Guide to Property Valuation in Dubai

Property values can fluctuate in Dubai depending on the market trends. If you are buying, selling or leasing a property in Dubai, you must be concerned about the exact value of the property. Property valuation services come in handy in this regard as they determine a property's fair and reasonable price. In this blog, we will discuss how you can conduct property valuation, its importance, and different methods to get a fair price.

Fundamentals of Property Valuation

Property Valuation or appraisal helps determine a property's current and accurate market value by considering its location, size, condition, and current market conditions. The Dubai Land Department (DLD) is a government body responsible for regulating the standards and guidelines for property valuation and ensuring all property valuation service providers adhere to Emirates Book Valuation Standards.

DLD also maintains a complete record of companies and professionals approved to provide valuation services. These companies are assessed for specific qualifications and demonstrate their expertise in property valuation. This way, clients can ensure they get services from qualified professionals, and the valuation is reliable. 

Role of RERA in Property Valuation

The Real Estate Regulatory Agency (RERA) division of DLD ensures transparency in property transactions and valuations. RERA provides training programmes and certifications to property valuation service providers. These trainings ensure valuers gain knowledge on valuation techniques, the latest regulations, and market trends. 

RERA has implemented several measures to address and manage disputes related to property valuation. Here are some of the key ways RERA upholds these standards:

• RERA oversees misconduct and disputes related to a disagreement over property valuation. 
• Imposes financial penalties for violations of regulations or ethical standards.
• Suspend or revoke a valuer's license for persistent non-compliance with rules and regulations.

Property Valuation Methods

Sales Comparison Method

The sales comparison method compares similar properties in the area that were recently sold. Location, size, condition, and amenities are used to estimate a property's fair market value.

Income Method

The income method evaluates commercial or residential properties that earn rental income. This method calculates the property's value based on the income it generates. It considers rental prices, occupancy rates, and operating costs to estimate the property's worth.

Cost Method

The cost method estimates a property's value by calculating how much it would cost to rebuild it from scratch. In this approach, the land value, building costs, and depreciation determine the property's value.

Investment Value Method

An investment value method is used when purchasing a property to be used as an investment. The approach considers the incomes it can raise and the subsequent returns on investment. The sum of the future cash flow, probable risks, and expected expected return rate calculates the property's investment value.

Price Per Square Foot Method

The price per square foot method estimates a property's value by dividing its total price by its size in square feet. For owner-occupied properties, it includes all areas within the property, while for rental properties, it only considers spaces used by tenants and common areas.

Property Valuation Best Practices

Hire a Professional Property Valuer

Professional property valuation firms like Betterhomes provide the market value of your property by doing a thorough analysis. Given the complexities of property valuation in Dubai, hiring a professional valuer is a good idea. They have the skills and experience needed to provide accurate and reliable valuations.

Try our online property valuation tool to find how much your property is worth.

Asses Property's Condition

Well-maintained properties with modern amenities and features have higher values than those needing renovation or repairs. It is the most important part of the valuation process that can impact a property's value.

Location is the Key

Properties in prime locations like Palm Jumeirah, Dubai Marina, Jumeirah Lake Towers, and Downtown Dubai command higher property values. The nearby schools, hospitals, shopping centres, and transportation modes raise their value further. Similarly, properties in less desirable areas away from basic amenities have a lower value.

Market Trends

Keeping up with the latest market trends is important when valuing property in Dubai. A good knowledge of demand and supply in an area could give a better clue to a property's worth.

The Importance of Property Valuation

There are many reasons which show the importance of property valuation, such as:

• An accurate property valuation helps sellers set a realistic price that attracts buyers without compromising profit.
• Buyers who know the accurate property value can negotiate the price and avoid overpaying.
• Owners can demand the appropriate insurance coverage with accurate property valuation.
• It helps calculate the annual property tax or Ejari fee.
• Property valuation determines the mortgage or loan amount against the property.

Conclusion

No hard and fast rule exists to evaluate a property's price. Conditions, market trends, and location all impact the price of that property. The DLD and RERA oversee the whole process and protect the interests of each person involved in real estate. This would thus protect the interests of the buyer, seller, and investor in the real estate market of Dubai, as people will have confidence and faith in that market.