Property valuators come under pressure

Owners of property portfolios – both private and corporate - are leaning on property valuation firms to match “pre-crash valuations”.

An industry expert told this website that most owners of properties believe the market has recovered sufficiently and, therefore, want to see the value of their holdings put back at what they were worth before the economic crisis struck in 2008.

“Clients are pressing valuers to match their older pre-crash valuations done on their assets as they believed the market had recovered sufficiently from this year,” Simon Gray, Managing Director - Mena, Chesterton International, told 'Emirates24|7'.

“Many larger companies holding real estate had opted not to value their portfolios as they know the values had plummeted since 2008. Only recently have companies started the exercise again on account that the market has improved slightly this year.”

Gray cites price undercutting from small, unprofessional “valuation companies”, which have agents who believe themselves to be valuers, as one of the major challenges facing the industry in the UAE.

“Moreover, they are not covered by any professional indemnities/insurance which means should anything happen, these companies can disappear into the night leaving the clients exposed and with a wrong value.”

Besides, clients have taken the opportunity of referring to global economic slowdown to squeeze valuation fees down to a minimal.

“Sometimes they are opting to play the ‘auction’ game of whoever pitches the lower proposal fee, gets awarded the job, rather than on merit or professional services.”

Gray also believes that having a lack of regulation from the government hampers proper valuations to be carried out.

“Government authorities should have a database system where all transactions can be accessed by valuation companies and that they themselves should not be competing with private companies on offering valuation services to clients as it is a major conflict of interest.”

Dubai has been working on real estate valuation law that aims to regulate and set guidelines for valuation companies.

This website had reported earlier that the law was awaiting government approval to be launched. A draft of the Emirates Real Estate Valuation Book has already been released by the Dubai Land Department. Though not yet compulsory for valuers to follow the rules stated therein, it has launched a valuation course - a prerequisite for the upcoming valuer registration.

Asked about his view on the market, Gray said that the UAE market was now mature enough to be segregated to areas of developments rather than a market as a whole.

“I believe Dubai and Abu Dhabi need to be looked at differently. Abu Dhabi's prices will continue to fall as supply gets introduced into the market and tenants/ buyers have more choices. Dubai is more complicated. Prime areas like Palm Jumeirah, Dubai Marina/JBR, Downtown, Emirates Living will enjoy a stable if not an increase in prices.”

He expects fringe and secondary developments such International City, Silicon Oasis and so forth might suffer further reductions as the months go by, unless the entire region starts enjoying growth again.
 

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