Analysis Of Real Estate Value Determinants – The Case Of Valuation Practice In Tanzania

The dawn of global trade has had remarkable influence on the way professionals across boarders relate with one another. Sharing information is no longer a problem as between nations and cities. The need for transparency and consistence in global dealings cannot be overemphasized. Real estate valuations have become focal to trade and investment that form significant bases for measuring economic performance. While in the mature economies, valuations have become an important basis for constructing house and property price index, in the less developed countries, valuations have tended to lack credibility, reliability and even clarity for several reasons. Against this background, a study was undertaken to review valuation practice in Tanzania to determine the extent to which real estate value-influencing factors were being accounted for in valuation. A total of 316 questionnaire were administered to measure the lack of reliability and precision of value. The study confirmed the overtly reliance on cost method of valuation to arrive at real estate values for all purposes of valuation. This was despite of the fact that over 10,000 valuations are executed every year (URT, 2017) which suggests wealth of comparable data. It was evident, the increasing penetration of digital technologies and enhanced data management have had limited bearing on the adoption of dynamism that has characterized valuation methods and analytics elsewhere in assessing value affecting factors. Consequently, contrary to the old holding of Peto (1997), the choice of valuation method has not depended on the use, interest nor the purpose for which it is required. Based on selected valuation cases, the paper urges for use of existing market price information and past approved valuations towards estimating real estate values.