Stakeholders canvass standardized systems, processes for asset valuation

Real estate stakeholders comprising mainly estate surveyors and valuers who are involved in assets valuation, and banking institutions who are consumers of such services have canvassed standardized systems and processes for proper assets valuation and quality reporting.

The stakeholders who gathered at a breakfast meeting with the theme, ‘Risk Mitigation Through Appropriate Asset Valuation and Reporting’, hosted by one of Nigeria’s leading property managers, Ubosi Eleh & Co, also took a critical look at the core challenges slowing the growth of the real estate   industry and pointed the way forward.

In his opening remarks, Chudi Ubosi,  a partner at Ubosi Eleh & Co, explained  that the essence of the gathering was to get feedback from the financial institutions they have been working with and point  the way  for improvement. Representatives of various banks were present at the event.

“We do a lot of work for the financial institution in the areas of asset management and valuation where facilities are considered. We have, over the years, continued to get feedback from the banks on what it is they need from our valuation report and how these asset report scan be more useful to the banks.

“Over the years, we have continually improved our valuation reports to ensure they  are relevant to the banks. We actually want to have a face to face meeting with the bankers and hear from them the challenges that they have with our valuation report,” Ubosi said.

He added that their company was committed to building a better business relationship with financial institutions and ensuring that their valuation report was credible.

“We are more interested in the challenges that you have with us and how we can serve you better. The real estate market is one that we value so much and we want to keep our relationship cordial with  financial institutions. We want you to trust our valuation report”, he added.

Ubosi highlighted the common problems associated with valuation report which include asset over valuation; asset under valuation; inaccurate reporting and technical description; timing of report;  poor pictorial representation of asset;  absence of stamps, seal and signature, and location analysis.

“Reports are never accurate to justify the amount that is put on the asset; there is always complaint on how quickly a report can be delivered and there is a time line for every report to get to the bankers”,  he said, noting that quality control was key for a proper asset valuation to be done.

Stakeholdoders spoke extensively on the problems associated with asset valuation report and, according to them, quality control should be instituted to ensure that valuation reports were credible and feed back should be used to improve on such reports.

They noted that standardization of valuation report  was needed for proper asset valuation, adding that the standards must be fundamental and permissive across the industry for every estate surveyor and valuer, not a subjective style of asset valuation .

“Those standards that will push the industry to the next level in terms of accurate reporting, the differences in valuations from one property to the other need a set of valuation standards that will help to push the industry to the next level”, Victor Adeleye said.

In his response, Ubosi noted that the things that would make the industry get standardized were not present at the moment, pointing out that “the tools that will be used to standardize the industry are present and some are not being used, especially in valuation figures and rental values; there is a website that analyses rental values for properties in Ikoyi and others, but our people do not use them. These have led to wide disparity in asset values. For every asset valuations, the difference should not be more than plus or minus 5 percent”.

Emeke Elleh, a partner at Ubosi Eleh & Co  added that “the problems associated with valuation is the source of data, unlike developed countries where there is standard process of property valuation.”

He called for a standardized data bank that will give an idea of values across board where stakeholders can use for valuation, adding that the  industry have witnessed an unusual time in the last one year following the drop in the price of crude oil.