The Relevance of Contemporary Valuation Techniques in the Determination of Buy-out Value of Leasehold Properties in Uyo, Nigeria

Abstract

The determination of buy-out value of leasehold interest arises when the freeholder of a real property wants to acquire and integrate the interest of the leaseholder into his holding. This study examined the relevance of contemporary valuation techniques in the determination of buy-out value of leasehold properties in Uyo, Nigeria. Data for the study were collected from 348 residential investment properties and 18 registered valuers in the city through field survey, using multi - stage sampling technique. Results of data analysis show evidence of periodic rental reviews in the residential property market, the expected rent review pattern being 2.9366 years (say 3 years). In the market valuation of leasehold residential properties in the city, it was found that the buy-out value of leasehold interest obtained using contemporary technique was 7.31% higher than that obtained using the conventional valuation technique. The study recommends the adoption of contemporary valuation techniques in the determination of buy-out value of leasehold properties in the city as the conventional valuation technique used by valuers in the city for such valuation is not sensitive enough to interpret the realities of the property market due to its inability to incorporate rental growth and rent review frequency in its computation.