESG factors such as location, mobility, and connectivity could and should be captured within a valuation. However, without much-mandated prescription, there could be too much room for interpretation in some areas, as Nicolas Le Goff, Director of Valuation Advisory in Europe, notes.

Data management standards

Regarding the changes to data management standards, Rajinder Singh points out that, “As the number of data sources used to produce valuations increases, the updated Red Book sets additional requirements to ensure transparency in its use, confidentiality, and data rights protection.”

While many of the shifts here simply clarify and, on occasion, enforce existing best practice presumptions in the industry, it’s noteworthy that many of these best practices have shifted to mandatory reporting requirements. Globally, many valuers (including Altus Group’s valuers) already follow these guidelines in practice.

AI, new technologies, and valuation

Robby Tandjung summarizes these shifts as follows: “It appears that the new commentary is permissible of new technologies as long as there is oversight, understanding, and governance around the data and process.” These are particularly welcome edits, as Timothy Comer observes, helping to better distinguish and clarify valuation and consulting services, as well as the applicable standards and scope of work.

The integration of big data analytics, AI-powered predictive modeling, and automation has revolutionized the way finance professionals approach the valuation process. However, AI is, of course, a technology that is very much in its nascent growth phase. This is an important first step, clarifying that a model or process assisted or produced by AI is only regarded as a written valuation if it has been subject to the additional application of professional judgment by a valuer.

This helps to ensure human insight and control—despite AI’s many boons, this is still a necessary precaution in safeguarding ethical practices. Nicolas Le Goff explains why adeptly: “The general public deserves to better understand how their data is being used.”

How will these changes impact the accuracy and transparency of valuation reports?

As any good standards overhaul should, these changes address many rising concerns within the valuation industry. The updated guidelines outline mandatory practices and guidance for conducting valuations, ensuring consistency, transparency, and regulatory compliance across global markets. RICS considers the revisions a key step in modernizing the profession’s standards to address emerging challenges and technologies.

However, Robby Tandjung raises a key concern: “Technology is ineffective without access to good and reliable data. Strong data can aid valuers in their analyses, but it's crucial to carefully track and identify the sources of information. Ultimately, accuracy depends significantly on the valuers' ability to understand, review, and verify the information.”

In general, however, more technology use (and standards for it) also means a wider focus on using these new options ethically and responsibly, making these changes an overall positive.

The latest RICS Red Book updates continue to emphasize consistency, transparency, and regulatory compliance, while encouraging the responsible use of technological tools to help valuers stay current and uphold strong industry ethics.

If you’re ready to explore how enhanced compliance and new technology can assist your valuations process, need help navigating these changes, or if you have any further thoughts on the RICS Red Book changes and their implications for the valuations industry, please reach out.

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