Review of a lending or security proposition without relevance of water, will leave a large gap in the value and appraisal of property.
The RICS have now recognised this and are currently drafting a formal Guidance Note that will directly impact upon Red Book valuations.
Banks and financial institutions need to understand this.
Of concern will be:
• Land that requires high volumes of water for irrigation and consumptive use
• Businesses that rely upon the availability of large amounts of water for processing and manufacturing
• Property that derives amenity and landscape value from water on third party ownership
• Conventional and hydro energy production
• Investments with obscure water reliance
• Leisure sector with a reliance on water
• Abstraction licences in a water stressed location
Banks need to raise awareness and encourage clients to positively manage and maximise the value of their water resource.