Uncertainty of Valuation in the Emerging Markets. The Polish Case

According to experience gained by valuers operating in mature markets uncertainty is the immanent feature of valuation. Its source should be sought in the unreliability of the input data used to value a single property, which makes the resulting value ambiguous. Another type of uncertainty is represented by the variability of valuation that is differences between valuations of the same property appraised at the same time and for the same purpose. The uncertainty of valuation (arising from uncertain data and variations in the appraised values) is definitely larger in the emerging markets in transition from a central command economy toward a market economy, whose economic structures, as well as political, legal and institutional environment is being profoundly modified. In those markets, it is much more difficult to find the market value. One reason for this is low activity in many property segments and geographical markets, their changeability and low reliability of the market data, which factors seriously impede market objectivization in the process of valuation. The diversity of understanding of the general valuation rules can play an important part as well. The paper discusses the uncertainty of valuation in Poland. It purposes to indicate the range of variations in the valuation results and their causes.