What a Dubai property valuation looks at

Two different documents in Dubai are both called a property valuation, and they are not interchangeable. One is the certificate the Dubai Land Department issues for a published fee: AED 4,000 for a residential apartment or a residential villa with its land, AED 2,000 for vacant land under grant ownership, AED 15,000 for a hotel building with the land beneath it. The other is the appraisal a bank commissions before it lends, required by the Central Bank of the UAE under the Regulations Regarding Mortgage Loans. The first is a government record of value on a date. The second is a lender's view of its own collateral.

Both rest on the same raw material: what comparable property has actually sold for and been registered at. Where the numbers separate, the questions behind them differ. An asking price is an offer to the market. A bank's figure is what its loan-to-value cap is applied to, and the Central Bank defines that cap against the appraised value rather than the price on the contract.

Who may sign one

Valuation here is licensed twice over. The firm needs a licence. The individual needs a card.

Real estate valuation services sit on the Land Department's list of licensable real estate activities, applied for through the Trakheesi system. The annual fee is AED 10,000 plus AED 20 in knowledge and innovation fees. The published service time for a decision is one working day.

The real estate professional practice card covers a set of named professions, among them real estate evaluator and trainee evaluator. The evaluator card costs AED 5,000 plus AED 10 knowledge fee and AED 10 innovation fee. A trainee card costs AED 500. The Land Department asks for an experience certificate of at least two years in real estate valuation for citizens and five years for expatriates, and a trainee must be trained in an office approved by RERA for one year. A certificate of good conduct from Dubai Police is on the document list. The card's validity is tied to the validity of the trade licence, so a lapsed licence takes the card with it.

There is a check for whoever receives the report. The Land Department verifies a Taqyimee certificate against the evaluation companies it licenses, on its website or through the Dubai REST app, and answers immediately.

What the Land Department charges

Turnaround splits in two. Residential units and attached villas are issued instantly. Everything else is quoted at seven working days, which the document list explains: a villa compound needs the built-up area, the list of units, a statement of expenses for the last three years and Ejari contracts by type, while a hotel needs three years of expenses and net profits certified by an accounting office, the management contract and the municipal tax letter.

Every request needs the valuation request form, a letter from the owner with a copy of a valid passport or Emirates ID, a municipality or planning map current within one year, and recent photographs. That owner's letter matters more than it looks. A prospective buyer cannot order a Land Department valuation over the head of the person who owns the unit.

Rent is a separate service at its own price. A rental valuation costs AED 2,000 per unit, capped at AED 10,000, plus the same AED 10 knowledge and AED 10 innovation fees, quoted at seven working days through Ejari or the Dubai REST app.

Comparables and the transaction record

The comparable method works backwards from registered deals rather than forwards from what anyone hopes to achieve. The Land Department publishes its own record. Its open data covers transactions, rents, valuations, projects, land, buildings, units, brokers and developers as CSV downloads, with earlier years held on Dubai Pulse, the Digital Dubai platform. A transaction row carries the number and date, the transaction type, the size and type of property, rooms and parking, and indicators such as the nearest metro station.

A valuer working an apartment picks deals in the same building or community, on a similar size in square metres, as close to the valuation date as the record allows. Then the adjustments start. Floor level, aspect, layout, condition, and the movement in the market since the comparable was registered. Two identical floor plans in one tower can justify a real gap on the strength of the floor alone.

The record has traps in it. The transactions category covers sales, mortgages and gifts together, so a raw count of transactions in a tower is not a count of arm's length sales. The date on a row is the registration date rather than the day terms were agreed, which leaves the evidence slightly behind a fast quarter. Read which comparables a valuation relied on before reading its conclusion.

On method, the International Valuation Standards are the usual reference. The IVSC splits them into General Standards and asset-specific standards, with valuation approaches at IVS 103 and real property interests at IVS 400, and a compliant valuation satisfies both sets. Dubai's licensing rules govern who may practise rather than which method to apply, so a report should state its basis of value and the standard it was written to.

Why the bank's number is not the asking price

The Central Bank's Regulations Regarding Mortgage Loans, circular C 31/2013, took effect on 28 December 2013 and have been amended by Board of Directors Resolutions 96/2019 and 31/2/2020, consolidated as at 8 April 2020. They define loan-to-value as the ratio of the amount of the loan outstanding to the appraised value of the residential property. Price does not appear in that definition.

Two things follow. The valuation is on site, so a desktop figure does not satisfy the article. And the valuer is not the buyer's choice: each bank and finance company keeps a board approved list of independent valuers, drawn up against clear evaluation criteria. The same article tells lenders that appraisal reports should not reflect expected future house price appreciation, which is why a bank's number ignores the argument that a community is about to be rerated.

The consequence is arithmetic. Take an expatriate buying a first home to occupy at an agreed AED 2,000,000, where the panel valuer returns AED 1,900,000. The cap of 80 per cent applies to the appraised value, so the loan tops out at AED 1,520,000. The buyer funds AED 480,000 rather than AED 400,000, before transfer costs. Nothing about the property changed.

The loan to value caps

Each borrower may claim only one property under the first house category. Alongside the caps sit a maximum tenor of 25 years and a debt burden ratio of 50 per cent, with lenders required to stress test at two to four percentage points above the current rate. Article 5 carves out government housing programmes: where a loan to a UAE national for owner occupation under a local programme is guaranteed, the maximum debt burden ratio rises to 60 per cent and the LTV may be raised to 85 per cent where the property is valued at AED 5 million or less.

The published wording is not symmetrical. For UAE nationals the first band reads less or equal to AED 5 million. For expatriates it reads less than AED 5 million, with the next band starting at more than AED 5 million, which leaves a property appraised at exactly AED 5 million unaddressed on the face of the text. The Regulations also state that these ratios are maximums and that lenders may set more conservative limits, so a bank offering less than the table is breaking no rule.

Reading the report

Check the date of the valuation, the basis of value it states, and the comparables listed with their dates. Confirm the firm holds a Land Department licence for valuation services and that the signatory holds an evaluator card, then run the certificate through the verification service. The Regulations set no expiry for a valuation, so any shelf life comes from the lender's credit policy and varies between banks.

Where a panel valuation lands below the agreed price, the difference is cash and it falls on the buyer. Lenders differ on whether they will entertain a second valuation from another firm on their approved list, and some will not.

One step before paying anything: establish which document the other side is actually asking for. A lender's on-site appraisal and a Land Department certificate at AED 4,000 answer different questions, and a file that needs the certificate is not satisfied by the bank's report.