Edition 2020 Ninth edition

(see EVGN 2 for a larger discussion of measuring Fair Value for IFRS)
5.1. 
IFRS 13, Fair Value Measurement refers to the asset to be valued as the "unit of account" 
which might be a portfolio of properties. It provides that:
"The objective of a fair value measurement is to estimate the price at which an orderly 
transaction to sell the asset or to transfer the liability would take place between market 
participants at the measurement date under current market conditions. A fair value 
measurement requires an entity to determine all of the following 
(IFRS 13:B2)
:
•
The particular asset or liability that is the subject of the measurement (consistently 
with its unit of account);

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European Valuation Standards 2020
I.B. - EVGN 1: Portfolio Valuation
109
•
For a non-financial asset, the valuation premise that is appropriate for the measure-
ment (consistently with its highest and best use);
•
The principal (or most advantageous) market for the asset or liability;
•
The valuation technique(s) appropriate for the measurement, considering the availa-
bility of data with which to develop inputs that represent the assumptions that market 
participants would use when pricing the asset or liability and the level of the fair value 
hierarchy within which the inputs are categorised."
5.2. 
IFRS 13 requires that the unit of account be established before determining the fair 
value. It is to be defined as the level at which an asset or a liability is aggregated or dis-
aggregated in an IFRS for recognition purposes.
5.3. 
The "portfolio exception" allowed by IFRS 13.48 appears to apply directly only to finan-
cial instruments within IAS 39 where defined financial assets and financial liabilities 
are managed together with offsetting market risks or counterparty credit risks as a 
portfolio and then only for qualifying entities. On those terms, this exception does not 
appear relevant to property.
5.4. 
However, the guidance to consider the most advantageous market for the asset and 
the reference to "its highest and best use" (as defined by IFRS for this purpose) points to 
the opportunity to value a portfolio of properties for this purpose on a portfolio basis, 
at least where that produces a higher value than a component valuation. In practice, it 
is likely that relevant factors will include:
•
The nature of the properties in question;
•
The business or other policy purpose for which the client holds them.
5.5. 
With the issues involved, the basis for reporting should be discussed with the client and, 
if possible, the client's accountant so that an informed instruction is given to the valuer.
5.6. 
Where the portfoloio is the valuation unit (rather than its components) successive val-
uations must be consistent with that unless the client instructs otherwise. If this basis 
is changed, that must be reported.
5.7. 
With the varying approaches of IAS 16 (owner occupied property), IAS 17 (leases), IAS 40 
(investments) and IAS 41 (agriculture), a view may also have to be taken that a portfolio 
includes a mixture of any of owner-occupied property, investment property, property 
held on lease and agricultural property. Leases pose the additional question of whether 
they are, for IFRS purposes, finance or operational leases.

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European Valuation Standards 2020
I.B. - EVGN 2: Fair Value for Financial Reporting
111