'Realistic' valuation hit by lack of transparency
Lack of actual transactions or access to database is the biggest hindrance to a realistic valuation of properties in the UAE, according to an expert.
"Having to explain to clients the reality of the market situations is another challenge," Robin Teh, Director, Valuations and Research, Chesterton International, told Emirates Business.
Although slowdown in the economy has hit surveyors/valuation companies in the UAE, Teh said the final quarter of 2009 saw increased levels of activity from their clients (banks and corporates), which shows an increase in confidence in the local markets.
How tough is it to do valuations of properties in the UAE?
It has always been a challenge to do valuations in developing countries, as there is a lack of transparency and access to database.
However, the UAE is moving in the right direction by introducing laws to help improve transparency and regulate the market.
I would say the UAE is actually leading the way in the region. More needs to be done to attract world-class funds and investment houses into the country.
Do you believe surveyors need to be regulated in the country?
Absolutely. Surveyors/valuers are an important part of regulating the real estate market. They form an independent voice to the market in terms of expressing market values and trends. Banks and companies rely mostly on them to provide a proper, regulated, professional and well-supported pieces of valuation for the client's needs be it for financing, accounting or transactional purposes. This will also eliminate any "cowboy" wannabes who think they can value properties as they had personally delved into it.
Has the slowdown in realty market actually hit surveyors and valuation companies?
Unfortunately, the slowdown in the global economy has hit the UAE market, especially the property sector.
The real estate surveyors and valuation companies have felt the brunt of this drop as there are now substantially less investors and buyers in the market and few banks are willing to lend. Larger corporate companies and funds though having the capital to spend are more cautious than ever and most are "sitting on the fence" as the market seeks more transparency and confidence. However, since the last quarter of 2009, we have seen an increase in the level of activity from our clients – both banks and corporate clients, which shows a rise in confidence in the local markets.
What challenges for chartered surveyors do you expect in 2010?
I would say the main challenge is to obtain a realistic valuation of properties especially with the lack of actual transactions or access to the transaction database in the market. Another challenge is having to explain to clients the reality of the market situations at the moment.
What is your view on the Dubai/UAE property market and when do you expect a recovery?
This really depends a lot on the government legislation or the lack of. A lot of would-be buyers are still not willing to commit because they are unclear as to the nature of the freehold market in Dubai/UAE.
If there is legislation that covers things such as residency visas, strata-titles and service fees/charges, I believe the recovery of the market will happen much sooner.
Can you provide us some details about the new regulations for registration of chartered surveyors in Dubai?
In essence, a by-law by Real Estate Regulatory Agency (Rera) will be announced to regulate the surveying/valuation companies in Dubai. Some main points are that all valuation reports needs to be signed off by International Valuations Standards Committee (IVSC)-approved valuers – RICS valuers are very much IVSC approved; they should have a degree and some years of actual experience.
Both valuation companies and valuers will need to be registered and each valuer will have an ID number.
Also, Rera might want the valuers in question to go through a Rera-approved basic course to introduce the Dubai market.
Have individuals and companies/banks looking to utilise real estate valuations/appraisal services for properties in Northern Emirates?
We have not really seen an increase in valuation services for the Northern Emirates. Most of our jobs are in Dubai or Abu Dhabi. I believe the fall in prices in the other emirates might be severe as they are not as well exposed to the media as Abu Dhabi and Dubai.
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