Danijela Ilic, president of National Association of Valuers of Serbia - I hope our real estate market will soon become competitive with European one
In its last quarterly publication - the June issue, CRE, one of the most prestigious international organizations, published an interview with Danijela Ilic, president of the National Association of Valuers of Serbia.
Ms. Ilic was interviewed by Paul G. Johnson, a member of the CRE Managing Board. The Counselor of Real Estate (CRE) is an organization established in 1953. This subsidiary of the National Association of Realtors (NAR) gathers around 1,000 members from all around the world.
Johnson: Danijela, the evolution of your Serbian counseling background is remarkable. Professionally, you`ve made the transition from a successful, highly trained civil engineer to a CRE. Personally, you`ve instituted international valuation standards for your country and led it to become a member of emerging valuation organizations, including collaboration with the Appraisal Institute. How did you get interested in real estate in the first place?
Ilic: Historically, my family was in construction and my father was a civil engineer in Belgrade. I graduated with a civil engineering degree and then followed up with a post-graduate program at Villanova in the United States. When I returned to Serbia, our country was going through political and economic change, especially the first round of privatization in the 1990s, and the second round of privatization in the 2000s. These privatizations of state-owned real estate created a need and market for modern valuation methods and education. At that time, the only approach to value was depreciated replacement cost, but many properties being privatized were businesses that included real estate, personal property and perhaps, business value. Most transactions were as-is, with no transparency or documentation, and many sales were to a strategic partner. Many transactions were treated as liquidation value.
Johnson: How did the state address the sale of state-owned real estate?
Ilic: It would typically include a team, each member with a specific role (i.e., engineering, budgeting, legal, strategic)—a very inefficient, time-consuming and political process.
Johnson: How has that changed?
Ilic: Since 2000, and even more recently, decision-makers have recognized the value of a multi-disciplinary counselor who can define the problem and address multiple disciplines in a more constructive, efficient, cost-effective and actionable solution or solutions.
Johnson: Can you give me an example of a typical consulting assignment?
Ilic: Right now I am working on an assignment involving the conversion of a former military property controlled by the Minister of Defense, located in a rural Serbian community. The local government would like to convert the property into a master plan but the friction is between the Minister of Defense`s assessment of highest and best use, land value, economics, planning, etc., versus the local government`s ability to convert the property to local civic uses.
Johnson: That certainly does require not only a multi-disciplinary approach, but psychology and perseverance as well. How does highest and best use differ in Serbia?
Ilic: In Serbia, highest and best use is strictly "right of use," not of ownership. For example, one may own a property but not have the right of use; so, valuation and consulting as to the right of use and highest and best use becomes very complex.
Johnson: What led you to champion valuation standards?
Ilic: Well, assignments like the one I spoke of led me to research how others address standards and practices. So I founded the National Association of Valuers of Serbia, which is now self-sustaining. We have online courses for valuation based largely on traditional approaches and analysis, and our courses have been online and exported to Bosnia and Montenegro.
Johnson: How do Serbian valuation standards compare with for example RICS`s Red Book and the United States` USPAP?
Ilic: They are very similar, however there are European standards that are regional and must be recognized involving such issues as highest and best use (i.e., legal versus market). In addition, in Serbia we have no universal databases so our valuations may not be as reliable.
Johnson: I sense you have been extremely modest. Considering the very recent privatization in Serbia, the virtual lack of transparent and accurate valuation methods, and the lack of data and databases, your efforts to elevate the profession, organize standards at the national level, integrate those standards with European standards, all while your country is still experiencing economic uncertainty, stabilization and comparatively low credit ratings is a fantastic credit to you. What are your goals for the future?
Ilic: We are a small country, we are not growing as many other countries are, and we are still going through many changes in our laws, court systems and international banking ratings. It is my hope that through increased valuation and consulting professionalism, transparency, and the electronic automation of data, our real estate markets will become stabilized and competitive with our European neighbors.
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