Industry watchdog urges new standards on valuing UAE real estate to boost investment
Rics is also pushing DIFC Courts to adopt its construction disputes service
The Royal Institution of Chartered Surveyors, a global association of property professionals that works to raise ethical and practical standards in real estate, is pushing the UAE to adopt international guidelines on how property is measured and valued to achieve consistency, as well as a mediation platform to resolve construction disputes, its chief executive said.
The proposals are intended to give greater confidence to investors looking to acquire property in the UAE at a time when the national government is also taking steps to increase transparency. The Dubai Land Department is creating a blockchain-based digital platform to record property sales and rentals by 2020 and make it easier for overseas investors to conduct transactions.
“Having consistency around the world is really important in bringing professional standards to the marketplace and encouraging investment,” said Sean Tompkins. “There has historically been a massive lack of clarity on how properties are measured, which impacts valuations.”
The institution is the oldest real estate professional body in the world, founded in the United Kingdom in 1868 with the purpose of accrediting qualified chartered surveyors, lobbying for regulations to improve the profession and imposing ethical standards, though it has no lawmaking powers.
The UAE has yet to adopt many of Royal Institution’s industry guidelines, and the organisation wants to increase its profile in the country, where it regulates 1,500 surveyors chartered by the institution. It held talks earlier this year with Dubai’s DIFC Courts to launch a conflict resolution service in the UAE, Mr Tompkins said.
The platform would aim to settle disputes between developers and contractors out of court. An existing Rics dispute resolution service has been implemented in several jurisdictions and resolved $2 billion (Dh7.3bn) in disputes annually since it launched four decades ago, according to the institution. The organisation seeks to establish the new platform within DIFC Courts because it is the common law judiciary of Dubai’s financial free zone, and such a partnership would increase visibility and take-up of the Royal Institution platform.
“[The proposal] is currently under review,” a DIFC Courts spokesman told The National. He did not say when a decision would be made.
Last November, DIFC Courts launched a dedicated Technology and Construction Division, a court system that draws on specialist judges and industry-specific rules to fast-track resolution of complex construction and technology cases. DIFC Courts has said it will also explore alternative dispute resolution mechanisms, including mediation and the establishment of “ad-hoc tribunals” to assist with large infrastructure and construction complaints.
“Such a service will help reduce costly and lengthy disputes and reduce the impact on large-scale, time sensitive projects,” DIFC Courts’ 2018 strategy published in February said.
An industry source said many real estate developers in the UAE would still prefer to go to court to litigate disputes, as they can enforce any upper hand they may have in
At the same time, the institution is lobbying DLD, and its equivalent department in Abu Dhabi, the Municipality, to encourage the government to mandate international property measurement guidelines approved by Royal Institution when drawing up title deeds, marketing material and other real estate documentation in the emirates.
Mr Tompkins said there are so many different methods of sizing up real estate globally – from which metrics to use, to which parts of a building are included – that it is hard to accurately compare space and price across international portfolios.
The subject is particularly important given the rise in appetite for real estate investment trusts in the GCC, where multiple parties are trading stakes and the valuation of underlying assets is critical in assessing returns, the chief executive said.
He cited research by consultancy JLL showing that a property’s floor area can deviate by as much as 24 per cent around the world. “The market needs to embrace standards of property measurement to give investors certainty on what they are buying and how much it is worth,” Mr Tompkins said.
He is hopeful the institution’s proposal will be adopted next year. The DLD and Abu Dhabi Municipality were not immediately available for comment.
Updated: October 10, 2018 10:43 AM