Thesis Abstract

Abstract
Rating valuation in Nigeria faces various challenges that hinder the accurate and efficient determination of property values. This research project aims to identify and analyze these challenges to provide insights for improving the rating valuation process in the country. The study will focus on factors such as inadequate data availability, lack of standardized valuation methods, inconsistent regulatory frameworks, and limited professional expertise in the field of rating valuation. The research will involve a comprehensive literature review to understand the current state of rating valuation practices in Nigeria and compare them with international best practices. Data collection will include interviews with industry experts, government officials, and professional valuers to gather valuable insights into the challenges faced in the rating valuation process. Analysis of the collected data will be conducted to identify common themes and patterns related to the challenges of rating valuation in Nigeria. The findings of this research will contribute to the body of knowledge on property valuation in Nigeria and provide recommendations for addressing the identified challenges. These recommendations may include the establishment of a centralized database for property information, the development of standardized valuation guidelines, the revision of existing regulatory frameworks, and the enhancement of professional training and certification programs for valuers. By addressing the challenges of rating valuation in Nigeria, this research project aims to improve the accuracy, transparency, and credibility of property valuations in the country. This, in turn, can have positive implications for various stakeholders, including property owners, investors, financial institutions, government agencies, and the general public. Ultimately, a more robust and efficient rating valuation system can contribute to the overall growth and development of the real estate sector in Nigeria. In conclusion, the challenges of rating valuation in Nigeria are multifaceted and require a comprehensive understanding to develop effective solutions. This research project seeks to shed light on these challenges and provide recommendations to enhance the rating valuation process in the country. By addressing these challenges, Nigeria can move towards a more reliable and transparent property valuation system that benefits both the industry and the economy as a whole.

Thesis Overview

1.1 Background to the Study

It was in 1987, in the wake of some well publicized research works by actuaries Hager and Lord that Drivers Jonas first sponsored Investment Property Databank (IPD) to carry out detailed research into valuation accuracy in the United Kingdom. The Royal Institution of Chartered Surveyors (RICS), as the valuers’ professional body, later took over the role of sponsor. In doing so, they were adopting one of the principal recommendations of Sir Bryan Carlsberg’s Working Party on valuation practices. In 1985, Udo-Akagha, one of the leading estate surveyors and valuers in Nigeria, while writing a foreword to “Guidance Notes on Property Valuation” noted that; “there ought to be no reason why two or more valuers valuing the same interest in a property for the same purpose and at the same time should not arrive at the same or similar results if they make use of the same data and follow the   same valuation approach”. In the same vein, in 1998, an editorial on page 2 on “property valuation and the credibility problems” in The Estate Surveyor and Valuer, the professional Journal of the Nigerian Institution of Estate Surveyors and Valuers stated inter alia that “the valuation process has been the focus of recent debate and controversy both within and outside the profession as cases of two or more valuers giving different capital values with wide margins of variation for the same property abound”.

Comments of this nature have led many to ask whether estate surveyors and valuers are interpreters or creators of value. From the above statements, it is evident that the twin problems of inaccuracy and inconsistency (variance) in the valuation practice exist in Nigeria. Even in developed countries such as Britain, Australia, Canada and USA, the valuers’ estimates, methods and processes have been increasingly criticized for over the past thirty years as clients seek advice in increasingly sophisticated investment markets (Baum and Macgregor, 1992). In the same vein, there has also been a focus on the seeming inability of valuation estimates to accurately represent/interpret market prices or serve as a security for bank loans. Bretten and Wyatt (2002) observed that valuers do not operate with perfect market knowledge while valuers in many instances follow clients’ instructions, analyze available information, make judgments and respond to different pressures from stakeholders when preparing a valuation in a market atmosphere of heterogeneity. However, the study of valuation accuracy should be a continuing one as is the case in the United Kingdom (UK) where the RICS of late teamed up with the Investment Property Databank (IPD) to produce investigations into valuation accuracy in Britain on a two (2) yearly basis.

The effort in this work will accordingly be the study of valuation accuracy and consistency and the factors influencing their occurrences, to cover a more up to date time period with a view to validating/invalidating, expanding and updating the results in the pioneering efforts of Ogunba (1997), Ogunba and Ajayi (1998) and Aluko (2000). Accordingly, the present effort will be to deal with valuation of properties in the Lagos metropolis which is regarded as the most active investment property market city in Nigeria