Assessment of Viability Appraisal Practice by Estate Surveyors and Valuers in Lagos Metropolis, Nigeria

Abstract

A capital investment appraisal is a means of ensuring value for money. It is not meant to provide an indication of profit or loss, but rather a comparison of costs in relation to those areas where there is an opportunity or an inclination for change. The decision to invest in a project is based on the expectation of future returns since a rational investor does not expect to incur loss on his capital outlay. This decision making is usually hinged on advice obtained during pre-investment appraisal. This study is aimed at evaluating the mode of practicing investment viability appraisal by Estate Surveyors and Valuers in Lagos metropolis. The data for the study was obtained by randomly administering structured questionnaires on eighty-seven (87) practicing Estate Surveyors and Valuers in the study area and the findings were analyzed through descriptive statistical tools such as the Likert scale to present the result. Findings revealed that the payback period is the most adopted appraisal technique in practice as evidenced with a mean score of 3.57. The objective (s) of the investor is also the most significant factor being considered while selecting appraisal technique with a mean score of 3.83 while the problems of actual return varying from the expected return and also difficulty in the repayment of loans always result when a wrong viability technique is employed. The success of any viability study goes beyond knowing the objective (s) of the investor; therefore, it was recommended that appraisers should ensure that they are equipped with adequate knowledge required for the execution of feasibility and on viability studies because knowing the right viability criteria for a particular objective will help in advising an investor on a course of action that will best achieve the developer’s objective.

Risks in feasibility and viability appraisal process for property development and the investment market in Nigeria

“…In the context of the Nigerian economy, property investments have witnessed a significant change over the years. As such, Kolawale and Grace (2017) opine that the buoyancy experienced in the early 1970s and 1980s property markets cannot be compared to today's economy. Therefore, there is an urgent need to protect investor capital, although scholars have scarcely examined this area of research in Nigeria.…”