Property valuations are an integral component of the real estate industry. The pandemic and lockdowns led to virtual surveys and online valuations, which have now become more or less the norm. However, it is vital that an accurate valuation is done, both for the seller and the buyer. Real estate agents in Dubai will agree that the more accurate the valuation, the more feasible it is to help the seller and buyer. Of course, the end result depends on how much the buyer is willing to pay and the amount the seller agrees on. However, to come to this decision, the accurate valuation of a property is necessary.
The government has set high standards for valuers, ensuring transparency. It has published the EBVS (Emirates Book Valuation Standards) “to be the guide and reference for workers in the real estate market since it includes the bases of real estate valuation and international valuation standards which reflects Land Department›s commitment to international standards for real estate appraisal.”
For property owners and landlords, it is important to have an accurate valuation, especially if it is online. We give below a brief guide to ensure the accuracy of such valuations.
Qualified valuers: The valuation company and the individual surveyor both need to be qualified with a RERA (Real Estate Regulatory Agency) certificate. They should also be internationally recognised by the RICS (Royal Institute of Chartered Surveyors). Valuation reports from such companies will be more accurate and trustworthy.
Documentation: All necessary documents should be kept readily available.
- A real estate valuation request form
- Letter from the owner and a copy of his/her/their valid passports/Emirates ID cards
- A copy of the municipality or planning map (one year).
Other documentation will be required for residences:
- The built-up construction area
- A detailed statement of the number of units/villas
- An expenses statement in detail for the last 3 years
- Ejari (rental) contracts for each unit type.
Vacant land for a real estate project:
- A No Objection letter from the bank/main developer
- The sale/purchase contract.
Commercial buildings (hotels) and land:
In addition to the construction area and certified expenses statement, the following will be required:
- The value of room rentals with the details of halls, restaurants and other facilities,
- Hotel or Management contract
- A tax letter from the Dubai Municipality.
Research: It is important to investigate certain aspects to get the true value of your property. Valuations of similar properties may differ due to location, the accommodation available (number of rooms and fittings) and the land area of the property. Also, the surrounding areas of the property, including availability of amenities such as shopping, good transport facilities etc can affect the value of the property. Similarly, unattractive or disturbing surrounding areas could decrease the value. Before registering for a property valuation, it is wise to conduct some research and find out the price at which similar properties are selling in the selected area, based on the above factors. Knowledge of the sway in property prices and the current market value will also help. These will give you a bit of leeway to compare the accuracy of values with that of the professional valuer.
Data update: As mentioned, the estimated value of a property will be dependent on data such as recent sales in the area, the facilities (number of bedrooms, bathrooms etc) and the size of the property. For online valuations, the network has to be super efficient with updated information. Even with the remarkable technology of AI (Artificial Intelligence), the basic data needs to be top level. With the trend change in the real estate market, data has to be upto the mark. Incomplete or out-dated information and inaccurate algorithms will not help. Then the accuracy of the valuation will be affected. This is another reason why your own research can help judge the accuracy level.
Approaches to property valuation: There are different types of valuations, depending on the property and purpose of sale/purchase.
- Market approach – where the value is arrived at by a CMA (comparative market analysis), showing sales transactions of other similar properties in the locality.
- Income approach: By investment, the value is derived from calculating the rental income to be generated from the property and the capitalization factor based on the return rate. The higher the income, the greater the property value. The value is decided on the cash flow, based on rental growth rate, costs, discount rate and the expected selling price.
- The profit method is more for commercial properties where the value is calculated by the business potentiality for which it is meant.
Conclusion: The valuation of a property is essential. Whether it is done online or by physical inspection is for you to decide. The main goal is to obtain an accurate valuation. While online valuations are helpful, unless you can explicitly trust the provider, there could be a risk in the accuracy. Based on the above guidelines, we know you will get the highest accuracy in the valuation of your property.