PROPERTY PRICE RISES LEAD TO CALL FOR VALUERS TO BE REGULATED.
By George Callaghan, Fit For Business.
Property rises in Dubai are escalating rapidly. These massive hikes in purchase and rental prices are raising the cost of living way beyond salary increases. I know this topic is discussed regularly but there are some serious issues which need to be addressed. Healthy house price rises are good for an economy however a bubble is destructive leading to damaging debt piles. Obviously the strong interest in Real Estate shows the success of Dubai in weathering the downturn but caution and regulation is arguably needed now.
There is as much as a 25% gap between similar properties in the value put on them by different valuers. Valuing property is an inexact science. It is to some extent objective and the market is always fluctuating. It is partly what you can get away with. But an overall tendency to inflate prices becomes self-reinforcing.
There are of course many intelligent, wise and fair property valuers. But a few irresponsible people are in danger of causing a lot of pain to all of us. Some people seem to have learnt nothing from the last property crash in the UAE and in the Western World. Property bubbles are very bad news. If we are not careful we may be heading for another one. It is a fallacy to think that prices can only go one way. Some people have no memory. Cast your mind back 5 years.
Regulation is urgently required. Who are these property valuers? Many of them have no relevant qualification. A professional body to uphold standards and integrity would be a good move. But this should not be self-serving. It ought to be controlled by the government with a view to ensuring that this sector serves the public and the economy and is not run in the interests of people in the property business. Things as basic as the unit of measurement are not enforced. Two years ago the government announced that properties were to be measured in metres which is the international common practice and far easier to calculate than feet and inches. Yet some people are still quoting property floor space in feet and inches. Imperial measurements are going the way of the Dodo. Moreover, this is very confusing for the uninitiated.
Further property price rises will make it prohibitively expensive for people to do business in Dubai. Much the same scenario pertains to the rest of the United Arab Emirates. Eye watering property price rises are not good for anyone in the long run. A few property speculators may make a quick buck and get out of town. But for people in the UAE for the long term property feeding frenzies are worrying.
Some people are already relocating and commuting in. Others are mulling whether to shift to nearby Gulf states where the cost of living and of running a business are more reasonable. Regulation is required.