Empirical examination of Assessed Property Values in Relation to Physical Property Attributes in Tanzania

This paper presents an empirical investigation of market valuation prices of commercial buildings in relation with the indicators (or determinants) of value creation in Dar es Salaam, Tanzania. The commonly used measures of commercial property values are evaluated for estimation of logarithmic model for estimation of the assessed values of properties. The paper uses statistical test procedures to examine whether there are any significant differences in the valuation data as well as valuation indicators for the period 2009 - 2010. Furthermore, multivariate procedures, auto-regression, Granger non-causality tests, and generalized hedonic model are conducted to analyse relationships between the assessed property values and the physical property attributes. The hedonic price equation expresses the assessed property value as a function of physical property attributes. The model is based on a representative sample of the segment of real market with good statistical performance from Dar es Salaam, the capital city of Tanzania. With the model in place, the unknown values of properties in the absence of clearly defined markets can be derived from information acquired through surrogate markets. To this effect therefore two different research questions are investigated. The first substantive research question is how to estimate commercial property values in valuation, with the use of a hedonic model. The second research question is how the estimated values by hedonic model correlate to the actual observed values. It is found out from the model that the general external area (GEA) and value of land (VoL) play an important part in the assessment of the Property Value.