Property Valuation in UAE
Property valuation form part of the professional services provided by many RICS professionals. Accurate valuations are vital to healthy property market and stable economy. The United Arab Emirates (UAE) comprises seven separate emirates each governed individually, each emirate has its own ruler and, together, they form the Federal Supreme Council. The UAE has one of the most open economies in the world. oil exports now account for about 30% of the total UAE gross domestic product. The UAE launched an economic diversification program to reduce reliance on oil and transform its economy from a conventional, labour-intensive economy to one based on knowledge, technology and skilled labour.
The UAE is one of the richest economies in the world, and it is a highly unbanised country Dubai is the biggest city followed by Abu Dhabi which is the largest contributor to the UAE revenue.
Historically, Dubai’s property market started in 2002 when His Royal Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai declared freehold rights for owning property for non-nationals. At this time the population of Dubai was 1 million approximately, 75% of which were non-nationals – According to the Dubai Statistics Centre.
Foreigners are permitted to own real estate in certain areas. Outside these areas, ownership is restricted to Gulf Cooperation Council (GCC) nationals. Each emirate has a well-developed land use and planning framework.
The government’s decision to diversify the economy from a trade-based but oil-reliant economy to one that is service- and tourism-oriented has made real estate more valuable, resulting in the property boom from 2004-to 2006. The property boom is largely driven by Mega-Projects such as palm islands, Dubai Marina, Business Bay, Burj Khalifa and Dubai Land.
Over this period, the UAE, and particularly Dubai, has seen unprecedented real estate development initially through infrastructure development, then in the retail, hospitality and residential asset classes and more recently industrial, commercial office and theme park development. The other emirates have adopted a similar approach to Dubai.
Also, the majority of real estate development in the UAE – during that time -particularly residential, was undertaken speculatively and through the use of off-pan sales. The off-plan sales approach was a contributory factor in the development quantity rather than quality.
Property valuation and appraisal firms play a pivotal economic role in UAE. In 2007, RERA (Real Estate Regulatory Authority) was formed which brought various Rules and Regulations that streamlined transactions and registrations of ownership for land/property in Dubai.
Following the 2009 market recession in Dubai and the global financial crisis, the Dubai Land Department (DLD) and RERA jointly established the Dubai Real Estate Appraisal Centre to regulate valuation in the emirate. Significant progress has been made towards improved regulation of valuation professionals and the adoption of internationally recognised valuation standards.
In 2019, Dubai mandated the use of International Valuation Standards (IVSC) which are now the basis for valuation in a hundred countries worldwide. Emirates Valuation Book is mandatory for all valuers in Dubai and fully incorporates the IVS to ensure best practices are being applied in the Dubai real estate market which is one of most international markets in the world. The IVS is the foundation of a strong and respected global valuation profession that will benefit every valuer, regardless of where they work.
RICS (Royal Institution of Chartered Surveyors) is actively participating in the development of valuation, measurement and construction standards which aims at promoting transparency and consistency.
In 2014, RICS (Royal Institution of Chartered Surveyors) required all RICS members undertaking a real estate valuation in the UAE to be enrolled on the Valuer Registration Scheme (VRS).