Market Data Limitations in the Application of Income Approach to Property Valuations in Nigeria: Practitioners' Perspectives

Abstract

Whereas the income approach (investment method) to valuation represents the most applicable method of valuing income generating properties, limitations arising from the dearth of market data for market comparisons and determination of yields, among others, sometimes question the reliability of most opinion of values. Meanwhile, valuation reliability is a worldwide issue in the property industry. With the emerging trends of hedonic pricing, big data analytics, growth-explicit valuation methods, and cross-country investment comparisons (for FDIs), dependable and readily available sources of researched data are indispensable, and the African real estate market cannot be left behind.Drawing on the authors' practical experience in property valuations over the years, this paper sheds light on the prevailing means and ways of data sourcing and usage by which the menace of lack of data for property valuations is being overcome. The paper recommends measures such as company/individual practitioner's data collection and processing, vetting and peerreviewing of procedures, having institutional property databank, as well as the development of country-wide and continent-wide property databanks as ways to aid cross-country investment property appraisals.