🏘️ What Qualifies as Investment Property?
Under IAS 40, investment property is land or a building held to earn rentals or for capital appreciation — not for use in production, supply of goods/services, or sale in the ordinary course of business.
📊 Fair Value vs. Cost Model
IAS 40 allows two measurement models after initial recognition:
- Fair Value Model: Changes in fair value recognized in P&L each period. Most UAE REITs and property companies use this. Requires annual professional valuations.
- Cost Model: Carries property at cost less accumulated depreciation. However, fair value must still be disclosed in the notes.
🇦🇪 UAE Real Estate Context
Dubai's real estate market — with its off-plan sales, service charges, and developer payment plans — creates complex accounting scenarios. Key issues include:
- Transfer of risks and rewards vs. control (IFRS 15 interaction)
- Mixed-use properties: owner-occupied vs. investment property portions
- Valuation frequency in volatile markets (post-COVID, post-Expo)
- RERA compliance and investor disclosure requirements
🔄 Transfers to/from Investment Property
Reclassification between investment property, owner-occupied property, and inventory is permitted only when there's a change in use — supported by evidence. The accounting treatment differs significantly depending on the model adopted.
About the Author
DCS Finance
Senior Advisor · Diraya Consulting & Solutions
A seasoned professional specialising in UAE taxation, IFRS standards, and business advisory services. Our team brings deep expertise in helping businesses navigate complex regulatory and financial landscapes across the UAE and beyond.
