Investigating the UAE Investigating the UAE
residential valuation residential valuation systemsystem
Simon Huston, Ebraheim LahbashSimon Huston, Ebraheim LahbashAli ParsaAli Parsa
PROJECT AIMPROJECT AIM
An investigation into the United Arab An investigation into the United Arab Emirates Residential Valuation System Emirates Residential Valuation System (‘RVS’)(‘RVS’)
The project diagnoses RVS issues and The project diagnoses RVS issues and seeks improvements.seeks improvements.
IssueIssue
Rapid development and economic Rapid development and economic diversification has opened up UAE diversification has opened up UAE residential markets BUT the RVS needs residential markets BUT the RVS needs development in terms of:development in terms of:Institutional capabilitiesInstitutional capabilitiesValuation standards Valuation standards TrustTrust
External market drivers External market drivers Geopolitical uncertaintyGeopolitical uncertainty Regional growth/declineRegional growth/decline Capital flowsCapital flows Migration Migration Oil price volatility Oil price volatility Global investment market sentiment Global investment market sentiment
Internal fragmentationInternal fragmentation
Administration (Emirate?)Administration (Emirate?) Tenure (locals vs. foreign buyers)Tenure (locals vs. foreign buyers) Encumbrances (pipelines)Encumbrances (pipelines) Building quality Building quality Financial indicators (occupancy, rent)Financial indicators (occupancy, rent) NeighbourhoodNeighbourhood
• + facilities+ facilities• -pollution-pollution
LiteratureLiterature1. RICS, 2014, Global valuation standards, VPS 4 Bases of value, assumptions and
special assumptions.
2. RICS, 2014, The role of international and local valuation standards in influencing valuation practice in emerging and established markets,, available at: http://eprints.ulster.ac.uk/29529/1/MAIN_REPORT_Global_Valuation_Standards_FR_130314_dwl_aj.pdf
3. RICS, 2014, Red Book, New 9th Edition.Valuation Standards, Royal Institution of Chartered Surveyors.
4. Heps and M.Vatansever, 2011, ‘Forecasting future trends in Dubai housing market by using Box-Jenkins autoregressive integrated moving average’, International Journal of Housing Markets and Analysis, Vol. 4 No. 3, pp. 210-223.
5. N. Crosby and C. Hughes. “The basis of valuations for secured commercial property lending in the UK” Journal of European Real Estate Research, 2012, vol. 4, issue 3, pp. 225 – 242.
6. Crosby, N. (2000). ‘Valuation accuracy, variation and bias in the context of standards and expectations.’ Journal of Property Investment and Finance, 18 (2) :130-161.
Thesis Thesis phasesphases
RVS SEM modellingRVS SEM modellingKey: Ovals depict latent variables linked to at least 3 measured variables (rectangles), each with an associated error term (circles)
Source: Authors (2015), adapted from Streiner, D. (2006) Research Methods in Psychiatry Building a Better Model: An Introduction to Structural Equation Modelling
RVS
robustness
Stakeholder
trust
Standards
salience
Capabilities
DSS (GIS + model)
Qualified staff
Governance
Dissemination
Awareness
Usage
Accessibility
Credibility
Transparency
C1
pa
C2
pa
C3
pa
S1
pa
S2
pa
S3
T1
pa
T2
pa
T3
pa
Low dispersion
High dispersion
Area Systems Aspect Reason
Valuation
purpose
CAPABILITIES Stakeholder’s identified and valuation base (MV, IV, RV or MGV is
clear so that the reporting entity provides client decision useful
information.
Technology &
data capture
CAPABILITIES
Primary data is securely and systematically captured to provide
necessary details for robust valuation:
1) Date of valuation 2) Location
3) Legal matters (title, lease, encumbrances)
4) Property characteristics and conditions
5) Locales details
6) Performance indicators 7) Valuation
Data handling CAPABILITIES Data is analysed by competent people, using latest technologies.
Principles of
valuation
STANDARDS
SALIENCE
Valuation standards are disseminated and professionals conduct
valuations who are knowledgeable about:
1) Scope (period) 2) Materiality
3) Measurement 4) Prudence
Reporting output TRUST Reporting frequency
Information
output/input
TRUST 1) Transparency 2) Completeness
3) Accuracy 4) Auditability
5) Relevance 6) Comparability
7) Clarity 8) Neutrality
9) Sustainability 10) Content 11) Inclusiveness
Institutional capabilitiesInstitutional capabilities
Preliminary findingsPreliminary findings Institutional capacity Institutional capacity
• PaperworkPaperwork• Lack of collaborationLack of collaboration• Governance (qualifications)Governance (qualifications)
PrinciplesPrinciples• Low salience valuation standardsLow salience valuation standards• Lack of confidence in market reportsLack of confidence in market reports
Intelligence Intelligence • Lack of access to GIS / property Lack of access to GIS / property
databases etcdatabases etc
ConclusionConclusion
UAE RVS research project contributes to:UAE RVS research project contributes to:Sustainable residential market Sustainable residential market Institutional capabilitiesInstitutional capabilities
• TechnologyTechnology• ProfessionalismProfessionalism• administrative processadministrative process
Standards salience (awareness, use and personal Standards salience (awareness, use and personal knowledge of recognised standards)knowledge of recognised standards)Trust (internal and external in valuations)Trust (internal and external in valuations)
Thank you!Thank you!
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