The Dubai property market has seen the value of its developed real estate assets fall by well over $100 billion from their 2008 peaks, an official at the real estate services and investment management firm, Jones Lang LaSalle, has said.
Similarly, in other markets across Mena, values have fallen by between 20 per cent and 50 per cent, slumps that have largely been attributed to the absence of an agreed basis for measuring value across the region over the past five years.
“The lack of appreciation of the factors which drive value coupled with the absence of an agreed basis for measuring value have contributed to the significant boom and bust in property values experienced the Mena region,” says Natasha Ladha, Head of Management Consulting - Jones Lang LaSalle, Mena.
“Unlike trading in equities and commodities where pricing information is public, property values are not independently recorded or available in most markets across Mena. Potential buyers and sellers therefore operate with very imperfect knowledge, relying on anecdotes, newspaper articles and sentiment rather than on reliable market information,” Ladha added.
Jones Lang LaSalle, in its latest real estate report, said that the remedy would be the introduction of more valuation standards.
“Accurate and regular valuations are what investors need to adopt as the real estate market faces continued uncertainties and only selected stability in 2010,” the firm said, adding “The lack of transactional evidence makes it more difficult for buyers and sellers to find and agree on a price.”
Government’s have a key role to play
A defining characteristic of Mena real estate markets in 2009 and into 2010 has been the limited number of actual transactions. The volume of residential sales has declined in most markets as funding has dried up and there have been very few major commercial transactions completed, according to Jones Lang LaSalle.
However, the report lauded and commended the recent initiative efforts by some states, aimed at stabilising and restructuring real estate markets across the region.
“For instance, the recent initiative of the Dubai Government to allow locals to purchase previously gifted land for 30 per cent of its assessed market value requires a clear and transparent valuation mechanism if it is to be successfully implemented,” it said.
Dubai’s Real Estate Regulatory Authority (Rera) has also implemented a number of initiatives to improve the quality of real estate valuations. The agency has teamed up with Dubai Land Department and other interested parties to draft appropriate legal guidelines to regulate how valuations are conducted.
The new regulations will be based on Dubai Law 7 of 2006, under which Taqyeem (the Land Departments Real Estate Appraisal centre) will be legally established as the regulator of the valuation profession.
“It is hoped that these guidelines will be published in mid 2010 and Rera would certainly welcome continued feedback from valuers and other stakeholders who share our view of making the valuation industry more professional,” says Mohamad Khodr Al-Dah, Head of Taqyeem.
In Saudi Arabia, the Capital Markets Authority (CMA) regulations for Real Estate Funds require all new acquisitions to be supported by two independent professional valuations. Once purchased assets are required to be professionally valued/reviewed for fund accounts every six months.
Online registration of Dubai tenancy contracts
Meanwhile, Rera has mandated all tenancy contracts in Dubai to be registered online.
Failure to comply with the new order would lead to tenants and landlords “not protected by the law”, the agency warned.
In a statement, the Director of Rera’s Regulatory Deparment, Mohammed bin Hammad said the new regulation will curb violations and malpractices happening in the rental sector.
“The law aims to ensure that all tenancy contracts, and parties entering into such a deal are registered and their details recorded. This will help in increasing market transparency, and making Dubai market one among the best regulated markets,” Bin Hammad said.
The tenancy contracts should be registred at Rera’s new Ejari online portal. The address is
www.ejari.ae and the announcement is based on Law No.26 of 2007, which regulates the relationship between landlords and tenants in Dubai.
Consider also reading:
Dubai property market needs more than Nakheel rescue
Dubai property litigation cases decline
UAE property prices seen flat in 2010: LaSalle
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