Another look at data challenges in property valuation practice: a case of Lagos property market
| Date | 19 December 2023 |
| Pages | 325-347 |
| DOI | https://doi.org/10.1108/JPIF-07-2023-0069 |
| Published date | 19 December 2023 |
| Author | Sunday Olarinre Oladokun,Manya Mainza Mooya |
Another look at data challenges in
property valuation practice:
a case of Lagos property market
Sunday Olarinre Oladokun
Department of Estate Management, Obafemi Awolowo University, Ile-Ife,
Nigeria, and
Manya Mainza Mooya
Department of Construction Economics and Management, University of Cape Town,
Cape Town, South Africa
Abstract
Purpose –Challenges of property data in developing markets have been reported by several authors.
However, a deep understanding of the actual nature of this phenomenon in developing markets is largely
lacking as in-depth studies into the actual nature of data challenge in such markets are scarce in literature.
Specifically, the available literature lacks clarity about the actual nature of data challenges that developing
markets pose to valuers and how this affects valuation practice. This study provides this understanding with
focus on the Lagos property market.
Design/methodology/approach –This study utilises a qualitative research approach. A total of 24 valuers
were selected using snowballing sampling technique, and in-depthsemi-structured interviews were conducted.
Data collected were analysed using thematic analysis with the aid of NVivo 12 software.
Findings –The study finds that the main data-related challenge in the Lagos property market is the lack of
database of market property transactions and not the lack or absence of transaction data as it has been
emphasised in previous studies. Other data-related challenges identified include weak property rights
institution with attendant transaction costs, underhand dealings among professionals, undocumentedcharges,
undisclosed information, scarcity of data relating to specialised assets and limited access to the subject
property and required documentsduring valuation. Also, the study unbundles the factors responsible for these
challenges and how they affect valuation practice.
Practical implications –The study has implication for practice in the sense that the deeper knowledge of
data challenges could provide insight into strategy to tackle the challenges.
Originality/value –This study contributes to the body of knowledge by offering a fresh and in-depth
perspective to the issue of data challenges in developing markets and how the peculiar nature of the real estate
market affects the nature of data challenges. The qualitative approach adopted in this study allowed for a deep
enquiry into the phenomenon and resulted into an extended insight into the peculiar nature of data challenges
in a typical developing property market.
Keywords Market data, Data challenge, Property market, Valuation, Property database
Paper type Academic paper
1. Introduction
The property market is an unpredictable, complex, non-routine, and ill-structured
environment (Klamer et al., 2017;Hardin, 1999). The complex nature of the property
market presents valuers with intricately interconnected real-world challenges. In essence, the
challenges valuers face stem from the character of the property market in which they operate.
Despite each market having its characteristics, little is known about the data challenges
valuers face in developing property markets characterised by high levels of uncertainty.
While much has been written about the lack of market data in most markets (Olaleye, 2004;
Awuah et al., 2017;Olapade and Olaleye, 2018), little is known about the actual nature and
dimensions of these challenges in developing economies, where market uncertainty is high,
and how these challenges impact valuation practice.
Data
challenges in
property
valuation
325
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1463-578X.htm
Received 21 July 2023
Revised 2 December 2023
Accepted 3 December 2023
Journal of Property Investment &
Finance
Vol. 42 No. 4, 2024
pp. 325-347
© Emerald Publishing Limited
1463-578X
DOI 10.1108/JPIF-07-2023-0069
The problem of insufficient market data is a worldwide phenomenon. Property markets
are typically inefficient, but market inefficiency varies across nations (d’Amako and Kauko,
2008;Akinbogun et al., 2014). For instance, while market inefficiency is high in developing
nations, particularly in Sub-Sahara Africa, where most markets are underdeveloped, it is low
in developed nations such as the United Kingdom, the United States and Australia (JLL, 2016;
Awuah and Gyamfi-Yeboah, 2017). This variation corresponds to the degree of uncertainty
surrounding property markets and property valuation in these markets. Literature suggests
that developed markets have a comparatively higher level of valuation accuracy than
developing markets (Parker, 1999;Hansz and Diaz, 2001;Ogunba and Ajayi, 1998). Similarly,
while developed economies have reasonably reliable property databanks, most developing
economies lack these resources, thereby increasing the subjectivity of the valuation process.
These disparities suggest a relationship between market maturity and data challenges.
Aluko (2007),Bello and Bello (2007) and Munshifwa et al. (2016) found that property
markets in most sub-Saharan African countries lacked sufficient and reliable market data. As
the market is deemed immature in Nigeria, a lack of property data has been cited as one of the
significant challenges confronting valuation practice (Dugeri, 2011;Akinbogun et al., 2014;
JLL, 2016). Similarly, Olapade and Olaleye (2018) identified economic, attitude, ethical, legal,
administrative and technical factors as obstacles to property data accessibility in Nigeria. In
addition to a high level of economic and political volatility, Nigeria’s real estate market is
characterised by a weak institutional framework and a high degree of informality (Agboola,
2015;Gbadegesin, 2018;Olapade and Olaleye, 2018). The weak institutional framework
reflects, among other things, inadequate enforcement of standards and procedures and a high
degree of corruption. The Certificate of Occupancy (CofO) is the formal land title in Nigeria
(Atilola, 2010;Ashaolu and Olaniran, 2016). According to empirical data, only about 3% of
property owners in Nigeria’s urban areas possess a CofO (Atilola, 2010;Ashaolu and
Olaniran, 2016). It implies that only a negligible percentage of land titles are verifiable
through government records as valuation-reliable data. This increases transaction costs for
market participants, such as property appraisers, who require accurate market data for
decision-making. In accordance with this, Mooya and Cloete (2012) argued that market
liquidity depends on the market’s institutional structure and the associated transaction costs.
Therefore, understanding market peculiarities and their associated challenges is significant.
Most developing markets are immature, opaque and exist within the framework of
uncertain economic conditions. The markets are fraught with varied challenges and
uncertainties. The maturity and transparency of the market affect the objectivity of valuation
(Rattermann and Mai, 2014). As a result, the practice of valuation in such an environment is
confronted with several challenges. However, few studies have examined the real nature of
these challenges and their impact on valuation practice. A significant number of behavioural
studies have focused on valuation methods and approaches, with little attention paid to how
the nature of the real estate market influences the practice of property valuation. Given the
differences in the nature and behaviour of property markets across countries, including
information availability, economic variables and cultural and social characteristics, the
paucity of research on the effects of market peculiarities on property valuation practice is
considered a significant gap in behavioural research in valuation and the body of knowledge
in real estate in general.
This necessitates understanding the actual character of data challenges in the property
marketand how this impacts valuationpractice. Itis believed that an in-depthunderstanding of
aproblem’s origin is the first step in its resolution. This studyinvestigates the data challenges
that valuers face whenperforming their professional duties in the Lagos property market.
Specifically, this study seeks to identify the specific forms and causes of data challenges
and their effects on property valuation practice in a typical developing market. With this
information, the real estate industry in Lagos and other similar developing markets can
JPIF
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