Leading real estate professionals in the UAE are to be regulated under a new scheme designed to deliver transparency and boost investor confidence in the property market
The Royal Institution of Chartered Surveyors (RICS) announced today that their UAE members will adopt increased levels of regulation to both ensure and demonstrate that property valuations undertaken by their chartered members adhere to the strictest international standards thus delivering improved transparency and confidence to valuation end users, banks, auditors and other related stakeholders.
Recent reports of an overheating property market in the UAE and the potential for a further boom and bust cycle could have severe consequences in investor confidence, in particular with investors from outside of the Middle East region. Whilst Dubai's position at this moment in time is seen as a relatively safe haven for investment from the more 'regional' markets and which is driving liquidity in the sector, in order to deliver a sustainable property market, the short term initiatives being introduced by Dubai Government also need to be complemented by mid to longer term focused regulatory improvements to ensure sustainable growth.
One of the principle challenges in the current market is surrounding the quality of property valuations provided by real estate professionals in the UAE. There have been multiple reports of vendors 'shopping around' estate agents and valuation companies for a valuer who is prepared to value their property at their inflated asking price, regardless of the real market value as determined by international standards and methods of valuation. Many agents have openly discussed the immense pressure being put on their valuers if they are to be awarded the sales commission. Some valuations we have seen are basic one-page documents reflecting the vendors selling price but with very little supporting auditable evidence as to how the property price has been determined. It is this practice which improved regulation would help curb, and in doing so would keep property price increases at realistic levels based on sound, fact based principles.
Rob Jackson, RICS Middle East Director says, "RICS sees the introduction of Valuer Registration as a fundamental step to supporting the Dubai government in their drive for a transparent and sustainable property market through the adoption of international standards and best practice. It will also provide governments, lenders, agents and auditors access to transparent and regulated valuations which support their own internal risk management processes."
Following the last global financial crisis, RICS developed the regulatory monitoring initiative, known as Valuer Registration (VR), to ensure the consistent application of professional valuation standards worldwide. It is a pro-active risk based regulatory programme that evaluates and oversees the performance of valuers and provides quality assurance to clients, financial institutions and regulators that valuations are performed by qualified professionals to the highest professional standards in a transparent and auditable process and in accordance with International Valuation Standards (IVS).
Banks, lending institutions and government bodies have welcomed the news that RICS will be introducing Valuer Registration in the UAE on a mandatory basis for all members working in the field. Qualified members of the Valuer Registration scheme will be identifiable by the designation "RICS Registered Valuer".
The drive to adopt international best practice standards by Dubai Government and RICS taking a lead position on market valuation could lay the foundations for a market regulatory framework to be created and made available for key stakeholders in the property sector which will help deliver healthy sustainable growth for the long-term.
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RICS is the professional body for Chartered Surveyors. More than 185,000 RICS members and trainees operate across 145 countries worldwide, providing international best practice expertise across all areas of the property and built environment sectors.
For further information contact Karen Levent at: klevent@rics.org.
© Press Release 2013
