Property Valuation in Emerging Economies: The hands-on experience in Ghana

Abstract

Purpose: This paper identifies and discusses a number of pertinent property valuation issues as the fundamentals in promoting valuation in emerging economies using Ghana as a case study. Businesses, individuals, financial institutions and governments globally require property valuation for several purposes. Property value as a proxy for price is essentially premised on demand and supply, and therefore determined on market value basis. The purposes for which property valuation may be required typically include sale, purchase, mortgage, insurance, accounting, compensation, rating and stamp duty whilst rental value is determined for a tenancy arrangement or the associated tax payment.Design/methodology/approach: This paper is a case study approach motivated by the view that property plays an important role in the development agenda of all nations. For instance, the expansion of property stock and rise in its market value form part of the accumulation of wealth with successful economic development. As a potential source of tax revenue for central and local governments, especial in emerging economies where cash-based informal sectors hamper the collection of other forms of taxation, property markets will continue to play an important role in national development. And as exemplified by the Asian crisis in the late 1990s, incorrectly valued and unstable property markets are major risk components for the banking and financial systems (Mera and Renaud, 2000).Findings: The credibility, reliability and accuracy of property value are imperative and more germane in emerging economies. In examining the practice of property valuation in Ghana the paper establishes that four underlying requirements – Property Valuation Guidelines and Standards, electronic database, automated property valuation and, research and development – are the driving force for the development of the valuation profession in emerging economies.Practical implications: Countries in Africa as well as other emerging economies may adopt these four requirements as the corner pillars in establishing the framework to promote property market development and valuation. Thus, this study tends to present a practical approach to establishing credible digital property systems.Originality: The paper is a novelty on the property market, which identifies and addresses fundamental property valuation issues in Ghana.