“Philippine Appraisal Industry and its Potentials” PART 1

The author provides a short, historical tour of the Philippine appraisal industry and then proceeds to enumerate the various issues affecting it today. An estimate for the industry’s market size is also given, paving the way for a more systematic discussion in future installments.


Appraisal is a form of advisory service, a process that generates an opinion of market value of an asset for legal, auditing, and investment planning purposes. In the Philippines, an appraiser is usually a real estate appraiser although there are also licensed appraiser for machines and equipment and some appraisal firms have business valuers.

allied-ipreaThe Philippine Appraisal Industry formally began in 1961 with training and designation of the first appraiser designation. IPREA’s IPA. This was followed closely by DTI’s licensure program later in Indonesia and Singapore. Filipinos were the regional pioneers in the field of appraisal. The 1980s saw a period of consolidation with the industry basically becoming a duopoly. The two largest firms began offering expanded services and contributed to Philippine financial deepening by expanding service coverage. This period of aggregation continued well into the late 1990s until the 1997 Asian Financial Crisis.

During late 90s crisis, appraisal professional fees plummeted and the duopoly could not maintain service revenues. There was intense pressure to streamline and increase efficiencies. Appraisal firms downsized staffing including licensed appraisers. This process of disaggregation continued in succeeding years and the number of appraisal firms ballooned, manned by former employees of the duopoly. The competition led to vicious price wars, which further decreased revenues.

Over the course of the first decade of the 21st century, new and old companies continuously competed with each other and-many say-cutthroat priced services below “maintaining levels” – the level of revenues new appraisers can be trained competently within independent appraisal firms.

And also while appraisal fees are at historical lows, the supply of new and competent appraisers has been stifled. To be sure, new appraisers in private banks that have the budgets continue to be trained. However, these appraisers are not independent, third party appraisers as they are attached to lending institutions that have specific interests to protect.


Meanwhile, recent strong economic growth is fuelling a round of aggregation, this time led by multinational brokerage or multi-service firms, which were not financially-constrained by the late 90s crisis. These multinational agencies have the resources to maintain their own appraisal departments that are now rivalling or even exceeding the largest independent appraisers in revenues and employment. And while there are issues regarding the impartiality of appraisers connected with brokerages, the concern by serviced industries does not seem as extreme compared to valuations by auditors.

Another contemporary development is the enactment of the RESA Law, which imposed new limits on which parties are authorized to appraise in the country and under what conditions. Banks and auditing firms, for example, are no longer allowed to appraise assets, particularly very valuable properties.  All appraisers are required to belong to one professional organization. Prospective appraisers in 2015 will need to have taken up specialized courses as a prerequisite to take licensure examinations.

The scrapping of an apprenticeship period of five years before a candidate can take the appraisal licensure exam was one aspect of RESA that was met with deep consternation. To be sure, many provisions of the RESA Law and its implementation have courted protests and serious concerns that, due to the background of this author, are better taken up in another forum.

With the growth of the Philippine economy and the enkindled interest of foreign investors, there has been a marked increase in demand for valuation services. This had led to a correspondingly higher demand for competent, licensed appraisers. On the corporate level, further competition and aggregation may lead to a possible return to natural monopoly (of duopoly), a situation similar to the late 1970s.

Also due to improved economic conditions, foreign appraisers have been observed practicing in the Philippines without licenses and there have been complaints filed against them regarding faulty appraisal reports in the PRC. Legal or not, this trend will only continue with the impending economic integration of ASEAN countries in 2015 (or 1016 is delayed).

Yet another development in the new century is the increased in demand for appraisal of other asset types. The Philippines is rich with unmonetized innovation and new technologies developed by local scientists, engineers and entrepreneurs. These intangible assets need to be converted into equity via valuation. As a result, foreign and local investors are requiring ever more business valuation services.

Finally, another new development is the adoption of the International Valuation Standards, or IVS, by an increasing number of practitioners that began in 2005. It should have been noted, however, that there are many Philippine appraisers who only profess to follow the IVS (or any one of the other international standards that are not as widely-used) but whose reports are anything but international standards.

Obviously, there are many problems in the industry today and these will have to be tackled by all the concerned stakeholders.

What is evident is that Philippine economic growth will require more appraisal services and that a far higher calibre of appraisers needed for the industry to push forward and thrive.


At present, the market is fuelled by the constant demand for appraisal and valuation requirements. Demand comes from the SEC, PSE and other institutions that require international accounting standards with practices of good governance. Additionally, more and more government departments and private companies now require independent appraisal reports for taxation, bidding, feasibility studies, research, privatization, audit accounting, leasing, utilities, power rate adjustments and PPP’s as well as legal engagements. Tourism, real estate and industrial industries are also promising sectors to be look upon due to Philippine competitive advantage such as a lower wages compared to China.

Another factor to expect is the REITs which would be complimentary to the appraisal and valuation industry. PSE requires REIT’s valuations to be done once a year by external appraisal firms. Growth and potential to the appraisal pie may lead to three to five-fold growth increases as fees for these jobs will be based upon a percentage of the REIT entity being appraised. Each REIT can be capitalized with at least a value of 300 million worth of income generating assets; the appraisal fee would be 3%-1% (or 3 to 9 million per REIT  valued). However, most Philippine appraisal/valuation firms currently have their hands full with small accounts and big ticket accounts are normally handled only by appraisal firms that have means to cater to them. Sadly, less than 10% of these firms only know about this opportunity and are getting ready to participate (most of these firms are the large, international property consultants previously mentioned).


Financial statements data of duly registered appraisal corporation were collected from the SEC to estimate market size of the Philippine independent appraisal industry based on sales. The absolute numbers were withheld pending verification from individual companies. What is depicted is market share per firm.

The appraisal/valuation industry revenue pie in 2011 is about P 350 million and is sub-divided into these firms (see graph below). In the early 2000’s, the total service revenue was at P200 million and Cuervo Appraisers Inc., had 25% of about P 50 million in revenues. The industry was then monopolized by 4 large firms. The industry was mostly limited to appraisal and valuation services of real estate and industrial property valuations.

It is evident that industry competition is tough but it is also open to opportunities as well. The revolutionin this industry is diversifying to broader services. And these emerging services enable providers to stand out from the rest.

Phil. Corporate Appraisers

Financial Statement as of 2010 to 2011


Appraisal/valuation industry is a type of business that is un-reliant to the economy unlike other businesses. The services is needed amid growth and economic decline which makes it very sustainable. RESA Law requires that appraisal/valuation services should only be serviced by external firms, this makes the revenue pie bigger. Due to evolution in the industry, intangible asset appraisals under business valuations are another potentially profitable market to look forward to. Normally, auditing firms offer this but the industry has been over lapping services with each other. Under the PSE requirements also, appraisal/valuation of REIT’s will be strictly for external firms. Lastly, one of the companies we are looking into E-value is an example of an appraisal/valuation company that has reached about 6 ASEAN countries for appraisal services. This just means international growth is something to look forward to. The industrial sectors growth impact affects us greatly since it is the most profitable sector as of the moment.


  • The IPREA Journal
  • Real Estate Appraiser, Mr. Miguel Alvaro Camus
  • Prof. Roque Sorioso
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