Summary
Automated Valuation Models (AVMs) redefine how property valuations are conducted worldwide. This article:
- Examines how AVMs are reshaping the property valuation landscape
- Highlights the benefits, limitations, and ideal applications in today’s market
- Presents real-world data on adoption trends and future outlooks
- Outlines why combining AVMs with expert advice ensures reliable investment and lending decisions
Introduction: Moving ahead in property valuations
Property valuations have long been recognised as a discipline of professional expertise — a careful balance of market knowledge, detailed analysis, physical inspection, and sound judgement. This foundation remains essential today.
Yet, as the real estate sector evolves, so do the supporting tools. Automated Valuation Models (AVMs) have emerged as valuable allies, offering speed and consistency for specific use cases, particularly where scale, speed and standardisation are key.
In today’s fast-paced environment, success lies in adopting a hybrid, standards-driven approach — where technology enhances efficiency, and human expertise ensures depth, accuracy, and contextual insight.
Where traditional valuations and AVMs each excel
Traditional property valuations remain the cornerstone of accurate, reliable, and regulatory-compliant assessments. For bespoke assets, commercial properties, high-value real estate, and complex developments, there is no substitute for the due diligence, local market understanding, and professional judgement provided by RICS-qualified valuers.
However, shifting market demands, including rising transaction volumes, regulatory pressures, and real-time data expectations, paved the way for AVMs to serve as a complementary solution.
Key drivers of this balanced approach include:
- Increased transaction volumes: The global real estate market is projected to reach USD 654.39 trillion by 2025. Residential real estate will dominate, with a projected value of USD 534.37 trillion (Statista, 2024).
- Operational efficiency: Institutions seek digital tools to streamline routine valuations while maintaining high standards for complex assignments
- Regulatory alignment: AVMs provide consistency in bulk reviews and low-risk assessments, but professional oversight remains essential for high-stakes valuations
AVMs deliver clear advantages when applied to standardised residential portfolios or retrospective analyses. However, their actual value is realised when integrated within a broader valuation strategy that continues to rely on traditional methodologies where required.
Understanding Automated Valuation Models (AVMs)
An AVM utilises mathematical algorithms and structured datasets to estimate property value at a specific point in time, without human intervention after initiation.
According to the Royal Institution of Chartered Surveyors (RICS):
“Automated Valuation Models use one or more mathematical techniques to provide an estimate of the value of a specified property at a specified date, accompanied by a measure of confidence in the accuracy of the result, without human intervention post-initiation.”
Furthermore, RICS guidance highlights:
“Regardless of the AVM approach used, it should be capable of being explained and tested, and a judgement made on its performance and efficacy (using confidence levels where available) in the context of the purpose of the valuation.”
Modern AVMs typically draw upon:
- Historical sales and rental data
- Geographic and demographic context
- Property attributes (e.g., size, type, condition, view)
- Market trends and economic indicators
In markets such as the UK, over 70% of lenders now employ AVMs for mortgage approvals involving low-risk residential properties. Platforms like Zillow, Hometrack, and CoStar have further normalised AVM usage across both residential and, increasingly, commercial sectors.
The impact of AVMs on property valuations
- Speed and efficiency: AVMs can deliver valuations within seconds — a transformative asset for institutions managing large property portfolios or conducting regular reviews
- Scale: Automated models can manage thousands of valuations in minutes
- Consistency and objectivity: Automated models minimise variability inherent in human-led assessments, supporting regulatory compliance and internal risk management
- Broader accessibility: AVMs extend valuation coverage to regions where physical inspections may be impractical or where professional resources are limited
The role of human expertise
Despite the advantages of AVMs, human-led valuations remain the benchmark for precision, contextual understanding, and regulatory assurance.
Complex assets, including mixed-use developments, commercial real estate, luxury residences, and unique land parcels, require insights far beyond the capabilities of algorithms. Factors such as:
- Income-producing assets with multiple variables on current & future incomes
- Specialised properties
- Architectural quality and build integrity
- Neighbourhood dynamics and future development risks
- Legal, planning, and regulatory considerations
- Market sentiment and behavioural trends
These nuances reinforce why global regulators, financial institutions, and investors rely on traditional valuations for critical transactions, audits, and investment decisions.
At ValuStrat, traditional valuation methods are employed in client engagements, reflecting sustained trust in RICS-accredited expertise for high-value, complex, and sensitive assignments.
ValuStrat’s AVM approach: Standards-led, custom-built, and internally deployed
ValuStrat has taken a disciplined and purpose-driven approach to automated valuation that is grounded in transparency, RICS-compliant governance, and regional market realities. Rather than adopting off-the-shelf AVM tools, the firm has developed a bespoke, in-house AVM platform named AVALON, which has been under continuous internal development since early 2018.
Unlike many AI-led or black-box solutions, AVALON is fully explainable, operating through mathematical algorithms without artificial intelligence or machine learning. This deliberate design aligns with RICS guidelines, ensuring that all outputs are testable, auditable, and accompanied by clearly defined confidence ranges.
“Automation should never compromise professional rigour. As valuers, we have a responsibility to uphold trust, consistency, and compliance. At ValuStrat, our approach to AVMs is rooted in international best practice — not speed for speed’s sake, but governance-led innovation that enhances internal quality, never replacing professional judgement.”
— Declan King MRICS, Senior Partner ; Group Head of Real Estate, ValuStrat
ValuStrat’s AVM is strictly used for internal benchmarking, quality assurance, and research, not for client-facing execution. It supports the firm’s commitment to valuation rigour, acting as a cross-checking mechanism for human-led reports and enhancing internal risk monitoring.
Key applications include:
- Cross-validation of valuation consistency
- Internal mark-to-market portfolio reviews
- Risk monitoring and anomaly detection
- Retrospective analysis for legal or tax review
AVALON is regularly benchmarked against ValuStrat’s traditional RICS-compliant valuations and tracked through the firm’s proprietary ValuStrat Price Index (VPI).
The platform currently covers the entire Dubai residential market — both freehold and non-freehold areas — and will soon expand to Abu Dhabi’s residential market. The system draws on structured data, including:
- Property size, location, and floor height
- Transaction history and rental patterns
- View quality, build integrity, and specification level
Outputs are produced within valuation bands to account for market variability, especially in areas with lower transaction transparency.
In recent internal testing, nearly 90% of AVALON’s results closely aligned with human-based valuations that required on-site inspection, highlighting its value as a robust cross-validation engine.
“AVMs are powerful tools when built on domain-specific logic, tested methodologies, and regional insight. AVALON was designed in-house to meet our markets' technical and data realities. It’s a mathematical model — not an AI experiment — and while it delivers strong accuracy benchmarks, it’s built to support valuers, not replace them.”
— Haider Tuaima, Managing Director & Head of Real Estate Research, ValuStrat
By embedding AVALON within a governance-first framework, ValuStrat sets a regional benchmark for responsible AVM use, where technology complements, but never replaces, human expertise.
Conclusion: A hybrid future anchored in standards
The future of property valuations lies not in choosing between technology and tradition, but in combining them. AVMs offer scalability and speed for specific use cases, particularly in internal analysis and research. However, the depth, credibility, and contextual value RICS-accredited professionals provide remain irreplaceable – we recommend that RICS Registered Valuers remain at the heart of AVM solutions.
ValuStrat champions a hybrid model, where automation supports internal review and cross validates analysis, but does not replace traditional valuations' judgement, rigour, and reliability. Whether assessing large portfolios, monitoring internal risk, or navigating complex real estate decisions, integrating trusted data and human expertise provides a future-proof foundation for the industry.
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