Redcurry stands for real estate-backed digital currency. It’s designed to grow in value, offering users a reliable way to preserve and increase their wealth over time.
The value of Redcurry is determined by the value of the real estate portfolio backing it. Therefore, to ensure trust and transparency, the properties in the portfolio must be valued accurately.
So, how do we guarantee accurate and transparent real estate valuations for Redcurry? The answer lies in the RICS Valuation – Global Standards, commonly known as the “Red Book.” This gold-standard framework ensures that every property in Redcurry’s portfolio is assessed with precision and integrity.
In this article, we’ll explore what RICS is, how it works, and why it is critical in maintaining Redcurry’s stability and long-term growth.
What is RICS?
RICS is an acronym for Royal Institution of Chartered Surveyors. It is a professional body that sets global standards for sectors like real estate, construction, and infrastructure. The RICS “Red Book” is a comprehensive guide that outlines best practices for property valuation. It’s the standard in the industry, ensuring that valuations are consistent, transparent, and of high quality, no matter where in the world they’re conducted.
How Does RICS Work?
The RICS Red Book establishes strict procedures and reporting standards that valuers must adhere to, ensuring consistency and transparency. These include:
Preparation: Defining the valuation scope through a clear agreement before the process begins.
Investigation: Carefully examining the property, including its location, condition, and market comparisons.
Valuation: Using proven methods to calculate the property’s value.
Reporting: Creating a detailed report that explains the valuation process, final value, and any key assumptions.
Review: Regularly reviewing the valuation to keep it accurate and up to date, especially in changing market conditions.
Redcurry Valuation Principles and the Role of RICS Standards
The RICS Valuation guidelines provide a globally recognized framework for property valuation. Redcurry’s valuation methodology operates within this framework, applying a structured approach to ensure that property values translate into a stable and reliable Net Asset Value (NAV) of the CRE portfolio backing Redcurry.
By following RICS standards, Redcurry ensures its real estate is valued with integrity, accuracy, and alignment with global best practices. This reinforces trust, enhances credibility, and gives Redcurry users confidence in their holdings’ stability.
How the Valuation Process Works?
The property valuation methodology is designed to prevent unnecessary Redcurry price fluctuations—the goal is to eliminate volatility while ensuring that valuations remain reflective of actual market conditions.
The process has three essential steps:
1. Establishing the baseline: Original Acquisition Value (OAV)
Each property is initially recorded in the books (and on the blockchain) at its acquisition cost, including transaction expenses. This recorded value, known as the Original Acquisition Value (OAV), acts as a stable baseline for property valuations. Unlike traditional valuation methods, OAV does not appreciate nor depreciate annually under GAAP rules. Instead, it remains fixed unless specific conditions trigger an adjustment.
For example, significant investments, such as major infrastructure upgrades (e.g., replacing elevators or upgrading HVAC systems), increase the OAV to reflect the enhanced property value. Meanwhile, routine maintenance and minor repairs do not affect the OAV, ensuring that only meaningful upgrades contribute to valuation adjustments.
2. Annual Market Valuation Following RICS Guidelines
To keep valuations aligned with real-world market conditions, each property undergoes a yearly assessment, a primaryexternal valuation conducted according to RICS standards. This provides an objective market-based valuation of the property.
3. Synchronizing Valuations
Once the annual valuation following RICS standards is complete, the market price is compared to the OAV:
- If the market valuation is equal to or higher than the OAV, no changes are made, and the property value in the books remains unchanged.
- If the market valuation falls below the OAV, the difference is recorded as an Original Acquisition Value Impairment (OAVI) to reflect the actual market value.
- OAVI remains in place until the market valuation recovers above the OAV, at which point the adjustment is removed, and the property returns to its original valuation.
This dual-layered evaluation ensures that properties in the Redcurry portfolio are never overvalued during market downturns or inflated during booms—all with the goal of maintaining low volatility and long-term price stability.
The following image comparing market price-based valuation methods to OAV-based valuations paints a clear picture of the differences:
The black line on the image above depicts the CPPI, or Commercial Property Price Index, tracked by Green Street. This represents Pan-European commercial property values at which commercial real estate transactions are currently being negotiated and contracted. The blue line represents the OAV of a theoretical commercial real estate portfolio assembled in 2014, containing industrial (25%), office (25%), retail (25%), and warehouse (25%).
As the graph shows, the CPPI line is much more volatile. It rises sharply during periods of economic growth but also drops significantly during market downturns. Since the OAV only changes when additional investments are made into the property, such as renovations or improvements, it remains relatively stable over time, offering a more predictable value baseline and growth. Most importantly, it can weather even the most significant market downturns.
Conclusion
RICS standards are more than just a set of guidelines; they’re a commitment to ethical and high-quality valuation. For Redcurry, adhering to these standards is adding another layer of transparency—a way to ensure that savers can hold Redcurry with confidence, knowing that the real estate backing their digital currency is valued fairly and accurately.
