IFRS 13 fair value hierarchy applied to UAE real estate.

• Level 1 — unadjusted quoted prices in active markets for identical assets. Almost never available in UAE real estate: property is heterogeneous, and even high-turnover communities like Dubai Marina or JVC push valuations out of Level 1 on unit-level differences alone.
• Level 2 — observable inputs, directly or indirectly, but not quoted prices for identical assets. Most UAE residential and commercial valuations sit here: DLD transaction data and comparable sales adjusted for size, location and condition, provided the adjustments are transparent.
• Level 3 — unobservable inputs requiring significant judgement: off-plan in emerging communities, specialised assets, or distressed/forced-sale scenarios. Carries the heaviest disclosure burden — a documented rationale, sensitivity analysis, and explanation for why more observable inputs weren't available.

The most common audit query isn't the conclusion — it's the trail. Auditors want to see:

• Which level was applied and why, stated explicitly in the report
• The specific comparables or inputs used, not just a stated yield or rate
• Consistency in methodology year-over-year for recurring fair value exercises
• Clear separation between market value and any entity-specific adjustments, which IFRS 13 explicitly excludes

For portfolio valuations spanning multiple asset types, don't apply a blanket hierarchy level. A mixed-use asset might have its retail component at Level 2 (active comparable leasing evidence) and its hospitality component at Level 3 (limited comparable transactions). Disclose per-component where materiality warrants it.

Choosing the right valuer

A valuer with UAE-specific transaction data access and IVS-aligned methodology is essential here — generic international templates rarely map cleanly onto DLD data structures or RERA-regulated transaction disclosure norms. If your fair value disclosures need to hold up at audit, get in touch before your next reporting cycle.