Valuation Accuracy and Certainty in Developing Countries- A Socio-Political Analysis

Abstract

Valuation services have become increasingly less credible in Tanzania despite an impressive digital data penetration from an inisignificant 115,000 people at the end of 2000 to over 11.5m by June 2017. Practicing valuers have been accused of valuing that which never existed, overvaluing and undervaluing to suit different situations.The key research problem for the study revolved around the lack of measure on reliability and precision of value estimates as was once observed by Dell (2013). While findings from the interviews revealed little appreciation of the intertwin relationships that exist between real estate and finance markets amongst practising valuers, it was evident, external influences mainly through government guidelines and certification processes had strong impact on the valuation estimates. The local practice is apprehensive of strict adherence to government circulars on valuation assessment and reporting standards,which to a large extent might account for the limited valuers’ inquisitiveness on the dynamics of value affecting factors. It was also established that practicing valuers have limited understanding of the general investment market which as Scarrett (2008) observes is crucial in trying to interpret the working of property investment markets.The paper observes a dichotomy between values derived from local market operations and those estimated by valuers. The paper attributes this to reliance on government published guidelines and limited continued professional training amongst valuers.The paper concludes that valuation accuracy and certainty in developing countries are influencecd by the limited roles that professional valuation boards exercise in keeping their members in pace with development in the profession