Studying Surveying and Real Estate in Finland and in some other European

countries

National Taipei University

Professor Kauko Viitanen

Department of Surveying, Inst. of RE Studies

Helsinki University of Technology (TKK)

11th May 2007

Some personal data of Kauko Viitanen (1955)

• Professor of Real Estate Economics and Valuation, Ph.D.• Dean of the Department of Surveying, Helsinki University of Technology (2000-)• Member of the Board of the Helsinki University of Technology (2003-)• Head of the Institute of Real Estate Studies, Department of Surveying, TKK (1998-)

• Chairman of the Finnish Association for Real Estate Valuation (1999-2007, Member of the Board 1994-)• Chairman of the Property Valuation Board of the Central Chamber of Commerce (2004-)• Chairman of the Commission 9, Valuation and Management of Real Estate, the International Federation of

Surveyors (FIG); (2006-2010)

• Legal Adviser in the Cadastral Mapping and Land Registration Pilot Project in Cambodia, FM-International ltd FINNMAP (2 months, 1997)

• Professor, Helsinki University of Technology, Department of Surveying (1998-) • Associate Professor of Land Management, TKK (1992-1998) • Department Manager, Huoneistomarkkinointi Oy, Department of Market Research and Information (1989-

1991) • Property Valuer, Huoneistomarkkinointi Oy, Department of Property Valuation (1989)• Researcher/special researcher, Technical Research Centre of Finland VTT, Laboratory of Urban Planning and

Building Design (1986-1988)• Legal Gadastral Surveyor, The National Land Survey of Finland (NLS) (1978-79, 1980-86)

Helsinki University of Technology (TKK) in a Nutshell

• www: http://www.tkk.fi/English/• Founded in 1849, received university status in 1908 • Twelve faculties, one Surveying• Nine separate institutes • 19 degree programmes, one Real Estate Economics• 250 professors• 15 000 under- and postgraduate students • 1000 Masters´ degrees awarded and 150 doctorates

Finland’s location in Europe

Finland

Area 338,000 sq.kmPopulation 5,3 millionHelsinki Area 1 million

Language Finnish

(Source: CIA)

Department of Surveying, TKK

Degree ProgrammeReal Estate Economics

Institute of Real Estate Studies

3 Professors

Institute of Law

1 Professor

Degree ProgrammeGeomatics

Institute of Photogrammetry

andRemote Sensing

1 Professor

Laboratory of Geoinformation and Positioning Technology 3 Professors

About 550 Undergraduate StudentsAbout 140 PhD Students

Annually about 40 master’s degrees (medium 6,5 years) and 3 doctor’s degrees (5 in 2006)

Land Surveyor at the end of 1700

• First Surveyor in 1633

•The education was based on a system of apprenticeship until middle of 1800 when it moved

to the technical schools as in the Central Europe

• University level education at HUT 1908

• Until 1972 the examination almost same for all surveyors

• Since 1972 the students have had many possibilities to take their own majors and minors,

i.e. to specialise

• In 1993 the Degree Programme (MSc) of Surveying was divided into two options: Property

Economics and Law; Surveying and Mapping Technology

• In 2000 the Degree Programme (MSc) of Surveying was divided into two Degree

Programmes

• In 2005 Degree Programmes were restructured into two-cycle programmes: BSc and MSc

Introduction• The aim of presentation is to give an

overview of how and why the real estate programme at TKK have been developed dramatically during past decades

• The presentation also gives ideas of how the surveyor education should be developed in order to survive in the changing environment

History of real estate education at TKK

1633

The first surveyor

1908

Helsinki University

of Technology

1971

Curriculum reform

1993

Two official study

options

2000

Two degree programmes

2005

Bologna process

Discussion, Conlusions

• The study object in real estate studies at TKK has changed and broadened a lot during the last decades

• Also the technical field has developed from field measurements and mapping to satellite analysis, GPS, navigation and GIS-modelling etc.

• It was clear that one surveying programme could not anymore handle all these areas

-> The unified surveying programme was divided into two independent degree programme

DEGREE PROGRAM OPTION MAJOR

GEOMATICS (MSc)

REAL ESTATE ECONOMICS (MSc)

Intake 40

Intake 50

Geoinformatics

Surveying and Mapping Technology

Land Management and Law

Real Estate Management

Positioning and Navigation

15.8.2001 (ST d:/myfiles/koulutusohjelma1.vers 2 3)

RE Economics and Valuation

RE Economics and Valuation

Imaging Tecnology

Remote Sensing

Cartograpy

Photogrammetry

Geodesy

Land Management

Economic and Real Estate Law

Real Estate Management

Environmental Law

Building Materials Technology

Economic and Real Estate Law

Information Science

Geoinformation Tecnology

Environmental Law

Construction Economics Intake 15 into Civil Engineering

Gained Benefits and Challenges

• Benefits of curriculum development– Number of applicants has increased– Real Estate education is known and respected– More funding to the research activities

• Problems– Small department amongs the big ones– Industry attracts too much students– Fulltime PhD students are hard to find– Research projects grow continuously, a small entity cannot

get on alone -> networking

Discussion, Conlusions

• The programmes are still run in the same department with some joint studies

• Geomatics teach students of Real Estate Economics to gather information of the environment and to handle and analyse it.

• This is important in order to survive in the more and more ICT-based world

Discussion, Conlusions• The division has strengthened the real estate education

dramatically • The education is now popular among students,

appreciated in the industry and stronger also in research• The old know-how has successfully been directed into

the new subject area in real estate economics• Until now the main concern has been on the

reformation of the national operations and strengthening of the bases

• Now it is time to strengthen the international cooperation and thereby international research

Current Degree Programmes

• Bachelor in Real Estate Economics• Bachelor in Geomatics

• Master in Real Estate Economics• Master in Geomatics

----------• Licentiate of Technology (lower doctoral degree)• Doctor of Technology or Doctor of Philosophy

Programme

studies

YO 20 cr

Level 2 moduleA2 20 cr

Level 1 moduleB1 20 cr

Bachelor’s Thesisand seminarK 8 + 2 = 10 cr

Elective studiesV1 10 cr

Level 1 module

A1 20 crGeneral studiesP 80 cr

Level 3 moduleA3 20 cr

Level 2 moduleB2 20 cr

SpecialmoduleC 20 cr

Elective

studiesV2 20 cr

Master’s ThesisD 30 cr

Meth

odological

princip

les10 cr

MASTER’S DEGREE PROGRAMME,

BASIC MODEL

Bachelor of Bachelor of TechnologyTechnology

Master of technologyMaster of technology

Bachelor’s Degree Programme in Real Estate Economics180 cr

General Studies80 cr

ProgramStudies

20 cr

Level 1 Modulein Real Estate

Economics A1 20 cr

Level 1 ModuleB1

20 cr

Level 2 Modulein Real EstateManagement

A2 20 cr

Level 2 Modulein Land Management

and LawA2 20 cr

Bachelor’s Thesis and SeminarK 10 cr

Elective StudiesV 10 cr

Degree Programme in Real Estate EconomicsMaster of Science (Technology) 120 cr

Level 2 Modulein Real EstateManagement

A2 20 cr

Level 2 Module in Land

Managementand LawA2 20 cr

Level 3 Modulein Real EstateManagement

A3 20 cr

Level 3 Modulein Economic

Law A3 20 cr

Level 3 Modulein Land

Management A3 20 cr

Bachelor Master of Science (Technology)

Special Module inReal EstateManagement C 20 cr

Special Module inReal Estate Investment C 20 cr

Special Module in Real Estate Economics and Valuation C 20 cr

Special Module inEconomic Law C 20 cr

Special Module inEnvironmental Law C 20 cr

Special Module inLand Management C 20 cr

Methodological principles

10 crLevel 2 ModuleB2

20 cr

Elective Studies20 cr

Master’s Thesis30 crLevel 1 Module

B1 20 cr

Exam structure for M.Sc. in Real Estate Investment &

Finance• TKK & Hanken (Swedish School of Economics and Business

Administration) offer jointly

• M.Sc. of 120 cr. (2 years)

Thesis + seminars40 cr. (30 + 10)

Core courses40 cr. (20 + 20)

Special courses20 cr.

Electibles20 cr.

Bachelor’s Thesis and Seminar 10 cr

Optional Studies 10 cr

Basic module in Geomatics A1

20 cr

DEGREE PROGRAMME IN GEOMATICSDEGREE PROGRAMME IN GEOMATICS

Basic module B1 20 cr

-RE Economics

- Information Technol.

- Imaging Technology

Advanced module in Geoinformatics A2 20 cr

BASIC MODULE ADVANCED MODULE

Basic Studies

80 cr

Bachelor in Technology

Advanced module in geodesy and photogrammetry A2 20 cr

Joint studies in the degree program

20 cr

Degree Programme in Geomatics - Master of Science (Technology) 120 cr

MASTER’S MODULE SPECIAL MODULE MASTER’S THESIS

Geodesy A3 [20 cr]

Photogrammetry and remote sensing A3 [20 cr]

Geoinformatics A3 [20 cr]

B2 [20 cr], e.g.

- RE Economics

- Information techn.

- Imaging technology

ADVANCED MODULE

Geodesy C [20 cr]

Positioning and navigation C [20 cr]

Fotogrammetry C [20 cr]

Remote sensing C [20 cr]

Cartografy C [20 cr]

Geoinformatics C [20 cr]

Master’s Thesis D [30 cr]

Optional Studies V2 [20 cr]

Scientific methodology [10cr]

The Graduate School for Real Estate, Construction and Planning KIRSU

• KIRSU incorporates knowledge of the real estate, construction and planning fields, e.g. in the areas of facilities management, real estate economics, construction economics, heating, ventilation and air-conditioning engineering, applied information technology, finance and the national economy, land management, land use planning, housing, and water management.

• Joint School with TKK, Tampere University of Technology, Hanken Business School, Turku Business School, Oulu University of Technology

• KIRSU is lead from the Institute of Real Estate Studies, chairman prof. Kari I. Leväinen.

Surveyors in Finland / employer

0

100

200

300

400

500

1950 1960 1970 1980 1990 2000 2010

NLS Other governmental Municipalities Private

Institute of Real Estate Studies

REAL ESTATE STUDIES

Cadastral surveying/Land Management• maintenance of the land registration and

cadastral system

Real estate economicsand valuation

• understanding the operating mechanisms

of the real estate market

Real estate management

• organazing the management of

real estate

LAW

Law on real estate and environment Economic law

Broadening the Study Object of Real Estate Studies

1700 Rural Real Estates

1950 Urban Real Estates

1980 Housing and Property Companies

1990 Real Estate Investment Companies

2000 (Real Estate) Stock Market

2004 Real Estate Vehicles

LAND REGISTER SYSTEM

MORTGAGE

PREMISES

ENTERPRISE

REGISTRATION TO A TITLE

REAL ESTATE(IN THE CADASTRE)

PARCEL OF LAND

LEASED LAND

PERSON

BUILDING

APARTMENT

POPULATION REGISTER SYSTEM

directed at

directed at directed at

situated

situated

situated

situated

situated

lives

owns

owns

acts

owns

directed at

directedat

ENVIRONMENTAL DATA

USERS

(OTHER)INVESTMENT MARKET

$FINANCING MARKET

YEN EUR

INVESTMENT STRATEGIES

REAL ESTATE MANAGEMENT

Purchase - Occupancy - Conveyance

External environmentInternal environment

REAL ESTATE MARKET

2:13

Growth of pension capital in the EU area (INREV)

0

2000

4000

6000

8000

10000

12000

2000 2005 2010 2015 2020

billion €

There are plenty of capitals seeking for return, so competition may also be keen, and, on the other hand, e.g. a substantial fund may easily allocate a (risk) investment into a small market, which the (minor) actors in the said market cannot respond to

Future of Research at the Institute of Real Estate Studies

• In last years the research activity has increased a lot. The percentage of outside finance is about 50 % of total finance (HUT 45%, Dept. Surveying 35%)

• Our aim is to further activate the research funding. This requires bigger projects and active collaboration with other universities and research institutes.

• The number of projects with own finance have to be reduced

• Besides finance the supply of good researcher may be problematic

Surveying and Real Estate in the other European Countries

• Sweden– Royal Institute of Technology (KTH)

• Norway– Agricultural University of Norway (in Ås)– The Norwegian University of Science and

Technology (NTNU)

• Denmark– Aalborg University

Surveying in the other European Countries

• The Netherlands– TU Delft

• Germany

• United Kingdom

Surveying in the other European Countries

• Austria– TU Vienna

• Switzerland– ETH

• Spain

• Greece

Surveying in the other European Countries

• Baltic Countries

• Poland

• Slovakia

• Hungary

• Slovenia

VALUATION IN FINLANDProfessionEducationLiability

Prof. Kauko Viitanen, PhDTaipei 11.5.2007

Statutory requirements

• No act on real estate valuation, excepting– compulsory purchase

• a task of civil servants, i.e. surveyors

– real estate funds (Ltd.) • shall use an external and independent valuer

• controlled by the Financial Inspection

• no real estate funds at the moment

– mortgage banks

Valuation for mortgage banks

• Mortgage banks– new act, 2000– shall use external and independent real estate

valuers for the biggest properties credited– proposed to use authorised real estate valuers– controlled by the Financial Inspection– about 3 mortgage banks at the moment– seems not yet used external valuations

Valuation for financial statements

• EU requirement for international accounting standards (IFRS/IAS) increases the need for valuation

• Still unsure what will be the impact for external valuers but it seems that the number of external valuations is increasing

Commercial valuation

• Real estate valuation is in most cases a free occupation in Finland, i.e. can be practised without a licence

• The valuation activities are regulated by the same general provisions as the rest of business activity

• There are no specific professional requirements for commercial real estate valuers, except for certain particular situations (RE funds and mortgage banks).

Valuers in Finland• About 50 full time valuers for commercial properties in the

biggest towns

• In the housing sector the valuations mainly by real estate agents, some 2000 to 3000 persons– About 50 of them are authorised valuers

– Most of valuations are “free of charge” in connection with the housing transaction

• When giving credit for housing purchases the banks quite seldom have valuations done, but rely on their own expertise.

Organisations of real estate valuation

• There are three organisations acting in the real estate valuation sector in Finland: – The Finnish Association for Real Estate Valuation

(SKAY) – The Property Valuation Board in the Central Chamber

of Commerce – Authorized Real Estate Valuers (AKA)

• The organisations are working in a rather close co-operation

The Finnish Association for Real Estate Valuation (SKAY)

• Established in 1978

• The purpose to develop the general conditions for qualified valuation based on proper valuation methods, and promote the general knowledge of real estate valuation

• Non-profit organisation

• Member in The Finnish Scientific Association

The Finnish Association for Real Estate Valuation (SKAY)

• Member in TEGoVA 1995 - 2001– Before 1995 and from 2001 observer in the TEGoVA ; will

resigned 2006

• Observer in the International Valuation Standards Committee (IVSC)

• Participating in the Baltic Sea Area Valuation Conferences

• About 170 individual and 10 collective members

The Property Valuation Board in the Central Chamber of Commerce

• Taking care of the authorisation of valuers since 2004

• IVS Code of Conduct has been adopted for authorised valuers

Authorisations of real estate valuers

• Authorisation may be applied for in three different branches and generally: – housing (50 valuers), – commercial properties (20), – agricultural and forest properties (25),– general i.e. covering all valuation areas (65).

• Together about 160 authorised valuers• Annually they make about 3,500 valuations i.e. 22/valuer in

average• The IVS is a requirement in the authorisation examination for

general and commercial property authorisation

The Association for Authorized Real Estate Valuers

• Advancing the professional skills, promoting the familiarity, professional esteem, and supervision of interest of the authorised real estate valuers.

• Collective member in the Finnish Association for Real Estate Valuation (SKAY) and about 2/3 of the members are also individually members in the SKAY.

General (all property types) Agriculture and forest Commercial Housing

UUSIMAA372

13 21

Locality of authorised valuers

Education on Real Estate Valuation• Given at the Department of Surveying, Helsinki

University of Technology (TKK) • M.Sc. can in practice be taken in real estate valuation• Traditional value based education has been moved

towards real estate finance and international aspects• Autumn 2006 we started an English master’s

programme in Real Estate Investment and Finance jointly with the Hanken Business School

Insurances in Finland

• EVS claim professional indemnity insurance for the valuer (S 2.05 p. 13)

• In Finland such claims are not customary

• Big valuation companies have insurance, but the smaller companies and private valuers probably have not

• Insurance is not mandatory but recommended for authorised valuers

Insurances in Finland - Problems

• Nobody actually seems to know what the insurance should cover, who to compensate and what for.

• Proper insurance may not even be available.

• There are no actual legal proceedings against valuers for their liability, except for a few occasional cases.

• Since there are no specific acts relating to valuation, the compensation for potential valuation damages will rest on general legislation, such as the Securities Market Act, Penal Code, and the Act of Damages (Torts). (Kasso 2000)

Insurances in Finland - Problems

• According to the Act of Damages (Torts) one might become liable for an intentional or negligent damage to the contracting party.

• In practice the liability is often limited in the contract, as in the consulting contracts.

• When estimating the liability for damage one would likely consider the general principles and ethics of valuation, which The Finnish Association for Real Estate Valuation and The Property Valuation Board have their own rules of. The international standards might be a pointer, too.

An example of a one-family house valuation in Finland in 1991

• The value of the house was € 0.6 million according to the valuation commissioned by a bank.

• The valuation came to the owner’s notice. The owner sold his house in 1993 for FIM 0.27 million and claimed the valuer for compensation, as he had held the transaction over due to false valuation.

• The owner estimated the correct value at around FIM 0.34 million in 1991 and therefore claimed some FIM 0.25 million for the loss of the purchase price and interest.

An example of a one-family house valuation in Finland in 1991

• The Lower Court in 1994: – the valuer had been under contract to the owner, – the valuation had been unrealistic and – the damage was in causal connection. – The valuer was condemned to the compensation

of FIM 0.13 million plus interest.

An example of a one-family house valuation in Finland in 1991

• The Court of Appeal in 1996: – there neither was a contractual relationship nor

particularly cogent reasons, – the market was unforeseen, and – the damage was caused by the owner’s actions– The claim was disallowed

• The Supreme Court of Finland did not try the case in 1997.

Thank you!

kauko.viitanen@tkk.fiAbout Real Estate in Finland see

http://www.tkk.fi/Yksikot/Kiinteisto/julkaisut/verkkojulkaisut/julkaisuB107.pdf