What is a property valuation?
A property valuation, simply put, is an assessment of a property’s value that looks at a range of factors, taking into account typical characteristics like size, layout, specification, condition, views. However, it will generally exclude non-permanent property features such as furniture, and the result will be in the form of a detailed report of a property’s market value.
It is important to note that value does not always equate to cost or price in a valuation.
Price is the actual amount that a person will pay for something. Cost refers to the actual money that has been spent on a property, including upgrades, renovations, improvements and labour costs to build the property. Whilst these are factors that can influence value, they are not determinants of value. As such, the final sale price is usually different from what is stated in the valuation report.
What is the valuation process?
A valuation is typically undertaken by a valuer/surveyor and is overseen by senior staff who are qualified to do so. The valuer carries out the valuation on behalf of their company. Valuers must be independent, objective and transparent in their approach. In Dubai, there is local regulation to become a registered valuer, similarly to the RICS, issued by the Dubai Land Department.
The first stage in a valuation would involve a due diligence check that would include a conflict of interest check and initial analysis of the preliminary information received. After this is completed, there would be a property inspection, with notes taken on the condition of the building, any upgrades, location and any other relevant information that would affect the property value.
Further research would need to be conducted, looking at recent real estate transactions in the property’s vicinity and in-depth market analysis. A key to determining this would be using different data platforms and sources, including land department data, internal and external databases, and conferring with reputable real estate brokers.
Once detailed research has been completed, an in-depth report would be written up with a quality assurance check carried out by a senior supervisor that is RICS certified, ensuring the report is held to the highest standards.
Why are valuations necessary?
One of the more common uses for a property valuation is because a bank or money lender requests one. These valuations would then be used to determine a mortgage, the risk of an asset and how much the lender is willing to give to the property owner. However, these are not the only purpose of a valuation. They are also necessary for audits and end-of-year reporting for tax and corporate purposes, as well as to help negotiate a property deal.
As such, there are many people who might want to have a valuation done on their property, such as property developers, property owners, and investors.
If you require a valuation to be undertaken on your property or portfolio, contact us today to book a meeting with one of our RICS certified valuers.