Application of Contemporary Equated Yield and Dcf Explicit Growth Methods in the Valuation of Over-Rented Properties in a Recessionary Period: A Case Study of Nigeria

Valuations have always been time specific and, if properly undertaken, are supposed to give a true reflection of property market conditions at any given point in time. In periods of economic decline, when properties are leased or tend to exchange hands at rents or prices lower than their true market value, a need to capture the explicit growth rate associated with an instability in the property market arises. With the Nigerian economy currently facing its worst recession in years, the onus is on valuers to adopt contemporary methods of valuation which seek to mirror the true situation of the property market at any point in time; something which, hitherto, conventional methods of valuations have failed to do. This paper therefore takes a pilot survey of the types of investment valuation models currently adopted by valuers when carrying out valuations of reversionary properties in a recession. The study seeks to highlight the knowledge gap of valuers, both in practice and in the academia, concerning the use of the Equated yield and DCF explicit growth method of valuation, and hence enlighten them and the general public on its use as a more appropriate method of valuing properties during a downturn.