Rera to ensure appraisal firms comply with RICS

Dubai's Real Estate Regulatory Agency (Rera) is in the process of implementing rules to ensure all valuation and appraisal companies are fully compliant with Royal Institution of Chartered Surveyors (RICS)-related laws, a top executive at a chartered surveyor firm told Emirates Business.

"Moreover, they are in the process of validating professional valuers who are real estate-trained, with the relevant degree and accreditation to improve the market," said Robin Teh, Director, Valuations and Research, Chesterton Middle East and Africa.

Real estate companies in mature markets have professional indemnity insurance (also known as PI Cover) and proper codes of conduct and rules where they can and will be held accountable for any misconduct or negligence.

"Dubai must follow these tried and tested approaches which had been proven effective through the test of time," he added. Excerpts from an interview:



Have real estate companies in the UAE and investors made use of property appraisers?

As part of their accounting or audit purposes and especially when investors require bank financing of their projects, property valuation companies have always been approached. The UAE, especially banks, has started accepting RICS guided principles as a standard minimum for valuations.

How important is it for people/companies to use the service of real estate appraisers?

Individuals and companies who utilise real estate valuations/appraisal companies are ensured that the work being carried out is independent and the third party is based on internationally qualified valuation methods used worldwide and that the valuations are all supported by evidence-backed calculations and factors. As well, the valuers/appraisers will be either RICS trained and led or RICS qualified persons who are both professional and responsible.

Is there any regulation from the Dubai Land Department/Rera for appraisers?

Rera is in the process of implementing new regulations that will ensure that all valuation/appraisal companies are fully compliant with similar RICS-related laws and should be a well established international or renowned local brand to do valuation work in Dubai. In addition, they are in the process of validating professional valuers who are real estate trained, with the relevant degree and accreditation to improve the market.

Do you believe the government agencies need to promote the use of property appraisers?

Rera and the Dubai Land Department has already started emphasising the need to use renowned professional real estate valuation companies to ensure an efficient, transparent and independent process is being achieved. RICS has signed an MoU with Rera to help assist them on improving the regulations.

How well have matured markets accepted the service of appraisers and what can Dubai learn from it?

Matured markets such as the United Kingdom, Singapore and the United States understand the need to have properly regulated real estate service providers who can account for the work they do. These established companies are not "fly-by-night" operators or one man businesses that can "disappear" should there be an issue with their valuations. Proper companies have Professional Indemnity Insurance (PI Cover) and proper codes of conduct and rules where they can and will be held accountable for any misconduct or negligence. Dubai, as a city that considers itself as a world-class city, must follow these tried and tested approaches which had been proven effective through the test of time.

What benefits do companies or investors stand to gain through getting their properties valued by third party?

Companies and investors using third party or independent valuers will know that their valuation will not be compromised by any irregularities or biasness.

All valuations would have been supported by evidence and mathematical calculations using approved and tested Valuations Methods which the RICS approve of. These valuations will also be recognised by international financial institutions and banks as the valuation companies are mostly internationally branded, this will make it useful for the companies and investors to seek banking assistance and investments.

What are the major issues/concerns that appraisers face in the UAE, particularly Dubai?

The main concern would be the transparency issue that all valuers faced in a maturing market such as Dubai. The Government of Dubai and also the federal government of the UAE is working towards improving the level of transparency in the country by introducing clearer laws such as the much anticipated Strata-title Law, fine tuning the Escrow Account Law and even the introduction of regulation for valuation companies. Even the Abu Dhabi Government recently created a new Abu Dhabi Statistical Centre such that all the emirates economic statistics will be published from one central source.

How much does it cost to get property appraised from experts?

Valuations in the UAE comprise either mortgage valuations, usually residential free hold valuations for banks and financial institutions. These would range around Dh2,500 to Dh3,500 per valuation depending on the bank. Other type of valuations are the commercial and industrial valuations whose fees are subject to the type and location of the property in question but would range from Dh3,500 to as much as Dh250,000.

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