Applicability of the International Valuation Standards in Estimating the Market Value of Agricultural Lands in Leyte, Philippines

Land valuation using the International Valuation Standards (IVS) was just adopted in the Philippines in October 2009 as reflected in its first edition of Philippine Valuation Standards. Part of the adoption however, is the question whether the valuation approaches namely; the market or sales comparison, income and cost approaches specified in the standards are readily applicable for land valuation purposes. This study aimed to determine the applicability of the said approaches. This was conducted in Leyte, Philippines with a total of 164 agricultural land samples being estimated. Based on the actual experience of the researcher and the available circumstances in the study areas, the income approach, in general, provided the most credible estimate of market values of all the samples because it has so far had the most complete information needed for the analysis. Results of the other approaches were not very reliable because of lack of needed information to support its estimation. For the market or sales comparison approach in particular, estimations were only done using alternative procedures. Other samples can not also be estimated properly using the cost approach because of the absence of cost-related information. Results of the analyses using the IVS approaches generated higher values than the values reflected at the Assessors’ Offices which indicate that agricultural lands in the study areas are currently undervalued. On the average, the cost approach provided the highest estimate valuing lands at Php202,415 per hectare, followed by the market or sales comparison approach at Php196,373 per hectare then by the income approach at Php138,693 per hectare. Adoption of any of the IVS approaches can increase values of agricultural lands in the study areas. The most preferable approach to be adopted at the current situation then is the income approach.