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Asset valuation and the role of news in sub-Saharan Africa: Valuers’ rationality and the hype dilemma

Author/s: Jacob Adejare Babarinde

Date Published: 4/05/2015

Published in: Volume 21 - 2015 Issue 2 (pages 139 - 159)

Abstract

This study is a survey of valuers within Africa to see whether they believe that valuations can be affected by stories relating to specific properties within the media. Experience has shown that valuers’ ideal of exercising duty of care to act in the best interest of their clients does not always hold sway as news stories in the form of hype can distort valuation outcomes through excessive publicity and exaggerated claims in advertisements or promotional materials for real estate assets. Based on a theoretical framework built around relevant real estate-related and behavioural theories and a research problem that shares the vision of the “Windhoek Declaration of 1991,” the paper analyses the behaviour of 50 randomly selected valuers across sub-Saharan Africa, when exposed to different news stories. Findings reveal that market valuations, rather than statutory valuations, can be impacted by good or bad news stories; this is particularly prevalent in cases where valuers fail to exercise due diligence. Recommendations are made to ensure valuers’ public reputation is not damaged by their exposure to framing or distorted presentation of information relating to the real estate market.

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Keywords

Assets - Hype - News Stories - Rationality - Valuation - Valuer

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