Valuation and land governance
| Published date | 03 February 2012 |
| Pages | 88-98 |
| DOI | https://doi.org/10.1108/14635781211194836 |
| Date | 03 February 2012 |
| Author | Richard Grover,Chris Grover |
| Subject Matter | Property management & built environment |
EDUCATION BRIEFING
Valuation and land governance
Richard Grover
Oxford Brookes University, Oxford, UK, and
Chris Grover
University of Winchester, Winchester, UK
Abstract
Purpose – Land governance plays an important part in influencing the quality of valuations. The
purpose of this paper is to review the different meanings of governance.
Design/methodology/approach – The World Bank Indicators of Governance, Jones Lang LaSalle’s
Global Real Estate Transparency Index (GRETI) and other data sources have been consulted.
Findings – The paper discusses what is meant by good governance and how this can be measured.
Originality/value – The paper presents some evidence to suggest that market transparency
requires freedom of information and association, and is associated with factors such as the quality of
institutions, the absence of corruption, and the quality of corporate governance.
Keywords Real estate, Governance,Corruption, World Bank, GlobalReal Estate Transparency Index,
World EconomicForum
Paper type General review
Behind the valuation model lie a number of assumptions about the quality of governance
in land markets. They are rarely articulated and are not explicitly addressed in valuation
standards. Whilst valuers working in the property markets of liberal democracies can
generally take a relatively high standard of governance for granted, this is far from
being the case in many parts of the world. For example, governments may confiscate
property assets by arbitrary authority without fair compensation. Land registration
systems may be ineffective or non-existent. Corrupt officials may block the lawful
transfers of property or extort a personal fee for allowing this to happen. Members of the
elite may exploit the powers of the state to seize the property of others, or subject rivals to
unfair penalties, such as taxes designed to bankrupt them, or to arbitrary court rulings.
Contracts like leases or mortgages may be unenforceable. Valuers may not be free to
discover or disseminate market information, or reach their decisions impartially and
objectively. Problems of this sort raise questions about whether the property markets in
such countries are capable of reaching a market clearing price, whether price is the on ly
or even the most important factor determining the allocation of resources, and how the
risks of operating in such a market should be reflected in valuations.
As the property market becomes increasingly global, more investment is taking place
in countries where the governance assumptions behind valuation are open to question.
This article discusses what is meant by land governance, the evidence about what seems
to determine the quality of land governance, and its implications for valuations.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1463-578X.htm
The authors are grateful to Jones Lang LaSalle for kindly supplying the data on the five
sub-indices of the Global Real Estate Transparency Index for each country and permitting their
analysis.
JPIF
30,1
88
Journal of Property Investment
& Finance
Vol. 30 No. 1, 2012
pp. 88-98
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635781211194836
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