The study of valuation variance in new global markets - Dubai, United Arab Emirates

The globalisation of financial markets has driven the need for the internationalisation of valuation processes and standards. The valuation methods used in each country depends on the techniques adopted. These standards are typically set by government legislation and may also be the established “norms” of relevant professional bodies. In new global markets, little academic work has been done to evaluate levels of consistency amongst valuers. This new PhD research investigates the extent and possible causes of valuation variance for commercial property in Dubai (United Arab Emirates). Having established the level of valuation variance the research investigates the possible causes of variance in property investment valuations based upon questionnaire surveys, valuation case experiments and an industry focus group. The surveys revealed that valuers in Dubai are on par with variance observed in other international markets. The surveys found the main cause of variance to be a result of information efficiency; including sparse transactional evidence; wide yield assumptions; and a lack of standardisation in key areas of the valuation process. Individual client “behavioural” influences were also pertinent in the cause of valuation variance. The research recommends that regulators and professional bodies ensure variance is minimised through the pooling of property data in order to provide more meaningful and consistent valuation advice. It is expected with an improvement in temporal data the local valuation profession will be better informed and client pressure exerted when finalising the valuation figure will subside. This new research is a useful starting point to expand the range of global studies in property valuation. In addition, the findings assist in improving valuation practices in Dubai and the wider GCC and Middle Eastern markets.