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The Royal Institution of Chartered Surveyors (Rics) is the world’s leading professional body in setting and enforcing standards associated with land, property and construction. Its activities cover areas such as technical standards, valuing and measuring property and ethics.
Though Rics has been operating in Dubai since 2007, Robert Jackson, the Middle East Director of Rics, has been at the helm for just 18 months. He shares insights into the organisation’s efforts to strengthen confidence and trust in the region’s real estate market and bringing about transparency.
* How is Rics assisting in addressing the primary concerns of the UAE’s property market?
One of the biggest concerns with the market is inconsistency. Most people follow different standards and have varying scales of calibre and competencies. Our main objective is to try and bring about a consistency in the marketplace, which will, in turn, have significant benefits when it comes to attracting investment.
This is key because if you ask the Dubai government or any big developer what their main aim is, it’s a larger slice of the global investment pie. How can we work with governments to create a market that attracts more investments? One of the means of doing that is to build transparency so the investor is more confident in investing in this market.
* What initiatives have you brought about to establish consistency and transparency?
Rics has 180,000 members globally, of which more than 3,500 are in the Middle East and nearly 2,000 in the UAE. We regulate them to ensure quality and provide them with constant learning opportunities so they can keep pace with new technologies, standards and laws.
We also work in partnership with key stakeholders — developers, regulators, the Real Estate Regulatory Agency (Rera) and the Dubai Land Department (DLD) — to look at the major global initiatives driving the real estate market. As per the G20 countries, one thing that contributed to the economic crisis was poor valuation of real estate projects. The World Bank estimates that 70 per cent of the world’s wealth is tied up in property.
Now the question is, how do you value that property? There are international standards that tell professionals how to value property, but in many markets across this region these are not followed and therefore we get wrong valuations. Additionally, the first step to value a property is to know how big it is. To achieve this we have been working with professional bodies to create the International Property Measurement Standards (IPMS) and the key to bringing transparency and consistency is to follow them.
* How has the IPMS progressed so far in Dubai?
IPMS was born because different countries follow different measurement standards. The problem is exaggerated in the Middle East. Many governments produced their own codes but realised it makes more sense to support and apply an international standard. The Dubai government was the first to see merit in this.
The standards were put together by a collation of professional bodies similar to Rics from around the world. We started with 13 but now stand at well over 60 partners. We are beginning to see major corporate occupiers starting to use the standards. The International Monetary Fund, for example, is now remeasuring all of its assets globally to the new standards. Vodafone is committed to do the same.
* Is Dubai likely to make IPMS mandatory?
It will be a staged process. There will be three standards, the first one being IPMS for offices. This has been in circulation. The second will be covering residential [property]. It has just been produced for consultation and currently exposed to the public and global stakeholders for comment and feedback.
The third set of standards that will come next year will cover commercial and retail. But across the GCC, and in Dubai, the mandatory adoption rests with the governments. We are most likely to see this happen when the residential standards are issued later this year, then the office and residential standards will be rolled out as mandatory. The Dubai government held a meeting with developers late last year to explain that this will become mandatory in the future.
* How is Rics working with Rera and the DLD?
As far as Rera goes, it’s more about the introduction of the international valuation standards (IVS), while the DLD deals more with IPMS. IVS is important for Rera and the banking sector. It will help the agency strengthen the rental index further and banks to mitigate risk.
In addition, we are talking to the Dubai Real Estate Institute about training products that we can deliver jointly. It offers real estate-related coaching as do we.
* Which Middle Eastern markets do you see most readily embracing these standards?
The UAE has the largest membership base in the region. However, over the past 12-18 months, there has been a surge in Saudi Arabia. Its government has mandated that from January 2017 every property valuation in the country will be in accordance with IVS. We are also working with the Abu Dhabi and Dubai governments as well as the banking sector to get IVS mandated.
The Abu Dhabi government is looking to bring out a new survey act, which will cover people operating in various surveying practices such as land surveying, hy-drographics, quantity surveying, valuation and building surveying. The idea of the land survey act is to ensure that everybody in Abu Dhabi is following the same standards. It is very similar to what we have been doing in Dubai.
In Bahrain, there are a lot of positive changes going on, while across the region many governments are also looking to create real estate regulatory agencies.
Source: Ashutosh Gupta, Special to Property Weekly