We have valued hundreds of commercial properties in the UAE region in accordance with the local and international valuation standards.
For example, we have valued a freehold commercial building for an insurance company for the estimated market value of AED 70,000,000/- in Deira.
The office estimated age is 15 years old and no material defects were noticed in the property inspected. It consists of 60 offices and 4 shops. The building has a Dubai Creek view, Garden View and Community View.
The plot size is 20,143 square feet as per affection plan provided. The total built up area size in 102,492 square feet as calculated through floor plans provided. The leasable build up area is 74,317 square feet.
Sources of Information and Documents Relied Upon
Copies of the Documents
Building Completion Certificate
Floor Plan of the Building
Sold Transactions via Reidin/Dubai Land Department Data.
Market listings for sale and rentals through a number of listing portals.
Discussion with various Broker Agencies.
Similar Valuations done by us in the past.
Our own sales and rentals database.
Construction Cost Market Research (2019)
We have applied the Income Approach (Term and Reversion method) in determining the Market Value. We have estimated the market value of the property based on the details provided in the Sources of Information and Documents Relied Upon stated above, income generating standard commercial units and the listing available for individual units.
We have applied term and reversion method under the income approach, as we see material difference between operational and maintenance expenses, vacancy and cap rates.
Under the term, we have adopted the total income of AED 5,940,089/-p.a. (as per the Rental list provided by the owner) under the term period. We have assumed that these rental figures provided are correct and valid going forward as they are line with our market comparison for rents.
After the term year, we have applied the reversion of rental income to the market conditions. After a year, as per our fact finding with the same subject property and comparable rents in the market, we have adopted the total income of the property to AED 5,940,000/- p.a.
Further, we have applied the following valuation factors to estimate the market value of the Property: Term Reversion
Operating and Maintenance Expenses 10% 12.5%
Vacancy 0% 5%
Net Capitalization Rate 6.75% 7%
The net capitalization rate is derived from the following characteristics of the Property and the Market of such a Property:
The location of the neighborhood and the building is very good. It is close to a Metro Station and has access to two main roads – Al Ittihad Road and 8th Street. The subject property is built around a very good location, as it is near Dubai Creek and commercial outlets and hotels.
The building market rent is lower and provided rent is even lower compared to the market.
The building is 15 years old as confirmed through building management but the remaining life of the subject building can go up to 40 years.
The sizes of the offices are compact and hence, there are many office units in the subject building. Smaller offices are in high demand as can be observed from the vacancy rates in the subject building.
The quality, maintenance and overall condition of the subject building is good.
There are 4 working elevators, access to emergency staircases and CCTV coverage in the subject building.
The sales negotiation discount taken has been adopted after verifying the supply and demand of the property, neighborhood and the market.
We internally double checked our valuation through applying income and cost approaches too.
We disclosed all our valuation calculations, facts, assumptions, observations, market knowledge and experience to our clients through the valuation report.