In the absence of continuously traded, deep and securitised markets, commercial property valuations perform a vital function in the property market by acting as a surrogate for transaction prices. The ability of valuers to make effective estimation of value is therefore a vital issue in commercial property market. The purpose of this paper is to examine the effects of valuation variance and inaccuracy on Nigerian commercial property market.
Questionnaires were used in collecting data from 163 randomly selected estate surveying and valuation firms in Lagos Metropolis with a record of over 60 per cent of the total population of estate surveying and valuation firms in Nigeria. Both descriptive and inferential statistics were used to analyse the data collected.
The results revealed that valuation variance and inaccuracy causes fluctuation in the price of property, sending wrong signal to the market participants and jeopardising the future of commercial property market. It also, exposed valuers to negligence liability, loss of valuers’ credibility and reduction of valuers’ integrity.
The paper concluded that quality data bank system is needed to obtain accurate comparables which are the cornerstone of market valuation. Also, surveyors in the academia should revisit the techniques they have developed with a view to replacing or modifying them into a format that are easy to use by practitioners. The findings of the study will be of importance to estate surveyors and valuers, estate surveying and valuation firms, government agencies in charge of property taxes as well as investors in commercial properties.
The paper is one of the few attempts at examining valuation variance and accuracy in Nigeria. This paper examined the effect of valuation variance and accuracy on Nigerian commercial property market.
