While report after report has been citing the take-off of the property market in Dubai, property owners have been left disappointed when trying to sell their units. According to one owner, “when I tried to sell my villa which I bought in early 2008, I checked the prices on the online portals and was expecting to make a profit, however, all the offers I received were much lower than what I saw online.” While Dubai’s real estate market has definitely been booming, this begs the question if the increase in prices has been overhyped.
The Royal Institution of Chartered Surveyors (RICS), the world's leading professional body for qualifications and standards in land, property and construction, recently announced that their UAE chapter will begin adopting increased levels of regulation in the market. The Middle East Director for RICS, Rob Jackson, explained the valuation system by saying, “RICS sees the introduction of Valuer Registration as a fundamental step to supporting the Dubai government in their drive for a transparent and sustainable property market through the adoption of international standards and best practice. It will also provide governments, lenders, agents and auditors access to transparent and regulated valuations which support their own internal risk management processes.”
The quality of property valuations currently being provided by real estate professionals is questionable. Reports of vendors looking for valuers who are prepared to value their property at inflated prices have been made to various news outlets. Scanning the different marketing platforms for property advertising in the UAE, such as Dubizzle or Propertyfinder, one finds that the advertised prices are relatively higher than the prices that these properties are actually being rented out or sold for. This discrepancy in the market will affect investor confidence, as fears of a boom and bust cycle similar to 2007 is still in the back of many investors’ minds.
RICS’s initiative to adopt and implement international best practice standards in the UAE will help lay the foundations for the Dubai Government in its quest to provide a market regulatory framework. As consumer confidence returns to the market, it is important to have these standards in place to deliver sustainable growth for the long-term.