The economic downturn in Dubai has turned the science of property valuation into something of a guessing game, industry experts say.
Richard Paul, an associate director in Dubai for the consultancy Cluttons, said it was "very, very difficult" to place an exact price on property, said
The old formulas simply do not work in the current market, analysts say. In many areas there are few or no recent transactions to use for comparisons. And prices paid a few months ago may not have any relevance today.
David Quinn, the head of UAE operations for Cushman & Wakefield, said: "Values are changing rapidly and you have to be conscious of that."
More than ever, analysts are forced to use judgement instead of maths in making determinations. It is not unusual for three experts to come up with three different prices for a property, analysts says.
Clients do not always like the results, especially if the price is lower than expected.
"You have to bear in mind, are the prices achievable?" Mr Quinn said. "There is definitely denial. The shock factor is greater."
Residential prices have fallen by 30 to 50 per cent in the past two years, but there have been fluctuations, complicating the valuation process. Housing prices were actually rising near the end of last year before dropping another 10 per cent in the past six months, according to Knight Frank data.
Commercial and office properties have experienced similar price drops, with an abundance of space available on the market. Dozens of half-finished projects further muddy any evaluation of the market.
In many areas, the only recent transactions available for use in analysis might be distress sales.
"There is a real disconnect between vendors' views of the long-term value and what purchasers are willing to acquire at," said Will Hean, the investment director for Matrix Property Middle East, an investment fund based in Qatar.
In Dubai Marina, for example, apartments might be appraised at Dh100 (US$27.22) to Dh120 a square foot, "but nobody is really willing to sell it at that", Mr Hean said. "The long-term hold on it makes it very difficult."
Valuations become even trickier in an office market such as the master-planned development Business Bay, where dozens of projects are on hold, Mr Hean said. Any valuation process would have to include "special assumptions" about when the infrastructure might be finished and the timetable for other towers to come on to the market.
"At the end of the day it is up to the company auditors to police that process and evaluate the special assumptions being used," Mr Hean said. "It's a very subjective business."
Today, the biggest issue is not the comparable market price for a property, it is the question of "saleability and liquidity", said Simon Brand, the head of valuation for Jones Lang LaSalle in the Middle East.
"What is the liquidity?" Mr Brand said. "That's the biggest challenge to the valuation profession."
Even in the best of times, Dubai would be a difficult market to analyse, Mr Brand said. Recorded transactions offer little detail - such as whether they were asset transfers or debt sales - or information on the structure of payments.
Ultimately, a long-standing industry truism is especially applicable in Dubai: the actual value of any property is the price somebody is willing to pay for it.
"What you have to look at is, at what point is there demand for this asset?" Mr Brand said.