notes and issues

Opportunities for Growth: The Appraisal Institute

and International Real Estate Markets
by Brian A. Glanville, MAI, and William E. Endsley

Abstract
The rapid changes of the last decade, in both real estate markets and the global economy, have created
an interconnected world where barriers of time and geography have fallen away. Real estate’s growing
place in investment portfolios demands that any professional dealing with real property be prepared to
play on this new field. International activities offer the Appraisal Institute a strong potential for growth.
Such activities also offer Appraisal Institute members the opportunity to learn firsthand how to do busi-
ness abroad and reap the financial benefit of providing services for multinational clients.
Building on its history of leadership in developing and disseminating real estate valuation theory,
the Appraisal Institute is in a position to see that this theory is transferred in practical ways around the
world. The organization’s core competencies are in high demand by the international community. By
taking the lead to ensure the systematic development of markets around the world, the organization can
realize growth in both membership and business opportunities for all members.

A Look at the Flat New World
Foreign investment in the U.S. real estate sector in
2004 was $37.9 billion. For example, from May 2004
to 2005, international buyers of residential real es-
tate in Florida came from more than one hundred
countries and accounted for fifteen percent of total
home sales.1 As a result of the continuing rise in the
price of oil, nearly 3,000 families in the Persian Gulf
region have over $8 billion in private capital to in-
vest; currently a large percentage of that investment
is in the United States. The markets in China and
India are continuing to grow and those economies
will exert greater and greater influence on global
real estate markets.
In the last several years, real estate has found a
growing place in investment portfolios because re-
turns on such investments have been higher than
on stocks and bonds. Real estate is attracting more
dollars because transactions are simpler to under-
stand, and there are fewer economic surprises in
real estate markets. As more and more dollars flow
into real estate, analysis is becoming more sophis-
ticated. Professional practice standards are being
developed, as are data tools that allow return fore-
casts to be more accurate. Much of this growth in
capital can be traced to aging populations in the
United States and Western Europe and the result-
ing growth in pension funds. A renewed desire for
diversification into real estate by institutional in-
vestors is also a factor. The real estate securitization
process using real estate investment trusts and com-
mercial mortgage-backed securities also contrib-
utes to this flow.
Consolidation in the banking and financial ser-
vices industry is also an important factor. Deutsche
Bank acquired Bankers Trust in 1999 and has op-
erations in seventy-four countries. ABN-AMRO has
branches in sixty countries including LaSalle Bank

1. National Association of Realtors Research Division, “Foreign Investment in U.S. Real Estate: Current Trends and Historical Perspective,” http://www.realtor.org/
Research.nsf/Pages/ForInvestSurvey?OpenDocument.

The Appraisal Journal, Summer 2006 285

 notes and issues
in the United States. Prudential Financial offers ser-
vices in sixteen countries. Real estate service pro-
viders have followed the trend, and now Cushman
& Wakefield has offices in over thirty countries and
CB Richard Ellis in over fifty countries. This global
expansion is also bringing about convergence in
professional standards, led by the International Valu-
ation Standards Committee and expanded coopera-
tive efforts by professional associations such as the
Appraisal Institute.
As the leading organization for real estate ap-
praisers in the United States, the Appraisal Institute
is in a position to see that valuation expertise and
skills that have helped U.S. real estate markets be-
come the envy of the world are transferred to the
global market over the next decade. “The world is
moving toward globalization and there is nothing
we can do to stop it,” noted Luis Vallejo, MAI, SRA,
and chairman of the Appraisal Institute’s Interna-
tional Relations Committee when asked about the
importance of understanding global markets. “I am
concerned about the opportunity costs for the orga-
nization that go up every day we wait to take action.”
In his book The World is Flat, Thomas Friedman
addresses the last decade of tremendous change
and the consequences of not responding to this
global opportunity.
To put it another way, the experience of the high-tech
companies in the last few decades who failed to navi-
gate the rapid changes brought about in their mar-
ketplaces by these types of forces may be a warning
to all the businesses, institutions, and nations-states
that are now facing these inevitable, even predictable,
changes but lack the leadership, flexibility, and imagi-
nation to adapt—not because they are not smart or
aware, but because the speed of change is simply
overwhelming them. 2
Local Is Global
The impetus for Friedman’s book was the political
uproar surrounding the outsourcing of white-collar
jobs to India. The appraisal community has not been
immune to this trend, as noted in Appraisal Today:
A recent article in the San Francisco Chronicle focused
on the issue of processing mortgages in India, includ-
ing reviewing the appraisals. The article was about
Citigroup and Chesapeake Appraisal and Settlement
Services, their in-house AMC. Other lenders are also
doing this.
2. Thomas L. Friedman, The World Is Flat (New York: Farrar, Straus and Giroux, 2005), 46.
3. Ann O’Rourke, “Reviewing Appraisals in India?” Appraisal Today (March 2004): 11.
4. Friedman, 237–238.
286 The Appraisal Journal, Summer 2006
Per the article, “We’ve been doing this for less than a
year,” acknowledged Maria Mendler, a Citigroup
spokeswoman. “We do it with the basic first-level re-
view to make sure the appraisal is in order.” Citigoup’s
Mendler emphasized that the reviews being
outsourced are primarily to ensure that appraisers’
paperwork is accurate and complete. Loan decisions
are not being made overseas. “We don’t outsource all
the appraisal reviews,” she said. “It’s definitely not the
majority of appraisals.”3
While some in the appraisal community responded
negatively to this news, Friedman points out that any
skill that is capable of being digitized and transferred
to lower-wage locations will inevitably be
outsourced to the cheapest and fastest provider.
Other forces—including the continued proliferation
of low-cost Internet access, open-source software
development, and supply chaining—have led not only
to a flat world, but also to a world with a new class
of untouchables, according to Friedman.
The way I like to think about this for our society as a
whole is that every person should figure out how to
make himself or herself into an untouchable. That’s
right. When the world goes flat, the caste system gets
turned upside down. In India untouchables may be the
lowest social class, but in a flat world everyone should
want to be an untouchable. Untouchables, in my lexi-
con, are people whose jobs cannot be outsourced.
So who are the untouchables, and how do you or your
kids get to be one? Untouchables come in four broad
categories: workers who are “special,” workers who are
“specialized,” workers who are “anchored,” and work-
ers who are “really adaptable.”4
In Friedman’s terms, Appraisal Institute members
have the potential to become the untouchable win-
ners in this new paradigm without ever leaving
home. All real estate is local, but finance is global,
and the increase in the volume of real estate invest-
ment has today’s investor chasing too little product.
Appraisal Institute members in any part of the coun-
try can help these investors find exactly the right
investment right in their local market.
With continued emphasis on knowledge, expe-
rience, and integrity, the Appraisal Institute is pre-
paring its members to be the “special,” “specialized,”
“anchored,” and “really adaptable” market analysts
this new world demands. Whether helping relocate
an employee from a multinational corporation, or
working to determine the current value of land

seized in past political conflicts, members of the
Appraisal Institute can share in the benefits of an
international real estate marketplace.
Access, Opportunity, and Benefit
The direct benefits of the Appraisal Institute’s inter-
national activities include the following:
• Access to international experts to help members
meet client needs
• Growth of work opportunities for members, in-
cluding valuation for financial reporting
• Increase in the value of the Appraisal Institute
designations and brand
• Financial gain for both individual members and
the organization
• Continued opportunities to lead the profession
• Stability through diversification and collaboration
Access, opportunity, and financial gain are the needs
professional associations must meet for their mem-
bers. The Appraisal Institute’s involvement with orga-
nizations such as the International Real Estate Fed-
eration and the International Federation of Surveyors
provides members with a network of over two million
real estate professionals in more than one hundred
countries. For example, from December 15, 2005, to
January 15, 2006, the Appraisal Institute used these
networks to field a number of international inquires:
• A former Eastern European landowner looking
for an MAI expert witness for a compensation
case
• Appraisal Institute members looking for local ex-
perts in France, Germany, Greece, Italy,
Kazakhstan, Slovenia, and St. Martin
• A banker looking for help with risk assessment
in China
• A certified appraiser looking to work in Hungary
• A valuer in Saudi Arabia looking to join the
organization
Whatever the need, wherever the country, the Ap-
praisal Institute through its international networks
can help members find local experts so that they can
meet a wider variety of client needs.
Even if a member never has the opportunity to
work for an international client, familiarity with in-
ternational customs can open the door to local im-
5. National Association of Realtors Research Division, “Foreign Investment in U.S. Real Estate: Current Trends and Historical Perspective,” http://www.realtor.org/
Research.nsf/Pages/ForInvestSurvey?OpenDocument.
notes and issues
migrant communities so that members can become
anchored local experts serving this ever-growing
client group. These contacts can lead to further work
for in-bound investments from the contacts made
by interacting with these immigrant groups.
Top 10 Places for Migration in 20045
1. California 6. New Jersey
2. New York 7. Georgia
3. Texas 8. Arizona
4. Florida 9. Massachusetts
5. Illinois 10. North Carolina
In addition, changes to accounting standards are
beginning to require that real property assets be
reported at market value rather than book value.
This change will provide Appraisal Institute mem-
bers with new clients, especially from multina-
tional corporations based abroad that have real
estate assets in the United States. Working to meet
the financial reporting needs of these multination-
als has the added benefit of opening doors to more
traditional valuation work for these clients and
their subsidiaries.
Perhaps most importantly, the Appraisal
Institute’s international involvement provides the or-
ganization a clear opportunity to lead. The financial
rewards are always greatest to leaders in any field.
Appraisal Institute members who become, in
Friedman’s terms, extremely adaptable real estate
valuation experts can assist as mortgage markets are
developed in the Middle East; banking and finan-
cial markets are strengthened in Latin and South
America; and real estate risk assessments are de-
veloped for China and Southeast Asia. This leader-
ship will translate directly into long-term growth and
stability for the organization.
A History of Leadership
While real estate markets may have drastically
changed over the last decade, the Appraisal Insti-
tute has a long history of leadership in real estate
valuation thought and theory. Homer Hoyt, MAI, and
Arthur Weimer, MAI, SRA, wrote Principles of Ur-
ban Real Estate in 1939; Paul Wendt, MAI, wrote Real
Estate Appraisal: A Critical Analysis of Theory and
The Appraisal Journal, Summer 2006 287
 notes and issues

Practice in 1956; William Kinnard, MAI, SRA, wrote national leadership today is greater than ever. As
Income Property Valuation in 1971; and Charles the appetite of business grows and spreads across
Akerson, MAI, wrote the first edition of Capitaliza- the flat world, governments overregulate,
tion Theory and Techniques in 1973. These are just a underregulate, or become mired in political con-
few of the thought leaders that have made tremen- flicts. Professional associations on the other hand,
dous contributions to the current body of valuation using democratic, peer-reviewed, and transparent
knowledge.6 The Appraisal of Real Estate, now in its processes can develop and enforce the consistent
twelfth edition, serves as the repository of this knowl- reporting and open data standards that entities
edge. This text has been translated or adapted into such as the World Bank, the International Mon-
sixteen different foreign editions. etary Fund, the Bank for International Settlements,
and others are demanding.
The Appraisal of Real Estate, International Editions
School Fees and Headmasters
Country Publication Date Reflecting this new world, much of the information
Germany 1981 regarding the global real estate marketplace is be-
Canada 1st—1992, 2nd—2002 ing exchanged over the Internet. Electronic portals
Hungary 1994 and newsletters such as the one provided by
Japan 1995 ResearchWorldwide.com are consolidating and dis-
Korea 1st—1997, 2nd—Pending seminating knowledge, information, and advice from
Bulgaria 1999
real estate experts all over the world.
Macedonia 1999
China (Traditional) 1999 If you are a serious real estate-related player with the
Poland 2000 responsibility of senior management decision making,
Romania 1st—2001, 2nd—2004 then an investigative trip to China and India to explore
real estate’s potential is recommended…. The chan-
China (Simplified) 1st—2001, 2nd—2005
nel for transferring real estate skills, expertise, and
Georgia 2002 capital from the West to the East will determine finan-
Mexico 2002 cial fortunes over the next 25 years…. As in any emerg-
Turkey 2004 ing country the risks are larger in the early pioneer-
Italy Pending ing days. However, there are unique opportunities to
pay “school fees” to develop and consolidate real es-
Australia Pending
tate-related businesses in China and India so that net-
works are developed, experience is gained, reputations
built and businesses established to take advantage of
In addition to being the world’s largest publisher the more maturing phase of their real estate booms.7
of real estate valuation texts, the Appraisal Institute
has also been working cooperatively with associa- Multinational corporations are key drivers for
tions in other countries to develop education cur- change around the world. They are operating in a
ricula and interactively transfer this critical body of round-the-clock, round-the-world environment
knowledge. Programs on generally accepted valua- with research, development, production, and dis-
tion principles have been developed and offered in tribution operations located in the most efficient
Turkey and Egypt. Courses on advanced commer- and effective places they can find. They have one
cial appraising began in China in December 2005 focus: the bottom line. Associations that adapt their
and have been offered in Korea for the last five years. core competencies—standards and best practices
The Appraisal Institute was at the table when development, continuing education and training,
the International Valuation Standards Committee and certification and accreditation programs—to a
was formed in 1981, climbed Machu Picchu to global perspective and help these corporations in-
commemorate the founding of the Union of Pan- crease efficiencies will find their place secure in
American Valuation Organizations in 1949, and this accelerated world.
reached out across the ocean to help create the The Appraisal Institute’s investment in interna-
Pan Pacific Congress in 1956. The need for inter- tional activities over the last decade has been tuition

6. Norman G. Miller, Jr., and Sergey Markosyan, “The Academic Roots and Evolution of Real Estate Appraisal,” The Appraisal Journal (April 2003): 172–184.
7. ResearchWorldwide.com, “China and India Provide Huge Potential for Real Estate Players,” http://www.researchworldwide.com/page.jsp?table=media&id=76.

288 The Appraisal Journal, Summer 2006


paid to prepare the organization for the future. The
organization will always be anchored in the United
States and the drivers of a free-market economy, but
the biggest opportunity for growth is in international
markets. Expanded collaboration with association
partners from every corner of the flat world can sen-
sibly and practically grow opportunities for mem-
bers, increase the value of the designations, and in-
crease the overall size and influence of the organi-
zation. “Certainly we don’t intend to go it alone,”
remarked Vallejo, “but the valuation profession must
have a greater place in this new global economy and
our activities over the last decade have prepared us
to take the lead.”
The need to reduce barriers, disseminate
knowledge, and increase transparency is greater
than ever. Common standards and cross-organi-
zational collaboration are the lynchpins of this
process. The Appraisal Institute is poised to have
unprecedented influence on the global real estate
valuation profession through committed volun-
teers. Joseph Vella, MAI, CRE, FRICS, is the chair-
man of the International Valuation Standards Com-
mittee for the next two years. Joseph Stanfield,
MAI, SRA, assumed the presidency of the FIABCI-
USA Chapter in April 2006. Steve Williams, MAI,
FRICS, was the 2005–2006 president of the Royal
Institution of Chartered Surveyors (RICS). The Ap-
praisal Institute and RICS held their first joint con-
ference in March 2006; RICS has been a key player
on the global property front for more than a cen-
tury and represents more than 120,000 profession-
als around the world.
A World of Potential Growth
Outside the United States there is a vast pool of pro-
fessionals available at all age levels. The profession
is often more consolidated in other countries; des-
ignations and other status symbols are highly
sought after. The next generation of valuers will al-
ready have an international perspective so invest-
ment in international activities is an investment in
the future. The continued growth of real estate in
investment portfolios in developed economies; the
continued growth of economies in Asia and East-
ern Europe; and the emerging economies in the
Middle East, Africa, and South America all provide
clear demand for appraisal services. The future is
assured for both residential and commercial ap-
8. Jean Rogers et al., Real Property Markets: The “Real” Solution for Economic Development (Chicago: Appraisal Institute, 2004), 1.
notes and issues
praising and an association that strategically pre-
pares to meet this demand.
In addition, the multilateral development banks
have a renewed focus on private property rights and
housing finance. The Appraisal Institute can con-
tribute to a greater good by providing professional
development for appraisers who support private
property rights and a robust housing finance sys-
tem in the developing world. As pointed out in Real
Property Markets: The “Real” Solution for Economic
Development, the sound development of real prop-
erty markets around the world can also help allevi-
ate global threats:
Economic studies until recently focused either on
pricing or policies, but not on the institutional un-
derpinnings of a functioning system. From a societal
perspective, it is these institutional underpinnings
that provide transparent, fair, and stable systems in
which people can place their trust. Property rights
and the institutional systems that uphold them are
not just a means of individual wealth, they are of ben-
efit to society as a whole—spreading wealth and
power, creating opportunities for growth, building a
tax base for government services, and providing ben-
efits which encourage participation in economic and
political processes. In the absences of sound prop-
erty rights and the institutions to defend them, the
alternative is an undocumented system or informal
sector in which everyone must fend for himself by
any means—creating a breeding ground for corrup-
tion, fraud, disenfranchisement, and distrust in po-
litical and economic systems.8
Conclusion
Over the last decade the Appraisal Institute’s inter-
national membership has significantly increased.
The organization had 47 members outside North
America in 2000; in 2006 there are 264 members.
Activities have evolved from the occasional presen-
tation at international conferences to full engage-
ment in the development of the profession in another
country. Parallel to this development, international
real property markets have accelerated at a rapid
pace. Billions of dollars are pouring into real estate
and the long-term effects or sustainability of this level
of investment is unknown.
The advance of technology and the removal of
barriers of both time and geography have led to a
flat world where Muleshoe, Texas, with its fifty-three
percent Hispanic population is more connected than
ever to Shansan, China, a small island city where
farmers dared to protest the government taking their
The Appraisal Journal, Summer 2006 289
 notes and issues
land. As the realtors say, “Under all is the land,” and
it is a limited resource. Add accelerating conflicts
over access to energy and water, and highest and
best use takes on greater scope.
The Appraisal Institute is engaged internation-
ally to provide members with access to international
markets and experts, and to capitalize on the oppor-
tunity to lead the development of real property mar-
kets around the world. International engagement
provides members with the expertise needed to ben-
efit financially by serving the multinational clients
that now dominate the global economy. Although this
international role has taken on greater significance
in the last decade, it is built on a long history of
thought leadership and inspiration. The interna-
tional real estate community places great trust in
and has high expectations of the Appraisal Institute.
Designated members are leading several interna-
tional property organizations.
The arrival of the twenty-first century brought
about geopolitical changes, unfettered technologi-
cal advancement, and new threats from the disen-
franchised. Whether in the courts of New London,
Connecticut, or the rice fields of China, just com-
pensation has taken on renewed significance. The
need for competent, unbiased, real estate valuation
290 The Appraisal Journal, Summer 2006
experts is greater than ever. Through greater inter-
national cooperation with association partners, in-
creased efforts to understand this new world, and
expanded efforts to educate members both at home
and abroad, the Appraisal Institute can not only ben-
efit from this millennial change, but also lead the
way for the global real estate community.
Brian A. Glanville, MAI, CRE, is a past president of
the Appraisal Institute and the Managing Director of
Integra Realty Resources in Portland, Oregon. He has a
Master of Education degree from Oregon State
University and is the Appraisal Institute’s representative
to the International Valuation Standards Committee.
Contact: bglanville@appraisalinstitute.org
William E. Endsley is the Manager of Business
Development for the Appraisal Institute. He has a
Bachelor of Arts degree in Communications from the
University of Memphis and has overseen the international
programs of the Appraisal Institute for the last six years.
Contact: bendsley@appraisalinstitute.org