Investment in real estate as a thriving sector has proven to be viable in the economic trajectory of most developed and developing countries of the world. The valuable contribution it provides to the development of national economies through its ability to generate revenue, create wealth and improve the overall socio-economic conditions of the society have made real estate investment attractive to many investors in the public and private sectors.
Decision-making on land utilisation and property investment are usually executed with adequate appraisal of market and non-market factors influencing value. Valuation as the art and science of estimating the monetary worth of assets at a given point in time have been employed by professionals mainly in the real estate domain such as estate surveyors and Valuers recognized by law to exclusively practice valuation for all purposes.
Over time, the practice of investment valuation have been encroached by professionals in other fields like engineers and accountants, thus raising concerns as to the standard of methods employed and also the accuracy and reliability of valuation in Nigeria.
Investors throughout the decades have grappled with the challenges of dealing with numerous practitioners who in most cases are not fully trained or have expertise in the areas of investment valuation.
The inadequate advice given to investors on market value of assets by professionals other than estate surveyors and valuers during consultancy have been misleading more often than not and as a result bringing about poor investment quality such as huge financial losses due to insecurity of capital and income streams, unrealistic returns and inappropriate capitalization rates or yield in the open market.
All of these issues have led to investors losing confidence in the opinion of professionals in the valuation discipline. Now more than ever, the need to regulate the practice of valuation to address the existing problems faced is imperative. The standardisation of valuation practice would ensure decorum and foster efficiency in investment decision-making process.
The techniques or approach to investment valuation should be in a manner that reflects and make provision for scientific honesty and integrity as well as judgment hinged on experience, competence and opinion of qualified professionals in the field real estate management and valuation.
Estate surveyors and valuers as valuation experts whose practice are strictly guided by the professional ethics and code of conduct stipulated by the International Valuation Standard Council (IVSC) and other guidance are the most qualified professionals in the valuation of assets including land, buildings, plants, equipment and machinery.
The opinion proffered by these professionals as regarding true market value of investment are done through the careful consideration and analysis of existing market condition of similar and/or alternative investment class. The development of suitable valuation method through the determination of valuation bases, makes the estimation of investment value more reliable and realistic with current market condition and trends.
Investors whose hopes were once lost can be given a better assurance by encouraging them to consult registered estate firms whose services in valuation will offer sound and informed decision making for purposes including but not limited to acquisition, mergers, auctioneering, insurance, balance sheet, redevelopment and disposal.
Esv Opayemi Adedoyin Oyenike (ANIVS RSV),
Lands & Housing Development Department, Federal Ministry of Housing & Urban Development, Mabushi, Abuja