The real estate owners of both private and corporate properties are awaiting for the property valuation results of firms to match “pre-crash valuations.”
According to industry experts, owners of properties are of the belief that the real estate market has recovered considerably, and so, it is time to see whether the value of their holdings have gone back to what they were worth before onset of economic crisis in 2008.
The Managing Director – MENA, Chesterton International, Simon Gray, said that clients are emphasizing valuers to match their older pre-cash valuations carried out on their assets, as they feel that the market has made sufficient recovery this year.
Several larger companies possessing properties had earlier decided not to value their portfolios, as they were aware about the decline in rates since 2008. However, these companies are currently beginning to again compare values, as the market has shown improvement this year, Simon Gray said.
One of the major challenges faced by the industry in the UAE is the reduced prices quoted by small, unprofessional “valuation companies”, which employ agents who claim themselves to be valuers. They are not covered by any professional insurance, which implies that if anything happens, these companies just disappear, leaving the clients exposed to wrong values, Gray points out.
Gray also pointed out that lack of governmental regulations too, can hamper implementation of proper valuations.
The government authorities should maintain a database system, wherein all transactions can be accessed by valuation companies, and they should not compete with private companies on offering valuation services to clients, as it could prove to be a conflict of interest, Gray said.
Dubai has been working on a real estate valuation regulation, which aims to set guidelines for valuation companies. The law is still awaiting government approval for launch. A draft of this law has already been released by the Dubai Land Department. The valuers can adhere to these rules, although they have not yet been made mandatory.
Speaking about the property market in the UAE, Gray said that the market is now mature enough to be divided into areas of developments, rather than being a market as a whole.
Gray is of the opinion that both Dubai and Abu Dhabi markets should be viewed at differently. The prices in Abu Dhabi will continue to decline, with surplus supplies. In Dubai, however, prime areas such as Dubai Marina, Palm Jumeirah, Downtown and Emirates Living will enjoy stable price levels. However, secondary developments such as International City, Silicon Oasis, may suffer further reductions in the near future, provided, the entire region begins showing growth again.