Swedish listed property companies report their investment properties under the standard IAS 40 that gives the opportunity to value investment properties to either historical cost or to fair value model. One problem with the fair value model is that there is no observable market price since the real estate market is far from complete which means that the price of the asset is hard to determine because of the limited information.

IAS 40 gives companies the opportunity to choose between internal or external valuation and this study aims to show how the property companies’ values appeared between the years 2007-2011. From the result we will study if there could be a difference in the outcome depending on if the company chose either internal or external valuation.

To investigate this we observe all Swedish real estate companies listed on OMX Nordic Stockholm and their financial reports during this period of time and complement this information by interviewing people working with these matters in the property companies. The methodology for the study is therefore partly quantitative and partly qualitative since we collect data both from financial reports and from interviews. The data will be analyzed using the selected theories; agency theory, the theory of perfect and complete markets, the commander-, and investor theory.

Our conclusion is that it is not possible to separate valuation results depending on whether it is conducted by external or internal appraisers. The majority of the companies did use some sort of external valuation, often to value a smaller part of the properties to secure the results from the internal valuation. Awareness of the agency theory is making external valuation to be considered to have more credibility then internal and for stakeholders and financial institute it is often a requirement that a third party secures the results of the valuation in some way.