How to Value a Property in Nigeria

Real Estate Valuation in Nigeria –  From time immemorial, putting a price tag on values as landed-property has never been a cakewalk. The many factors that must be taken into consideration point to the singular fact that a landed-property tin can only be correctly valued by an estate surveyor and valuer.

At its core, real estate valuation is a report which contains the nowadays budgetary value of a landed-property (as determined by market forces), property types, number of bedrooms and bathrooms, other technical features and the estimates of properties with similar features in that geographical expanse.

Without exaggeration, the danger of an inaccurate valuation is catastrophic; it threatens the overall credibility of holding valuation, puts doubtfulness in the mind of investors and puts operation measurement for landed-backdrop in jeopardy. When executed properly, a valuation report can serve as a proxy for transaction prices. This is of peachy value to professionals in the financial services, investors of like-minds, property owners and the economy in general.

While it is truthful that proper valuation can only exist properly executed by an estate surveyor and valuer, this does non in whatever way exempt laymen (especially individuals with interest in the existent estate manufacture) from familiarizing and understanding the nuts of property valuation. Without delving into technicalities, below are some of the central points that everyone interested in the real estate industry must know:

1. Cost of structure: When valuing a real estate belongings, the cost of constructing that building is ane of the starting time things that are taken into a consideration. In a stable economic system, the construction cost plays a great role in determining the budgetary value of a belongings.

2. Value is constantly in a fluid state: As yous might have guessed, the values of landed-properties are e’er in a dynamic state. Information technology is at the mercy of the market forces at all times. As we take seen repeatedly, a property’s value is not necessarily a function of its cost. Properties that initially command a value way higher than their entire price of construction and maintenance can besides experience a dip in value if the market place forces swing difficult.

3. Investment properties control higher value:

Unlike residential real estates whose values are majorly influenced by the cost of similar properties in that location, valuation methods for investment backdrop are more diverse.

Below are the valuation methods for investment backdrop:

• The Income approach: This approach values properties based on the propensity to generate income. The college the returns they generate, the college their monetary value.
• The Cost Approach: As the name suggests, this approach values properties based on the cost incurred in acquiring the country and putting the building to its current stage. This method is ordinarily practical on structures (Hospitals, schools and regime buildings) that are not easy to sell.
• The Sales Comparison Approach: This arroyo uses the sales price of similar properties at that place to give an estimate of the existent estate property. The property existence compared must share lots of similarities before the comparison tin be valid.

4. A healthy economy, a healthy cost: The broader economic system plays a pregnant role in determining the value of real manor backdrop in Nigeria. In a healthy economy, there is more money in apportionment and the purchasing power is loftier. With more coin in circulation, landed properties are able to control ameliorate monetary value. The opposite can exist said about the budgetary value of existent estate properties when the economy is unhealthy.

5. Authorities policies: Authorities decisions can influence the value of properties in multiple ways. For example, mortgage institutions in Nigeria charge betwixt 19 – 24 % depending on the risk volume. Commercial banks charge higher (minimum of 22%) for mortgage-related loans because real estate is considered a high-risk investment. While the interest rate of the Federal Mortgage Bank of Nigeria is significantly lower (from vi%), it is usually overwhelmed by lots of subscribers, avoidable bureaucratic procedures and a poor allocation system.

As expected, a building constructed with a loftier-interest loan will toll more than than that which is built with a single-digit interest loan.

All over the world, the factors determining the value of real manor properties are like. However, the divergence in economic strength makes property valuation more volatile in Nigeria. Evidently, the cost of construction and location are ii of the almost important factors that could tilt the value of a belongings in whatsoever direction. Simply like the other variables, they are not absolute determiners.

What is the preferred method for pegging a value? When does information technology change? How is the time to come value estimated? These and many more questions of this pattern can merely be sufficiently addressed by an experienced estate surveyor and valuer. If yous volition like to know more than, contact us at Lansar Aghaji & CO via whatever of the contact options provided on our contact page.

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