A critical examination of property valuation variance in Dubai

Abstract

This research investigates the extent and possible causes of property valuation variance in Dubai (United Arab Emirates). It complements the wide body of academic research examining valuation in new global markets. A literature review was undertaken and two questionnaire surveys circulated to local commercial property valuers. The surveys revealed that valuers in Dubai are on par with variance observed in other international case studies. The surveys found the main cause of variance to be a result of information efficiency; including sparse transactional evidence; wide yield assumptions; and a lack of standardisation in key areas of the valuation process. Individual client behavioural influences were also pertinent in the cause of valuation variance. An exam-based analysis of postgraduate real estate valuation students also highlighted a number of critical observations relating to variance and valuation methodology. The research, through an industry focus group, recommends a range of solutions to manage variance. Greater market transparency through the pooling of property data and more detail within transactional evidence would ensure more consistent valuation advice. It is expected with an improvement in temporal data the local valuation profession will be better informed and client pressure exerted when finalising the valuation figure will subside. This new research is a useful starting point to expand the range of global studies in property valuation. In addition, the findings undoubtedly assist in improving valuation practices in Dubai and wider GCC/Middle Eastern markets.