When it comes to evaluating your commercial property in Dubai, there are many factors you need to take into consideration. Whether you’re looking to audit, invest, occupy, or dispose of an asset, it’s crucial to understand the valuation process to ensure that the correct market value or market rent is reported, paid, or received.
Here are the top 10 methods to help you get an accurate property valuation in Dubai:
1. Look at the location
The location of your property is one of the most important factors in its value. Look at the surrounding area and see if it is an up-and-coming neighborhood or already well-established. It will be worth more if it is in the desired location than a home in a less desirable one.
2. Look at the condition of the property
The condition of the property is another important factor in its value. If the property is in good condition, it will be worth more than a property that needs some work. Take a look at the condition of the property’s exterior and interior and note any repairs that need to be made.
3. Look at the size of the property
The size of the property is another important factor in its value. A larger property will be worth more than a smaller property. Look at the property’s square footage and compare it to other properties.
4. Looking at the amenities
Another important way to figure out the value of a property is to look at the amenities that come with it.
If the property has amenities that are in high demand, it will be worth more than a property that does not have these amenities. Look at the amenities included in the property’s price and compare them to other properties in the area.
5. Look at the zoning
The zoning of the property is another important factor in its value. If the property is for commercial use, it will be worth more than a property zoned for residential use. Look at the property’s zoning and compare it to other properties in the area.
6. Look at the tax assessor’s value
The tax assessor’s value of the property is another important factor in its value. This value is based on the property’s market value and is a good indicator of what the property is worth. Look at the property value determined by the tax assessor and contrast it with that of nearby homes.
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7. Look at the sale price of similar properties
The sale price of similar properties is another important factor in their value. This is a good indicator of the property’s worth in the current market. Look at the sale price of similar properties in the area and compare it to the property’s asking price.
8. Look at the rental rates of similar properties
The rental rates of similar properties are another important factor in their value. This is a good indicator of the property’s worth in the current market. Look at the rental rates of similar properties in the area and compare them to the property’s asking price.
9. Look at the occupancy rates of similar properties
The occupancy rates of similar properties are another important factor in their value. This is a good indicator of the property’s worth in the current market. Examine nearby comparable properties’ occupancy rates and similar properties in the area and compare them to the property’s asking price.
10. Get a professional evaluation
The best way to evaluate your property accurately is to get a professional evaluation. A professional appraiser will think about all of these things and give you a fair price for your property.
DIFFERENT APPROACHES/METHODS FOR VALUATION?
1. Comparable Techniques
Direct comparison is a way to determine how much a property is worth by “comparing” it to the prices of similar properties market. This method examines AED rates per square foot of the built-up and lettable areas. As each of the remaining ways needs comparable analysis, this may be considered the fundamental methodology. Since each of the other ways needs a similar analysis, this could be thought of as the basic method. The direct comparable method is better for assets with fewer parts, such as single or individual office units.
2. Income Strategy Income capitalization is a way of valuing income-generating assets.
This appraisal approach links value to the estimated market rent an asset will generate. Net market income is capitalized at a rate set by the market that takes into account all aspects of the property. Properties like complete buildings of all asset types and industrial complexes would be valued using this method.
3. Reduced Replacement Cost (Land + Construction)
The “DRC” method takes into account all important types of obsolescence and optimization, as well as the current cost of replacing an asset with its modern equivalent. It also makes fewer deductions for physical wear and tears. This way of figuring out a property’s value doesn’t depend on the market and is thought to work for specialized properties. (i.e., properties that are specialized in nature, design, configuration, size, location, or another way that makes them distinctive and make it difficult or impossible for them to be sold on the open market.)
4. Remaining Technique
When a development is propose for a land site based on plot approvals and permissions. The method takes the gross development value from the direct comparison or income method and costs like building, infrastructure, and landscaping.
- Fees for professionals
- Price of Financing
- Contingent Fees
- Legal and Marketing (Sale/Letting)
- Profit to the Developer
- Other Costs (Purchasers’/Planning Costs)
- The plot’s residual value results after these expenses have been deductes from the Gross Development Value.
5. Profits Approach
When valuing specialist trading premises, where the property’s value depends on the business’s success, the profits technique is utilized. The approach values assets like hotels, gas stations, etc.
Utilizing The Five Techniques
When valuing a property, it is ideal to utilize at least two ways, one as the main method and the other as a cross-reference. It is crucial to ensure the method is suitable for the valuation’s objectives. All approaches will consider the properties’ characteristics/features, including their location, description, condition, size, types of lease agreements in force, etc. These factors will modify applied rates.
We think financial institutions in the United Arab Emirates often use property appraisals to determine the loan-to-value ratio. A mortgage is use to secure an estimate debt against the property. Even though this is one of the most typical reasons for the valuation of property in Dubai, many others exist. Whether you want to audit, invest, use, or sell an asset, it’s important to understanding the valuation process to ensure that the correct market value or market rent is report, paid, or received.